WHY INDIA
The Indian economy took 70 years to reach to
US $2.5 trillion,and it is expected that it will take only 7-8 years
more to reach US $5.0 trillion
Last 70 Years Growth = Next 7 Years Growth
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WHY INDIA
DEMOGRAPHICS
• 94% <65 (median 28)
•World’s largest middle class by2050
• 3rd largest consumer market by2030, with consumption growthfrom USD 1.5 to 6 trillion
GLOBAL WORKFORCE
• 2nd largest English speakingpopulation
• Top country for cost-efficientcontingent workforce
•Workforce is estimated to growby 8 million people annually for the next 15 years
GDP
•USD 2.7 trillion atpresent
• Estimated annualgrowth of 7.5% or more in next decade
• 3rd largest economy by2031
• India is forecasted to have the strongest GDP growth of any emerging economy over the next 10 years.
• Stronger public equity sector with much smaller share of state-owned enterprises than China.
• India is where China was in 2000, based on similar GDP per capita profiles.
• India is poised to surpass UK by end of 2018 and Germany by 2022 to become the 4th largest economy.
• India is already the world’s fastest growing telecom market.
• The 4th largest pharmaceutical industry. More than 1 in 3 pills consumed in US are manufactured by an Indian company.
• The 5th largest commercial vehicle manufacturer.
7.16.7
1.51.8
3.2
6.7 6.8
2.3 2.4
3.2
7.4
6.6
2.72.2
3.9
8
6
32
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India* China USA European Union World
2016
INDIA REPLACES CHINAA s E n g i n e o f G l o b a l G r o w t h
2017 2018 2019 ( Y e a r - o n - Y e a r i n % )
* F o r I n d i a , d a t a f o r e c a s t s a r e b a s e d o n f i n a n c i a l y e a r ( A p r i l - M a r c h ) b a s e s
Global Domestic Product (GDP)
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I N D I A ’ S L O N G T E R M G R O W T H T R E N D
India’s ability to achieve rapid, sustainable development will have profound implications
for the world.
India is in a period of unprecedented opportunity, challenge and ambition in its development.
D E F E N S E R A I L W A Y S I N S U R A N C E
M A K E I N I N D I AG O O D S &
S E R V I C E S T A X D E M O N E T I Z A T I O N
POLITICAL REFORMI N D I A N
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V I K A S A Leadership
Roshan oversees all management decisions at VIKASA Capital. He has a background in international business.
ROSHAN PUJARIFounder & CEO: OKC
Chris oversees all operations at VIKASA. He has a background in
new product implementation.
CHRIS LUZINEChief O perat ing O ff icer : N YC
Manish serves as Head of Business Development
MANISH SINGLA Head of Bus iness Developm ent :
U .S
MAGGIE CLAYTONChief Adm inistrat ion Off icer : OKC
Maggie works directly with the CEO and oversees all administrative and
financial activities for the entire VIKASA Capital team.
Dhritiman serves on investment committee.
DHRITIMAN HUI Advisor : S ingapore
V I K A S A T e a m
RANI PUJARIFund Accountant: India Rani serves as Fund Accountant for
VIKASA Capital Advisors India.
RAKHEE HERRALOLLFund Manager:
Maurit ius Rakhee serves as Investment
Analyst in addition to her role as Fund Manager.
Michael serves as System Admin and Marketing Director.
MICHAEL THOMPSONIT/Systems Administrator: OKC
Anousha serves in a business development capacity for VIKASA.
ANOUSHA MOHON Business Development
Manager: Maurit ius
Kiran is an associate for VIKASA Capital Advisors India.
KIRAN SHRIVASTVAAssociate: India
Prateek serves as regulatory and compliance advisor, India.
PRATEEK AGRAWAL Business Development
Manager: Mumbai
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ANUPAM AGARWALPrivate Equity Advisor:
India
RONISH OOGARAH Fund Manager:
Maurit iusRonish serves in a research and investment management role
for VIKASA.
Anumpam serves as an advisor in India.
Lindsey serves as Office Manager in OKC.
LINDSEY FLOWERSOffice Manager: OKC
O U R P A R T N E R S
VIKASA India EIF I Fund
Ø INVESTMENT MANAGERVIKASA Capital Advisors VIKASA Investment Management
Ø ADMINISTRATOR Apex Fund Services
Ø BANKER Bank of Oklahoma State Bank of Mauritius YES Bank
Ø AUDITOR KPMG
Ø BROKERSEdelweiss Sec | Motilal Oswald Indian Infoline | IDFC
Ø CUSTODIAN Edelweiss Custody
Ø TAX CONSULTANT GS Nayak RWJ-CPA
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U.S.
Mauritius
India
Accredited US
Investors
VIKASA India Fund
FPI Category 2
Eligible Investments
Eligible Investments
Eligible Investments
VIKASA Capital Advisors India
Investment Advisor
VIKASA Capital Advisors
Investment Advisor
International Investors
(non US / non India)
VIKASA Global Equities LPBroad Based,
Delaware Limited Partnership
VIKASA India Fund Mauritius GBC-1 =
VIKASA Investment Management Ltd
Fund Manager-Mauritius
VIKASA Custody Account
(Edelweiss)
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InvestmentObjective
The Portfolio seeks long-term capital
appreciation through exposure to
securities listed on the Bombay Stock
Exchange:
BSE 30 and BSE 500.
To build a portfolio of fast growing
high quality companies.
The Fund focuses on investing in
businesses with strong earnings
growth, cash generating, high ROCE
(Return on Capital Employed ) and
ROE (Return on Equity), low D/E (Debt
to Equity ratios) and attractive
valuation relative to its peers.
The Portfolio invests primarily in equity
and equity-related instruments of
Indian companies.
The Portfolio invests in securities
selected on the basis of Enhanced
Index approach.
The Enhanced Index approach is a
way of capturing the strength of
indexing while maintaining flexibility
to adapt to the changing market
conditions on both a macro and micro
level.
InvestmentStrategy
VIKASA INDIA EIF I FUND
InvestmentPhilosophy
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INVESTMENT PHILOSOPHYV I K A S A
• The Fund invests up to 80% in a passive strategy mirroring the BSE Sensex
PASSIVE INDEX APPROACH
ALPHA GENERATION THROUGH ACTIVE APPROACH
A
B
• Up to 20% of the portfolio is traded actively
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INVESTMENT PHILOSOPHYV I K A S A
Macro Themes Company Filters ValuationIndustry Potential – Ability to
grow XX % in next 10 yearsCompanies which either are market leaders or expected
to be leaders in their segment
Revenue GrowthROI>WACC
Debt to Equity
Select Sectors catalyzing GDP and growing faster than GDP – create Alpha
Business Growth – Ability to grow 15% CAGR over next 5
years
Price to Earning Ratio (P/E)Pledge of Shares
Strong Management
Market Potential MOAT Undervalued Stock
B
O
T
T
O
M
U
P
T
O
P
D
O
W
N
IDEA STIMULATION, RESEARCH AND RISK CONTROL
ALPHA GENERATION APPROACHB
Strategy ConstructV I K A S A
≥10 ≥20 ≥30 ≥40Number of Stocks in a portfolio
≥20% ≥35% ≥50% ≥65%Large Cap Allocation
≤5% ≤10% ≤15% ≤20%Per Stock Allocation
Sector Allocation
InvestmentHorizon
EXIT Strategy (% returns)
≤5% ≤15% ≤25% ≤35%
≥3 Years ≥5 Years ≥7 Years ≥10 Years
≥10% ≥15% ≥20% ≥25%
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SECTOR SELECTION
On a monthly basis, 10 year average trailing PE is monitoredto check for any discount. Upon discount, further analysis iscarried on specific stock to check against the sector PE inorder to determine the target multiple.
For example, the auto sector is trading at a PE of 18.5x, at apremium to its historical average of 15.8x. Further analysis,revealed that the Tata Motors is trading of 26% to its 10 yearaverage. However, same has not been overweight in theoverlay section as it has flaws in the other financial metrics.
Nov 18 witnessed further weakening of demandmomentum in the auto segment led by deferral inpurchase decisions and stringent financing terms by NBFCsthus dampening auto sector segment.
V I K A S A
Rationale for Sector Valuations
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P E R F O R M A N C E N o v 2 0 1 9 Y T D 2 0 1 8 S I N C E I N C E P T I O N
VIKASA India EIF I Fund
BSE SENSEX
0.04%
0.69%
9.84%
9.64%
-4.98%
-2.81%
34.25%
27.52%
T O P 1 0 H O L D I N G S ( % )
Reliance Industries Limited
HDFC Bank Ltd - FII
Housing Development Finance Corp. Ltd
ICICI Bank Ltd
Tata Consultancy Services Ltd
12.75%
12.19%
9.72%
7.16%
6.07%
Infosys Limited
Larsen & Toubro Limited
ITC Ltd
Bajaj Finance Limited
Kotak Mahindra Bank Limited
5.05%
4.90%
4.53%
4.22%
4.09%
F U N D F A C T S
Dealing Frequency.
Investment Advisor
Benchmark
Inception Date
Custodian
Administrator
Auditors
Valuation Day
Dealing Day
Load Fee
Exit Fees
Management Fee
Monthly
VIKASA Investment Management Ltd.
S&P BSE SENSEX
2nd September 2014
Edelweiss Custody Services
Apex Fund Administrators
KPMG
Last business day of the month
First business day of the month
Nil
Nil
0.85%
VIKASA INDIAEIF FUND 1
Fund Factsheet:
November 2019
NAV 134.25
SECTOR ALLOCATION
Asset Allocation
Equities: 97.59%Cash: 2.41%
Financials 44%
Information Technology 13%
Energy 14%
Consumer Staples 11%
Consumer Discretionary 6%
Industrials 5%
Materials 2%
Others 2%
Health Care 1%
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Quarterly Analysis Highlights- QoQ(Sep’18/Jun’18)
7.74%
Net Sales
13.79%
Cons Net Profit
13.91%
PBDIT
INFOSYS LTD
• Global leader in technology services & consulting.
• Segments: Financial Services, Manufacturing,Retail, Consumer packaged goods and Logistics,the Energy & Utilities, Communication & Services,Hi-Tech, Life Sciences, Healthcare & Insurance .
• INFO’s 4.2% QoQ CC growth beat expectations of3.5%, marking yet another quarter ofimprovement. However, margins remained flaton account of higher subcontracting and highervariable pay to stem attrition.
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• India’s largest IT services company, now one of theworld's 100 most valuable firms by market valuation.
• Segments: Banking, Financial Services, & Insurance;Manufacturing; Retail & Consumer Business;Communication, Media, & Technology.
• TCS expects to grow in double-digits for the remainderof the year.
• TCS is expected to see continued ramp-up of recentlywon deals
7.57%
Net Sales
7.64%
Cons Net Profit
13.31%
PBDIT
Quarterly Analysis Highlights- QoQ(Sep’18/Jun’18)
TATA CONSULTANCY SERVICES
RelianceIndustries
• India’s largest private sector enterprise, with businesses in the energy and materials value chain. Also engages retail business and telecommunications.
• Core business include hydrocarbon exploration and production, petroleum refining, petrochemicals and oil and gas-related operations.
• Represents 10% of the portfolio.
• YOY growth led by• High oil price (+44.5% YoY)• Higher volume in petrochemicals YoY (9.4 MMT vs. 7.9 MMT)• Solid growth in Retail (+121%), Jio (+52%)• Robust segment EBITDA growth of 23% YoY• Record petrochemical EBITDA of ₹ 9,477 crore• GRM $ 9.5/bbl.• Retail EBITDA up 3x YoY to ₹ 1,392 crore
Ø Jio EBITDA ₹ 3,589 crore, up 145% YoYRELIANCE INDUSTRIES
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LARSEN & TOUBRO
• Larsen & Toubro is a US$13.5 billion technology,engineering, construction and manufacturingcompany, with global operations.
• Revenue growth came in healthy at INR321b (+21%YoY). Key segments driving growth wereHydrocarbon (+38% YoY), Infrastructure (+22%YoY), IT (+32% YoY) and Finance (+35% YoY).
Quarterly Analysis Highlights- YoY (Sep’18/Sep’17)
21.30%
Net Sales
22.56%
Cons Net Profit
24%
PBDIT
39%56%
ICICI BANK
• ICICI Bank Ltd is India’s 2nd largest bank.
• Represents 5% of the portfolio.
Quarterly Analysis Highlights- YoY (Sep’18/Sep’17)
12.4%
Net Interest Income
Net Profit Non Interest Income
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AXIS BANK
• Axis Bank Ltd has been promoted by the largest and the best financial institution of the country, UTI. The bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence.
• Represents 3% of the portfolio.
18.21%
Interest earned
82.62%
Net Profit
8.38%
PBDIT
• Asset Quality metrics improve• Core financial performance remains healthy• Strong Retail franchise continues to deliver• Domestic Loan growth was healthy• Capital Ratios remain healthy to pursue growth opportunities
Loan Mix(As on Sep 30, 2018)
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BAJAJ FINANCE
Quarterly Analysis Highlights- YoY (Sep’18/Sep’17)
• Bajaj Finance is the financial services arm of the Bajaj group with business interest in Lending and Protection and Retiral through its various subsidiaries.
• It reported 2QFY19 PAT of INR9.23b beating street’s estimates. The quarter witnessed strong AUM growth of 38% YoY, benefit of operating leverage with operating profit growth of 53% YoY and lower credit cost of 130bp.
• The NBFC’s Gross Non Performing Assets(%) improved 20bp YoY to 1.5% with coverage ratio at 65%. Spreads were stable YoY at 8.7%.
• The Company continues its strong business performance driven by addition of new product lines, geographic expansion and diversification of liability mix. Growth and profitability have remained despite increased competition, while asset quality has been stable. The Company continues to be well capitalized to support its strong growth.
• The counter corrected above 25% to hover its book price in October following the liquidity crunch of IL&FS. Bajaj Finance was acquired with an average book price of INR 2194 in October with a target price of INR 3000
39.51%
Net Sales
54.46%
Cons Net Profit
44.47%
PBDIT
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BRITANNIA INDUSTRIES
• One of the largest brand in India, engages in the manufacture and trade of food products.
• The company has launched various brands in biscuits, bread, cake & rusk like Tiger, Good day, Britannia Treat, Marie & many more.
• Size-Ranks 5th out of 87 companies in FMCG sector.
• Represents 2% of the portfolio.
• Sustained strong growth in volumes, strong pace of new launches and continued cost efficiencies.
Quarterly Analysis Highlights- QoQ(Sep’18/Jun’18)
17.33%
Cons Net Profit
12.96%
Net Sales
16.69%
PBDIT
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THANK YOU
VIKASA Disclaimer: The information contained herein is confidential and proprietary. It is provided for informational purposes only, and is not complete. It does not contain certain material information about making investments in securities, and does not include
important disclosures and risk factors. All securities transactions involve substantial risk of loss, including the risk of total loss of investment. Under no circumstances does the information in this report represent a recommendation to buy or sell stocks, limited partnership
interests, or other investment instruments. Investments carry a risk of capital loss. Emerging markets may carry a higher than average risk of investment.
This is neither an offer to sell nor a solicitation of any offer to buy any securities in any fund managed by VIKASA nor shall there be any sale of a security in any jurisdiction where such solicitation or sale would be unlawful. The information contained in this material or
otherwise provided to you is provided for information purposes only. Data as of November 2019.
C H R I S LU Z I N E
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