capital t e wealth - alfaccurate advisors · 2018-11-23 · india gdp for q1 came at 5.7%, slowest...

1

CapitalP

rote

ct

Cre

ate

Wealth

“Rule No 1: Never lose moneyRule No 2: Never forget rule No 1.”

- Warren Buffet

2

“In the short run, the market is a voting machine, But in the long term,

it is a weighing machine”

- Ben Graham

“Successful investing is about owning businesses and reaping the huge

rewards provided by the dividends and earnings growth”

- John Bogle

We Protect Capital

3

• Close eye on earnings growth drivers• Close eye on valuations• Continuous monitoring of risk

Exit Strategy

• Portfolio exposure increased over a period• Not averse to raise cash

Staggered Approach

• Diversification across industries • Diversification across Mcap with focus on liquidity:

• ≥ 50% in large cap USD1bn+ , ≤ 10% in one stock , ≤ 30% in one sector, ≤ 50% in the top 10 stocks, Minimum investments in 30 stocks

• Flexible investment style: Growth as well as Value with focus on Margin of Safety

Investment Universe

A prudent risk management strategy is the core of our investment philosophy

We Create Wealth

3M Stock Selection Approach

Identify Size of Sector Opportunity

M: Market Size

4

Size of the opportunity should be huge to generate significant investment

returns

Identify the stock for investment with

Reasonable Valuation

M: Margin of Safety

The company should provide reasonable growth opportunity at reasonable Margin

of Safety

Identify top 5 (Profitable) players in

the sector

M: Market Share

The company be consistently profitable and should be among the leading

players in the industry

Leading To Multibagger Returns

5Note: Purchase price adjusted for any corporate action like split/bonusGain % indicates return since purchase, *Stock sold as per price mentioned

Stock Purchase Date

Purchase Price (Rs)

Price(Rs)30-Sept-2017

Motherson Sumi 28-Jan-10 20.5 336

Maruti Suzuki 29-Jan-14 1659 7978

Shree Cement 12-Nov-11 3983 18580

Eicher Motors* 08-Aug-13 3343 15249

Hitachi Life* 22-May-14 300 1360

Siyaram Silk Mills 01-Aug-14 604 2277

Bajaj Finance 14-Sep-15 514 1838

Ramco Cements 28-Mar-14 213 692

Timken India 22-May-14 233 720

Eveready* 29-Sep-14 102 302

Bayer Crop science* 05-May-14 1427 4052

Honeywell Automation 30-Jun-14 5790 15730

HDFC Bank 28-Oct-10 670 1806

Indo Count Industries* 19-Dec-14 297 785

HDFC 10-Dec-10 669 1742

Shankara Building Products 06-Apr-17 570 1429

Capital Trust* 29-Jun-15 253 601

Mannapuram Finance* 16-Dec-15 29 69

3M India 24-Nov-14 6475 14301

ITD Cementation* 23-Feb-15 65 143

Gabriel India* 01-Aug-14 55 114

KNR Construction* 03-Dec-14 304 608

Asian Granito 12-Jan-17 246 472

1541%

381%

366%

356%

353%

277%

258%

225%

209%

196%

184%

172%

170%

164%

160%

151%

138%

135%

121%

120%

108%

100%

92%

Gain (%)

6

Earnings Matrix Sensex AAA IOP Sensex AAA IOP Sensex AAA IOP

FY17 FY17 FY18E FY18E FY19E FY19E

EPS G(%) 1% 21% 12% 23% 18% 24%

ROE(%) 13% 17% 13% 19% 15% 19%

P/E(x) 23.1 35.5 20.6 27.6 17.5 21.5

P/BV(x) 2.9 6.3 2.8 5.4 2.6 5.3

AAA Portfolio Superior Earnings Growth

Source: AAA Research

Source: AAA ResearchSource: AAA Research

20% 21%23% 24%

-1%

1%

12%

18%

-5%

0%

5%

10%

15%

20%

25%

30%

FY16 FY17 FY18E FY19E

EPS Growth(%)

AAA IOP Sensex

16% 17%19% 19%

13% 13% 13%15%

-5%

0%

5%

10%

15%

20%

25%

FY16 FY17 FY18E FY19E

ROE(%)

AAA IOP Sensex

Wealth Creation – A Case Study

7

✓ Global home textile segment of $74bn growing at 5%✓ USA imports 17% made ups with imports growing at

~12%✓ Huge opportunity to improve market share for Indian

players in USA and Europe

✓ Reported healthy revenue and profit growth in last 5 years

✓ Ongoing expansion will lead to healthy profit growth over next 2-3 years

✓ Purchased at one year forward PE of ~6x significantly lower considering its net profit size (Rs 100 crs+ FY14) and 45% ROE

Indo Count Industries Ltd

✓ India expected to become the 5th largest consumer durables market by 2025, reaching $400 Bn by 2020

✓ Total Size of Indian A/C industry pegged at Rs.14750 Crs, with volume growth expectation of CAGR 13-15% over FY16-20E

✓ At 3%, India is one of the lowest penetrated market, leading to significant headroom for growth

✓ Market share of ~8%✓ Entry into Tier 2&3 markets with sub premium product to

improve its market share✓ Launched new products to reach mass consumer levels✓ Strong parentage means access to new technology to

offer world class products to Indian consumers

✓ Expect significant growth in profitability backed by operating efficiency and higher volume growth

✓ Market cap at Rs 800 crs, i.e. PER of below 10x FY15E –lowest in the industry compared to all consumer MNC which trades at average PE of >20x

M1

Mar

ket

size

M2

Mar

ket

Shar

eM

3M

argi

n o

f sa

fety

Hitachi Home and Life Solutions Ltd

✓ 4th largest bed sheet exporter to USA & 13th largest globally

✓ Capacity expansion from 36 to 68 mn meters in last 5 years and further expanding to 90 mn meters

✓ Focus on improving value chain by entering premium bed linen segment leading to improved operating margins

✓ No major investment in backward integration – leading to highest ROE of 44% in the industry

The Investment Process….

Stock Identification

Analysis & Decision making Process

Portfolio Construction Monitoring & Nurturing

Exiting & Realizing Value

• Identify emerging trends and opportunities from a universe of 450 companies• Filter approach – using variety of valuation parameters• Strong intermediary relationship

• Initial screening• Corporate meeting and detailed due diligence• Presentation to investment committee seeking recommendation and approval

• Constant evaluation of valuation metrics to decide optimum return potential • Intrinsic value V/s Current Market Price to evaluate Margin of Safety• Change in underlying assumptions of investment thesis

• Combination of Top Down and Bottom Up approach with a benchmark agnostic strategy to achieve Long term investment objective

• Continuous portfolio monitoring ensures prudent risk management• Regular interaction to provide strategic inputs to strengthen systems, controls and CG

in line with best practices

8

9

Exit Strategy As Important As Entry Strategy

Exit from Sensex 01 Jan 2011 Vs

01 Jan 2001

Exit from Sensex 30 May 2016 vs

01 Jan 2011

ACC DLF

Ambuja Cement Hindalco

Bajaj Holdings Jaiprakash Associates

Castrol India JSPL

GSK Pharma Reliance Communication

Grasim Sterlite

HPCL Tata Power

MTNL

Novartis

Ranbaxy

Reliance Infra

Reliance Petro

Satyam

Zee

Name of company Peak Price (Rs)

Price (Rs)30-Sept-2017

MTNL 200 20

Reliance Infra 2500 465

DLF 1200 164

Jaiprakash Associates 312 18

Reliance Communication 820 19

Tata Power 155 78

Fundamental Consistency check No. of BSE 500 Stocks

PAT growth 20%+ every year during FY06-FY15 0

Revenue growth of 10%+ every year with ROE15%+ during FY06-15

16

Monitoring of the Portfolio is critical

Market Outlook

10

Round Up – September 2017

11

The U.S. economy grew a bit faster than previously estimated in the Q2, recording its quickest pace in more than twoyears, but the momentum probably slowed in the Q3 as Hurricanes Harvey and Irma temporarily curbed activity. WhileFed Reserve kept interest rate unchanged, it expects one more rate hike in 2017. Fed also announced the plans toreduce its Balance Sheet, starting from October 2017 with $10bn/pm. As the reduction program gathers momentum, itmay lead to sucking of some liquidity from the markets. The Bank of japan kept monetary policy steady and maintainedits upbeat view of the economy. China's factory output grew 6.0% and exports grew by 6.9% in Aug17. Net-net, globaleconomy continuous its path of recovery

India GDP for Q1 came at 5.7%, slowest in last 3 years. This is largely due to the GST led destocking, subdued capexcycle as well as lagged impact of demonetization. The GDP growth is expected to come back to normal, as the initialchallenges of implementation wanes after 1-2 quarters. Also, needs to watched is the tax collection over next 2-3months. The organised players are very upbeat of changing scenario. August WPI inflation recorded an four month highof 3.2% Vs 1.9% in July, due to higher food and core inflation. The Nikkei manufacturing index rose to 51.2 in Aug17from 47.9 in Jul17.

Media reports suggest that the government may announce a fiscal stimulus to tide over the current slowdown. Onconcerns of fiscal deficit slipping, the bond yields have moved up; USD-INR has fallen by 3-4% and equity marketscorrected by around 4%. However, the government has maintained its second half borrowing program at the budgetedlevel, bellying concerns of rise in fiscal deficit.

We believe, demon and GST implementation are structural reforms. In short term, it has its own negative impact sinceit has hit SME hard. However, corporate earnings growth is expected to revive from 2HFY18 onwards as GST transitionsmoothens out. As we have stated in our earlier communications, the corrections are normal in bull market. Thiscorrection should be used to increase allocation to equities. We continue to remain positive on the markets with 3- 5years view.

UDAY (Ujwal Distribution companies (DISCOMs) Assurance Yojana) financial turnaround and revival package for DISCOMS via improving efficiency, reducing cost, and enforcing discipline

Bankruptcy Bill and Indradhanush to improve flow of capital and recapitalise public sector banks

Auction-based allocation of natural resources (e.g., coal)

Goods and Services Tax (GST) to streamline and simplify the national tax system

Direct Benefits Transfer (through the Jan Dhan–Aadhaar–mobile trinity) to promote direct transfers of financial benefits to beneficiaries’ bank accounts

Pradhan Mantri Awaas Yojana (Housing for All by 2022) – now middle income group also to get interest subsidy

India – Ongoing Reforms…

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13

Aadhar Card – Financial Inclusion

UID Enrollments 118Cr (98%)

5.9 Cr

(60%)

Aadhar linked MNERGS Cards

11.4 Cr

(45%)

Aadhar linked ration cards

12.3 Cr

(71%)

Aadhar linked LPG

Connections

Jan Dhan

30 Cr Aadhar linked Bank

accounts opened

Source : UIDAI, RBI, Ministry Of FinanceSource :DBT Portal

Minsitry/Dept SchemeReported Savings

(Rs Bn)G(%)

FY16 FY17

Petroleum & Natural Gas

PAHAL 215.8 297.6 37.9%

Food & Public Distribution

PDS 101.9 140 37.4%

Rural development

MGNREGS 30 117.4 291.4%

NSAP 2.5 4.0 60.2%

Others Others 11.2 11.2 0.0%

Total 361.4 570.3 57.8%

GST- Size Of Opportunity For Organised Sector

14

Source: Edelweiss, AAA Research

Demonetisation and GST will lead to market share shift from unorganised to organised sector, leading to 3-10x increase in Size of opportunity in the listed equity space.

Packaging

Electrical Equipment

Plastics

Tiles

Apparels

Plywood

Dairy

Diagnostics

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

Un

org

anis

ed

Sh

are

(%)

Size of Oppportunity (Organised Sector)(no of times over 10 years)

4-5x

6-9x

Drivers Of Growth – Investment By Government

15

5

12 11

16

32

19

0

5

10

15

20

25

30

35

FY13 FY14 FY15 FY16 FY17 FY18E

Railways Expenditure growth (%)

Source: Emkay Research, AAA Research

9794

1916

3620

7972

10098

15948

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

FY12 FY13 FY14 FY15 FY16 FY17

Road Project Awards (Kms)

Source: MORTH, AAA Research

0.6

6.1

12.6

-0.6

25.8

10.7

-5

0

5

10

15

20

25

30

FY12 FY13 FY14 FY15 FY16 FY17

Capital Expenditure Growth(%)

Source: Emkay Research, AAA Research

India Economy Recovery: Likely Repeat of FY03-08

16

Source: CSO,MOSL, AAA Research

Source: RBI, AAA Research

4.2

5.4

3.8

8.0

7.1

9.5 9.6 9.3

6.7

8.6 8.9

6.7

4.5 4.7

7.4 7.67.1

0

2

4

6

8

10

12

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Average GDP: 7.1%

GDP Growth(%)

Average GDP: 6.9%

5

2.7

5.77

11.7

8.6

12.9

15.5

2.5

5.3

8.2

2.9

1.1

-0.1

2.8 2.5

0.5

-2

0

2

4

6

8

10

12

14

16

18

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

IIP Growth(%)

Average IIP: 8.6%

Average IIP: 2.9%

Dissecting the economic recovery of FY03-08

27%

40% 39.7%

16%

31%

47.9%

26%

90%

47.3%

23%

11%

26.1%

53%

65%

45.8%

33%

60%

72.3%

43%

62%

22.0%

32%

73%

54.4%

17.6%

15.6%

52.2%

21% 21%

26.6%25%

38.7%

0%

20%

40%

60%

80%

100%

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

Re

ven

ue

PA

T

Mca

p

PA

T

Mca

p

Auto Banking Cement ConsumerFMCG

ConsumerDurables

Engineering IT Mining &Metal

Oil & Gas Pharma Sensex

Sectoral CAGR FY03-08 (%)

Source: BSE, AAA Research

Sensex Net profit CAGR: 25.0%Sensex Returns CAGR : 38.7%

Market Cap Returns > Net Profit Growth

17

0

2

4

6

8

10

12

14

16

BSE Auto BSE Banking BSEConsumer

Durable

BSE CapitalGoods

BSE FMCG BSEHealthcare

BSE IT BSE Metal Sensex

5.3x

6.6x

3.3x 3.2x 2.7x

8.7x

15x

7x

5.1x

Source: BSE

Sensex went up by 5.1xCyclical indices went up by 5-15x

Dissecting The Economic Recovery Of FY03-08

18

Focus On Stock Earnings Growth - Earnings Growth To Bounce Back

19

Source: Bloomberg , AAA Research

81 129181

250 266 291 278 280216 236 272

348450

523

718833 820 834

10241124

1183

1340135513401353

1516

1789

FY93

FY94

FY95

FY96

FY97

FY98

FY99

FY00

FY01

FY02

FY0

3

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

E

FY19

E

FY93-96EPS CAGR 45%

FY96-03: EPS CAGR 1%

FY03-08 EPSCAGR 25%

FY08-16 EPSCAGR 6.1%

FY17-19E EPSCAGR 15.0%

Sensex CAGR -1.4%

Sensex CAGR 38.7%

Sensex CAGR 6.2%

SensexCAGR

??

Sensex CAGR 13.9%

After reporting single digit earnings growth (FY08-17), Sensex is expected to report healthy double digit growth (FY17-19E)

Earnings growth critical for returns

20


BSE500 universe ex PSU Banking and Loss making companies

3 years 5 years 10 years

Net ProfitCAGR (%)

(Mar-17/Mar-14) (Mar-17/Mar-12) (Mar-17/Mar-07)

No of CompaniesMarket Cap

CAGR (%)No of Companies

Market Cap CAGR (%)

No of CompaniesMarket Cap

CAGR (%)

80% + 11 35.6% 7 32.1%

50-80% 25 55.6% 13 36.6% 10 57.5%

30-50% 43 39.1% 40 38.6% 40 33.0%

20-30% 49 38.1% 57 25.6% 71 21.3%

15-20% 40 28.9% 35 22.1% 60 17.4%

10-15% 41 13.5% 37 15.9% 65 13.6%

5-10% 31 13.2% 50 15.3% 49 12.6%

0-5% 40 13.0% 33 11.6% 31 3.8%

0-(-20)% 67 5.8% 84 3.4% 45 1.2%

Total 347 356 371

NIFTY 11.00% 11.60% 9.20%

SENSEX 9.80% 11.30% 8.50%

No of companies 15%+ CAGR Net Profit

168 152 181

Big Events during last three years

21

China Slowdown – Fall in commodity prices

China – Yuan Devaluation

BrExit – Europe Slowdown

US election – Donald Trump elected against prediction

Demonetization Impact

Uncertainty in the short term creates opportunity in the long term

Market Valuations

22

Sensex @31284 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E

EPS (Rs) 821 826 1,013 1,123 1,185 1,340 1,355 1,340 1,353 1,516 1,789

EPS G(%) -1% 1% 23% 10% 6% 13% 1.1% -1.1% 1.0% 12.0% 18.0%

BV (Rs) 4,441 5,101 5,944 6,842 7,790 8,862 9,540 10,143 10,684 11,290 12,006

P/E(x) 29.0 27.4 24.3 23.1 23.3 23.1 20.6 17.5

P/BV(x) 4.8 4.2 3.7 3.3 3.1 2.9 2.8 2.6

ROE(%) 18.5% 16.2% 17.0% 16.4% 15.2% 15.1% 14.2% 13.2% 12.7% 13.4% 14.9%Source: Bloomberg, AAA Research

7

12

17

22

27

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

Sep

-12

Sep

-13

Sep

-14

Sep

-15

Sep

-16

Sep

-17

P/E Fwd (x)

P/E Fwd(x)


1.3

1.8

2.3

2.8

3.3

3.8

4.3

4.8

5.3

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

Sep

-12

Sep

-13

Sep

-14

Sep

-15

Sep

-16

Sep

-17

P/B Fwd (x)

P/B Fwd(x)

Mean 2.6x

Mean 17.4x


The people running the show at AlfAccurate Advisors

23

The AlfAccurate Advisors Team

24

Rajesh Kothari Govind Agrawal

Founder and Managing Director Director

Bhushan Koli

Head Operations and Compliance

Bhushan Koli

Award Winning Investment Team

Mr. Rajesh Kothari – Managing Director (Grad CWA, MBA)

➢ Rich experience of more than 23 years in Indian capital market

➢ Expertise in both Long Only & Long Short investment strategy

➢ Former Director with Voyager Investment Advisors (US$500m) – USA based India dedicated

fund for two and half years

▪ During his tenure, fund Outperformed the benchmark indices significantly

➢ Former Fund Manager with DSP Merrill Lynch (now DSP Blackrock) Fund Managers Ltd for

more than four years

▪ During his tenure equity assets under management grew from USD100m to USD1.5bn

▪ The schemes delivered annualized return of 55% (Equity Fund) & 62% (Top100 Fund) outperforming

benchmark indices by more than 20% & 10% respectively

▪ The equity schemes maintained its “1st Quartile Ranking” consistently during his tenure

25

Achievements:

➢ Received CMA Young Achiever Award 2014

➢ Rated as “Platinum Fund Manager” by Economic Times for DSP ML Equity Fund on a risk-adjusted return

basis in July 2006

➢ Rated as “Gold Fund Manager” by Economic Times for DSP ML Balanced Fund on a risk-adjusted return

basis in July 2006

➢ CNBC TV18 - CRISIL Mutual Fund of the Year Award 2006 for DSPML Equity Fund

➢ Lipper India Fund Awards 2006 for best equity fund group for 3 years

➢ DSPML Technology.com Fund - best fund in the equity sector in the IT category (5 years, 8 eligible schemes)

➢ He was invited at Maharashtra Economic Summit to present views on Indian Infrastructure

(http: //maharashtrasummit.mieda.in/Program.aspx)

➢ Invited by Institute of Directors to present views on Governance Deficit

➢ Invited by World Council for Corporate Governance to present views on Governance

➢ Elected on the advisory panel of World CSR forum.

➢ Actively involved with Arham Yuva Group - a philanthropic initiative


26

Glimpses Of Superior Performance To Benchmark Index

27Note: Past performance may or may not be sustained in future

Consistent Superior returns to Benchmark Index

*(FY10 is from 23 Nov 2009 - 31 Mar 2010)#(01 Apr 2017 – 30 Sept 2017)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

FY03 FY04 FY05 FY06 Jun06-Dec08

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18YTD#

Funds managed by Rajesh BSE 500 Index

27.0% CAGR

13.6% CAGR

Rs 10,000 invested in Mar02 is worth presently Rs 3,08,120

-6.0

133.0

38.9

84.7

5.8 5.6 18.6 9.6 11.229.0

71.7

2.528.2 16.7

-11

85

17

70.5

-7.9

3.9 7.5

-9.1

4.817.1

33.2

-7.8

24.0 7.7

-50

0

50

100

150

FY03 FY04 FY05 FY06 Jun06-08 FY10* FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18YTD#

DSP MerillLynch MF Voyager AlfAccurate Advisors

Funds Managed by Rajesh Benchmark Index

Mr. Govind Agrawal – Director (FCA – Chartered Accountant, LLB)

➢ Rich experience of 29 years in finance out of which last 23 years in Indian capital market

➢ Former Fund Manager with Reliance Capital Asset Management Company (USD 20bn) for over

four years.

▪ Reliance Emergent India Fund (USD 100m offshore fund) outperformed benchmark indices by 35% since

its inception.

▪ Travelled intensely across globe to meet the investors and presented the firm for India and Emerging

Market as Investment Theme

▪ Played instrumental role in setting up Macro Economic Research desk

➢ Former Executive Director with UBS Securities India Pvt Ltd, a Swiss Bank subsidiary, for 4 years

▪ Responsible for India Account Manager for large FIIs

▪ Guided the portfolio managers for right country, sectors and stocks weightings


28

➢ Former Senior VP – Equity Sales with Motilal Oswal Securities Ltd for 10 years

▪ Played key role in establishing institutional equity broking business, systems and processes

▪ Was account manager for major institutional domestic and foreign accounts advising the clients on sectoral allocation

and stock selection

Achievements

➢ Represented Reliance AMC on international platforms and panel discussion on Emerging Markets and Indian

Equity Market

➢ Addressed investors’ meet and the private banking teams of large banks in Middle East, Asia, London,

Europe and in India

➢ At UBS, was voted as the “Best Equity Sales Person‐Mega Funds category, Asia Money 2006”

➢ Won several awards at Motilal Oswal for consistently contributing to Institutional Equity Sales

29


The AlfAccurate Advisors philosophy

30

AlfAccurate Advisors

To be the world’s most admired investment advisor

We are specialists in Indian capital markets with combined experience of 70+ years

Protect Capital , Create Wealth

31

Our Guiding Principles

Ambition

Entrepreneurship

Accountability

Passion

Excellence

Commitment

Teamwork

Integrity

Meritocracy

32

Investment Philosophy...

33

Fundamental Research core ofour investment management

Long Term Horizon

Constant endeavor to be ahead of the Market

Emphasis on value research Vs commodity research

Benchmark aware but not driven

Flexible investment style

Focus on margin of safety

Combined With Investment Discipline...

Parameter Rules Current Position

Cap Exposure At least 50% in Mega & large cap (More than USD1bn) 53.0% invested in Mega & Large cap

Sector Weightage Not more than 30% in one sector Maximum exposure in a given sector is 19.4%

Stock WeightageNot more than 10% in a given stock and not more than 50% in the top 10 Stocks

Maximum Exposure in a given stock is 3.9%. Top 10 stocks as percentage of portfolio is 29.6%

Number of Stocks Minimum 30 Stocks 52 stocks

Stock Universe 450 Corporates 450 Corporates

Number of Stocks: 52Number of Sectors: 15Top 10 Stocks as % of portfolio: 29.6%Data as on 30 Sept 2017 34

37%

16%

34%

10%2%

Portfolio Allocation

Mega Large Mid Small Cash

Sector Allocation

Agri Input Auto Auto Ancillary Banking

Cash & Cash Equivalent Cement Chemicals Consumer

Engineering Others Pharma Power

Real Estate Retail Software Textiles

Leading To Superior Performance

Performance (%)FY18YTD#

FY17 FY16 FY15 FY14 FY13 FY12 FY11 Since Inception*

AAA India Opp. Plan 16.7 28.2 2.5 71.7 29.0 11.2 9.6 18.6 418.3

BSE 500 Index 7.7 24.0 (7.8) 33.2 17.1 4.8 (9.1) 7.5 104.4

BSE Sensex 5.6 16.9 (9.4) 24.9 18.8 8.2 (10.5) 10.9 82.1

CNX Nifty 6.7 18.5 (8.9) 26.7 17.9 7.3 (9.2) 11.1 91.8

*(23 November 2009 – 30 September 2017)(Management fees adjusted); #(01 April 2017 – 30 September 2017)

AAA India Opp. plan consistently not only outperformed but also generated Positive return in volatile markets

Note: Returns of individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments

35

18.69.6 11.2

29.0

71.7

2.5

28.216.7

7.5

-9.1

4.8

17.1

33.2

-7.8

24.0

7.7

-20

0

20

40

60

80

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18YTD#

AAA India Opportunity Plan - Equity Vs BSE 500 Index (%)

AAA India Opportunity Plan - Equity BSE 500 Index


36


37

AAA India Opp Plan ranks # 1 compared with 141 diversified funds of each reputed fund house

Average Monthly Rolling Returns Since Inception(%)


Compounded Annual Returns (%)

1 YEAR 2 YEARS 3 YEARS 5 YEARS Since Inception*

AAA India Opp. Plan 23.4 20.2 22.9 27.3 23.4

BSE 500 Index 16.3 13.9 10.2 13.6 9.6

BSE Sensex 12.3 9.4 5.5 10.8 8.0

CNX Nifty 13.7 11.0 7.1 11.4 8.7

*(23 Nov 2009 – 30 Sept 2017 )(Management fees adjusted)

*Since Inception (23 Nov 2009 – 30 Sept 2017 )(Management fees adjusted)

Performance Vs leading Mutual Funds Since Inception(%)

24.426.1 25.7

10.1 10.7 10.5

0

5

10

15

20

25

30

1 Year 3 year 5 Year

AAA India Opp. Plan BSE 500 IndexSource: Bloomberg

418.3

225.9

162.7131.3

78.5104.4

82.1 91.8

AAA IndiaOpp.Plan*

Quartile 1 Quartile 2 Quartile 3 Quartile 4 BSE 500Index

BSESensex

CNX Nifty

38

Risk Analysis : AAA IOP PMS Performance Compared To Benchmark

Parameters How to read ratioAAA IOP

PMSBSE500 Index

AAA IOP PMS performance

BetaLess than 1 beta is good sign as it denotes lower volatility of the

portfolio0.85 1.0

Beta of 0.85 shows AAA PMS has lesser volatility compared to BSE500 Index

Sharpe Ratio Excess return per unit of

deviation. Higher the Sharpe ratio, better it is.

1.2 0.2Top Performing Midcap MFs have Sharpe Ratio 0.75+. AAA IOP PMS Sharpe ratio is

one of the best in the industry.

Standard DeviationStandard deviation denotes

amount of variation14.2 15.0

AAA IOP SD is less than Benchmark as well as peer group which shows portfolio has

lower risk

Upside capture It denotes overall performance

of PMS during up markets. 160.8 100.0

Upside capture ratio of more than 100 indicates that fund has outperformed Benchmark during positive markets.

Downside captureIt denotes overall performance of PMS during down markets.

78.3 100.0Ratio of less than 100 indicates, fund has

outperformed Benchmark during negative markets.

Capture Ratio

Capture ratio >1 indicates, Investment Manager has gained

more during up (positive) markets and lost less during

down (negative) markets.

2.05 1AAA PMS 2.05 capture ratio is healthy as

it protected capital during negative markets and building wealth consistently.

Data is analysed since inception of AAA IOP PMS data i.e. 23 Nov 2009 - 30 Sep 2017

AAA IOP PMS Rolling Return Analysis

39


Since Inception (23 Nov 2009 – 30 Sept 2017) (Management fees adjusted)

Monthly Rolling Returns Analysis(%)

AAA IOP 1 Year

BSE500 Index 1 Year

AAA IOP3 Years

BSE500Index 3 Years

AAA IOP 5 Years

BSE500 Index 5 years

No of obervations 84.0 84.0 60.00 60.00 36.00 36.00

No of Positive Observations 78.0 63.0 60.00 54.00 36.00 36.00

No of Negative Observations 6.0 21.0 0.00 6.00 0.00 0.00

Loss Probability (%) 7.1% 25.0% 0.0% 10.0% 0.0% 0.0%

Average Returns (%) 24.4% 10.1% 26.1% 10.7% 25.7% 10.5%

Median Returns (%) 18.5% 7.3% 29.1% 12.2% 25.5% 10.2%

Maximum Returns (%) 88.8% 51.3% 41.0% 22.9% 30.6% 16.0%

Minimum Returns (%) -13.8% -27.4% 6.2% -4.2% 21.9% 5.6%

➢ AAA has delivered average returns of 24.4%, 26.1% and 25.7% for 1 year, 3 years and 5 years respectively on monthly rolling return basis

➢ Negative returns for 3 years and 5 years rolling periods are 0

Note: Equity return scenarios are assumed expected returns.

The Power Of Compounding – A Scenario Analysis

40

Scenarios based on investment of Rs 5 Crores

The real power of compounding is seen only over the long term

12% CAGR 15% CAGR 20% CAGR

30Yrs

150 Cr

9 Cr

20Yrs5Yrs 10Yrs

16 Cr

48Cr

331 Cr

20 Cr

5Yrs

82 Cr

20Yrs 30Yrs10Yrs

10 Cr

10Yrs 30Yrs

717 Cr

20Yrs

137 Cr

26 Cr

5Yrs

11 Cr

30Yrs20Yrs

1,187 Cr

5Yrs

31 Cr

192 Cr

10Yrs

12 Cr

18% CAGR

Why We Should Be Your Choice Of Investment Advisory

41

Strong domain knowledge in Indian Capital markets

Expertise in both – Long Only and Long Short Investment Strategy

Sound Research capabilities

Award winning investment team and track record Process driven organization

Adequate infrastructure to support scalability

Integrity and ethics as the core of the business

Access to Founders – founders are fund managers

Staggered investment approach

Client centric business model

No conflict of interest

Product Features

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Name of plan AAA India Opportunity Equity PMS Plan

Objective Long Term Capital Appreciation

Investment ThemeTo invest in listed companies with combination of high growth stocks as well as value stocks

Principal Officer Rajesh Kothari

Director Govind Agrawal

Custodians Deutsche Bank, India

Fund Accountant Deutsche Bank, India

Depository Participant IL&FS, India

Mode of payment Fund transfer/cheque/stock transfer

Awards and Recognitions

43

Dr. Jitendra Singh, Union Minister of State (I/C), Prime Minister Office, giving Certificate of Merit – CMA Young Achiever Award – 2014

Lipper Fund Award – India 2007

44

Thank You Rajesh KothariT: +91 22 42360301M:+91 98200 [email protected]

Govind AgrawalT: +91 22 42360 311M: +91 93208 [email protected]

AlfAccurate Advisors Pvt. Ltd503, B Wing, Naman Midtown,Elphinstone Road, Mumbai - 400 013, IndiaT: +91 22 42360300; F: +91 22 42360333 [email protected]

Disclaimer: Equity Investments are subject to market risks , read all plan related documents carefully. This document is not for public distribution and has been furnished to you solely foryour information and may not be reproduced or redistributed to any other person. This material is for the personal information of the authorized recipient. The material is based uponpublicly available information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon. Opinions expressed are our currentopinions as of the date appearing on this material only. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject tochange without notice. Past performance may or may not be sustained in future. No part of this material may be duplicated in any form and/or redistributed without AlfAccurate AdvisorsPvt Ltd.'s prior written consent. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot beguaranteed. Alfaccurate Advisors Pvt. Ltd and any person connected with the firm, does not accept any liability arising from the use of this document.

Contact us:

http://www.alfaccurate.com/

mailto:[email protected]

mailto:[email protected]

http://www.alfaccurate.com/

capital t e wealth - alfaccurate advisors · 2018-11-23 · india gdp for q1 came at 5.7%, slowest...

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