August 2019

Motilal Oswal Business Opportunities Strategy

 The PMS Strategy will invest in a high conviction concentrated portfolio of minimum 20 stocks

 The portfolio will be constructed based on in-depth research leading to bottom-up stock picking
with a view of equities from 3 – 4 years perspective
 High Conviction portfolio which will invest across market capitalization and will primarily focus on

 Consumer Discretionary – Beneficiary of Doubling of per Capita GDP

 Private Banks and NBFC – Play on Value Migration from Public sector to Private sector
 Agriculture – A Play on Rising Rural Income
 Affordable housing – Governments Focus on Housing for All by 2022
 GST Beneficiaries – Business Migration from Unorganized to Organized

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 Themes we Believe in

Consumer Private Bank & NBFC

Discretionary
Value Migration from
Beneficiary of Doubling Public Sector to Private
of Per Capita GDP Sector

Agriculture

A Play on Rising Rural

Income
Affordable Housing GST Beneficiary

Government Focus on Business migration from

Housing for All by 2022 Unorganized to
Organized

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 Rise in GDP - Creates Disposable Income

4th US$ tn

3,977
3 years

3,611
3,278
3rd US$ tn
5 years

2,976
2,702
2nd US$ tn

2,453
7 years

2,274
GDP (USD bn)

2,090
2,042
1,879

1,864
1,828
1,708
1,366
1st US$ tn

1,239

1,226
58 years 948
834
721
618
524
494
475
465
301
155
59
34
22

FY02

FY13
FY51

FY60

FY70

FY80

FY90

FY00

FY01

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E

FY21E

FY22E

FY23E
Source: statisticstimes.com
Note: Above forward-looking statements are based on external current views and assumptions and involve known and unknown risks and uncertainties that could affect actual
results.

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Exponential opportunity in Consumer Discretionary Space
When per capita GDP doubles, discretionary spend becomes 12x

Discretionary Spend

Basic Spend
1,200
12X

100

900
1,000

GDP p.c. $1000

GDP p.c. $2200
$2000

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 Value Migration in Banking
At present, PSU banks have ~70% market share Vs 30% with private banks
 The total stressed assets in PSU Banks – Rs 10 lakh crores, causing dent to their lending ability
 Economy is expected to grow by 7%#, Credit growth expected to be 2X from banking sector
 Credit growth largely to benefit Private Sector banks as PSU Banks are struggling with Non Performing loans
and stretched tier 1 capital adequacy ratio
 Private banks PAT contribution to Nifty 50 was 13.4% in FY17, as compared to PSU banks with 2.9% and
expected to grow further
 Data Analytics, IT Infrastructure and Dynamic workforce – added advantage for private banks

PAT Contribution in NIFTY 50 – Private Vs PSU Banks Loan Growth : Private Banks outpacing the Public Banks

15 13.4 30
PSU Banks Private Banks Private Banks PSU Banks
NIFTY PAT Contribution %

10.6 25
10 20
7.6
15
5 2.9 10

5
0
FY 14 FY 17 0
FY12 FY13 FY14 FY15 FY16 1HFY17
Source: MOSL
# Source: www.ibef.org as on June 2017
The statements made herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and
unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance may or may not be
sustained in future
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 Private Banks gaining market share
Private banks contributed > 70% of incremental bank lending in FY17

(%)
In stock of loans In incremental loans
80
71
70
59
60

50

40 36

30 26
23 24
22 21
19 20
20

10

0
FY13 FY14 FY15 FY16 FY17
Source: Banks, CLSA
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 Agriculture Growth: Rise in Rural Income
Government wants to Double the Farm Income by 2022
 Agriculture infrastructure - increasing investments in agricultural infrastructure such as irrigation facilities,
warehousing and cold storage
 Increase in crop yield - Use of genetically modified crops will likely improve the yield
 Subsidies and Incentives - Short-term crop loans at subsidized interest rate of 7% p.a. & additional incentive of
3% for prompt repayment
 Total Budget allocation for rural, agricultural and allied sectors for FY2017-18 has been increased by 24%
 Increase in Rural income led by rise in MSP’s (Minimum Support Price) will create demand in related sectors
like Agrochemicals, Consumer Staples and Consumer Discretionary
MSP of wheat has risen from Rs.1,100 in FY10 to Rs.1,735 currently

MSP of Wheat (Rs. per quintal)

2000 7%
7% 1735
5% 1625
4% 4% 1525
5% 1400 1450
1500 10% 1285 1350
6%
1100 1170

1000

500

0
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Source: www.ibef.org/industry/agriculture-india.aspx For limited private circulation only
 Affordable Housing
Economic growth, urbanization and rapid change in socio-economic profile will drive demand

 Government vision – ‘Housing for all by 2022’

 Rising disposal income - Per capita income is expected to increase from 2,800 USD in 2012 to USD 8,300 by
2028*
 10 million people moving to urban cities every year, is likely to increase the demand#
 Growth in Affordable housing will create parallel demand in related sectors like Cements, Paints, Tiles, Plastic
Pipes and Electricals

Demand supply dynamics of housing for various income

High Demand supply gap for residential
units priced below 10 Lakhs
50%
Cost of Unit (INR ‘000)

Share of Demand Share of Supply 40%

40% 35%
30%
30% 25%
20% 20%
20% 15%

10% 5% 5% 5%

0%
200-300 300-500 500-700 700-1000 >1000
Source:- Jones Lang LaSalle (Affordable Housing in India)
Income Level (INR ‘000)
* Source: PWC: Building the economy block by block
# Source: www.kpmg.com For limited private circulation only
 Affordable Housing: Impact on Different Sectors

Construction of 60m units

over FY 18 -24

Total spend on housing

over 7 years: US$ 1.3 trn

Multiple Sector Linkages

Adhesives
Wood Plastic Light
Sector Cement Steel Paints Tiles Construction
Panel Pipes Electricals
Chemicals

Demand
linked to US$ 14 bn US$ 12 bn US$ 4.5 bn US$ 3.7 bn US$ 3.5 bn US$ 2.1 bn Us$ 2.1 bn US$ 1.1 bn
housing

FY 14-17
industry 3% 3%1 9% 1% 8% 5% 8% 8%
growth

FY17-24
Expected 12% 8%1 15% 12% 11% 14% 13% 13%
growth
Note: Industry size data based on CLSA estimates for housing led demand in each building materials sub-sector. Light electricals include switchgears/switches, fans, lightings &
fixtures and water heaters.
Source: MoSPI, Ministry of Commerce, RBI, Ministry of Steel, AceEquity, CLSA as on March 31, 2017
For limited private circulation only
 GST: Movement from Unorganized to Organized

 Portion of economy to migrate from informal to formal, leading to a 4.2%* growth in real GDP

 Institutional demand inclined to move towards branded players

 Increased efficiency in businesses due to reduced state level regime

 Tax evasion to fade away – Unorganized players to loose competitiveness

 Companies in sectors like paints, appliances, apparel, logistics, plastic pipes, ceramic tiles, batteries, etc. will
stand to benefit

Benefit of
moving to Change in Supply Chain Unorganized Organized
Sector Organized Tax Rate
Overall Sector
Management Share Share
Segment

Auto-Batteries Auto-Batteries 40%*** 60%

Logistics Logistics 92%** 8%

Apparels Apparels 70%*** 30%

Pipes, Ceramics Pipes, Ceramics 50%*** 50%

*Source:- www.federalresrve .gov.in
Highly Positive Positive Slightly Positive Neutral **Source:- KPMG India Retails the next growth story 5
Source:- The Financial Express ***Source:- Edelweiss: Analysis Beyond Consensus
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 MOAMC - Investment Team

Raamdeo Agarwal Chairman, Experience of 38 years in Equities, authoring wealth

MOAMC creation studies for last 21 years

3 Fund Managers in Mutual Fund & 4 in PMS, with

7 Fund Managers overall experience of over 95 years

2 Senior Research Analysts & Experienced pool of analyst covering sectors with
5 Analysts cumulative experience of 65 Years

3 dealers for Mutual Fund & 4 in PMS & AIF

7 Dealers with 50 – 55 years of cumulative experience

Over 250 years of cumulative experience in managing equities and wealth

creation

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 Fund Managers

 As one of the founding members of the MOAMC’s business,

Manish today heads the Managed Accounts business and is the
Portfolio Manager for the firm’s PMS Strategies and AIFs

 He has been with the Group for over 14 years.

 He has a cumulative 26 years of experience across equity fund

management and research covering Indian equity markets.

 He holds a Bachelors Degree in Commerce (Hons) , Chartered

Accountancy, Cost & Works Accountancy, Company Secretaries. He
has also completed his Masters of Business Administration in
Manish Sonthalia
Head Equity PMS and Alternatives
Finance from IISWBM.

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 MOAMC - Investment Philosophy
At Motilal Oswal Asset Management Company (MOAMC), our investment philosophy is centered
on 'Buy Right: Sit Tight‘ principle

Buy Right Sit Tight

 ‘Q’uality denotes quality of the business and  Buy and Hold: We are strictly buy and hold
management investors and believe that picking the right
business needs skill and holding onto these
 ‘G’rowth denotes growth in earnings and businesses to enable our investors to benefit
sustained RoE from the entire growth cycle needs even
more skill.
 ‘L’ongevity denotes longevity of the
competitive advantage or economic moat of  Focus: Our portfolios are high conviction
the business portfolios with 25 to 30 stocks being our
ideal number. We believe in adequate
 ‘P’rice denotes our approach of buying a diversification but over-diversification results
good business for a fair price rather than in diluting returns for our investors and
buying a fair business for a good price adding market risk

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 Investment Philosophy
QGLP – The investment philosophy has been framed out of 21 years of annual wealth creation
studies authored by our co–founder, Raamdeo Agrawal

Q-G-L-P Demystified

Enduring business, preferably consumer facing Volume growth

Compelling business opportunity Price growth
Sustainable competitive
Operating leverage
advantage
Financial leverage
Competent management

Reasonable valuation, relative Long-term relevance of business

to growth prospects
Extended competitive advantage
High margin of safety Initiatives to sustain growth for 10-15
Typically prefer stocks with earnings growth years
of around 1x

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 Emergence to Endurance – Key Strength of MOAMC

Portfolio Management Services

2018 A Multi Cap

Motilal Oswal strategy - in the
2010 Business making…
Opportunities To identify
2007 IOP PMS Strategy emerging value
2.6x in 9 Yrs creators
2003 NTDOP PMS
5.3x in 11 Yrs
Value PMS
26x in 16 Yrs

Value has identified wealth creators at an early stage - thus, its market cap increased from ~16k Crs to ~182k Crs

NTDOP’s journey started as mid cap strategy and today converging towards maturity & stability

IOP’s is a newly created small and mid cap portfolio following the footsteps of NTDOP
Data as on 31st July 2019 ; The performance shown above is of Absolute Return a model client, performance of an individual client may be different , depending on the time of investment in the strategy.
Past performance may or may not be sustained in future For limited private circulation only
 MOAMC – PMS Track Record
45 India Opportunity 60 300
NTDOP Strategy 25.57X
40 Portfolio Strategy Value Strategy
Nifty Smallcap 100 2.59X 50 Nifty 500 250
35 5.31X Nifty 50
30 40 200

25 150
30
20 1.78X
20 100
15
1.59X 10.99X
10 10 50

5 0
0

Nov-04

Nov-09

Nov-14
Jul-06

Jul-11

Jul-16
Sep-05

Sep-10

Sep-15
Mar-03

Mar-18
Jan-04

May-07
Mar-08
Jan-09

May-12
Mar-13
Jan-14

May-17

Jan-19
Dec-07

Dec-14
Jul-08

Nov-10
Jun-11

Jul-15

Nov-17
Jun-18
Oct-13
Feb-09
Sep-09
Apr-10

Feb-16
Sep-16
Apr-17
Aug-12
Mar-13

May-14
Jan-12

Jan-19
0
Dec-10

Jun-13
Nov-13

Dec-15

Jun-18
Nov-18
Jul-10

Oct-11

Jul-15

Oct-16
Feb-10

Apr-14
Sep-14
Feb-15

Aug-17

Apr-19
May-11

Mar-12
Aug-12

May-16

Mar-17
Jan-13

Jan-18

Inception Date – February 15, 2010 Inception Date – December 5, 2007 Inception Date – March 25, 2003

IOP Strategy NTDOP Strategy Value Strategy

 9+ years track record  11+ years track record  16+ years track record
 Mid & Small Cap Portfolio  Diversified Portfolio  Large Cap Portfolio
 Invests in stocks with potential to  Invest in stocks with potential to  The focus is on buying blue-chip
grow more than the nominal GDP be beat the markets high growth companies
for next 5-7 years
 Concentration on emerging  To identify potential long-term
 Focus is on identifying well run themes which are part of the wealth creators by focusing on
companies that are potential next trillion dollar GDP growth individual companies and their
leaders in the field of operations opportunity management

Data – As on 31st July 2019, The performance shown above is of a model client post fees & expenses. Performance of an individual client may be different, depending on the time of
investment in the strategy
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 MOAMC – Some Success Stories
Multibaggers across PMS strategies…
Purchase Current Market Performance CAGR
Stocks Purchase Date
Price (INR) Price (INR)* (% Growth) (Growth %)
IOP PMS

DCB Bank August 2016 110 196 78% 21%

Mahanagar Gas August 2016 511 808 58% 17%

Aegis Logistics August 2016 123 186 52% 15%

NTDOP PMS
Page Industries December 2007 456 18173 3882% 37%
Bajaj Finance August 2010 63 3252 5100% 55%
Eicher Motors August 2010 1,174 16348 1293% 34%

Value PMS

Hero MotoCorp June 2003 254 2356 829% 15%

HDFC Bank July 2008 201 2252 1020% 24%

Eicher Motors April 2012 2,055 16348 696% 33%

* As on 31st July 2019
The given stocks are part of portfolio of a model client of respective PMS Strategies. The Stocks mentioned above are used to explain the concept and are for illustration purpose only and should not
be used for development or implementation of an investment strategy. The stocks forming part of the existing portfolio of PMS Strategies may or may not be bought for new clients of PMS Strategies.
The stocks may or may not be part of the Fund. It shall not be constitute as an advice, an offer to sell/purchase or as an invitation or solicitation to do so for any securities. The portfolio would
constitute number of stocks having different weightage in the PMS portfolio. The Stocks held in the portfolio may or may not give positive returns. Past performance may or may not be sustained in
future. Motilal Oswal AMC does not provide any guarantee/ assurance any minimum or maximum returns
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 Disclaimer

Disclaimer: This presentation has been prepared and issued on the basis of internal data, publicly available information and other sources believed to be
reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact and terms and
conditions. The information / data herein alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. It
should not be construed as investment advice to any party. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on
date and are subject to change without notice. While utmost care has been exercised while preparing this document, Motilal Oswal Asset Management
Company Limited does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of
this information. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on
our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ
materially from those expressed or implied in such statements. Readers shall be fully responsible /liable for any decision taken on the basis of this
presentation. No part of this document may be duplicated in whole or in part in any form and/or redistributed without prior written consent of the Motilal
Oswal Asset Management Company Limited. Readers should before investing in the Strategy make their own investigation and seek appropriate
professional advice. Investments in Securities are subject to market and other risks and there is no assurance or guarantee that the objectives of any of the
strategies of the Portfolio Management Services will be achieved. Clients under Portfolio Management Services are not being offered any
guaranteed/assured returns. Past performance of the Portfolio Manager does not indicate the future performance of any of the strategies. The name of the
Strategies do not in any manner indicate their prospects or return. The strategy may not be suited to all categories of investors. The material is based upon
information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Neither Motilal
Oswal Asset Management Company Ltd. (MOAMC), nor any person connected with it, accepts any liability arising from the use of this material. The
recipient of this material should rely on their investigations and take their own professional advice. Opinions, if any, expressed are our opinions as of the
date of appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so. The Portfolio Manager is not responsible for any loss or shortfall resulting from the
operation of the strategy. Recipient shall understand that the aforementioned statements cannot disclose all the risks and characteristics. The recipient is
requested to take into consideration all the risk factors including their financial condition, suitability to risk return, etc. and take professional advice before
investing. As with any investment in securities, the Value of the portfolio under management may go up or down depending on the various factors and
forces affecting the capital market. Disclosure Document shall be obtained and read carefully before executing the PMS agreement. Prospective investors
and others are cautioned that any forward - looking statements are not predictions and may be subject to change without notice. For tax consequences,
each investor is advised to consult his / her own professional tax advisor. This document is not for public distribution and has been furnished solely for
information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to
observe these restrictions. No part of this material may be duplicated in any form and/or redistributed without ’MOAMCs prior written consent.
Distribution Restrictions – This material should not be circulated in countries where restrictions exist on soliciting business from potential clients residing in
such countries. Recipients of this material should inform themselves about and observe any such restrictions. Recipients shall be solely liable for any liability
incurred by them in this regard and will indemnify MOAMC for any liability it may incur in this respect.

19
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