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“One false move and… !”

India Strategy | February 2015

February 2015 3

One false move and..!

India Strategy | February 1st, 2015

Foreword

Dear Investor,

It’s been a month since I last wrote to you. Trust your clients and you, enjoyed the large cap

rally in January.

Encouraged by the good response on the white-labelled advisory note – Alpha Edge, first released in January , my team has made the note for February, interestingly titled – “One false move, and..’. as we believe the global and domestic markets are at a very critical juncture. We join you in hoping that the new Government has utilised their honeymoon period to plan well and launch us into a believable long-term growth trajectory. I am happy to share that our Conservative, Moderately Conservative and Balanced MF Model portfolios have out-

performed their benchmarks well despite being modestly under-weight in equities. As for our Citadelle - Growth

Opportunities Portfolio, it has outperformed all the 182 equity funds that we tracked in January. Probably it’s the

proverbial ‘beginner’s luck’. Time shall tell. You can find the initial mention of the underlying stocks in our January

strategy note here and the performance details of the 182 funds here. We continue to retain all the holdings as we

speak.

You may also find our “Threadbare” section that begins to cover all funds in our model portfolios. We started with an

interview of BNP Paribas Midcap Fund, Mr Shreyas Dewalkar and found some encouraging and interesting things

about the funds style and his approach to manage it. As a first, we have analysed the multi-baggers created in the

fund over time. Further we have estimated the potential returns of this portfolio assuming that the Industry’s FY 16

profit estimates come true and the fund managers retains his view on his present holdings. A useful insight, I hope, to

make forward looking statements to clients than recommend by looking back in time alone.

WE are hoping that the current internal Alpha Testing phase, which I believe will be complete by mid-March and

should be available for end users` Beta testing thereafter. We are relentlessly working to deliver a platform that shall

make YOU the star in front of your client.

I once again thank you for allowing us to stay in touch.

Warm Regards,

A V Srikanth

https://gallery.mailchimp.com/0df9ced5fe165c9cbfd02d4cb/files/Alpha_Edge_January_2015.pdf

https://gallery.mailchimp.com/0df9ced5fe165c9cbfd02d4cb/files/Citadelle_Growth_Opportunities_Portfolio_vs_Equity_MF_performance_for_Jan_2015.xlsx

February 2015 4

Alpha Edge | One false move and..!

Asset Class performance

Asset Class returns for January 2015

Source: Bloomberg

Equity has been the best performer for January 2015 with returns of 6.4% followed by Gold with a performance of 2.4%. Long term debt has been the relative laggard with returns of 2.1%, despite the rate cut in Jan. This, due to expectations being partially built in.

FII Flows in January 2015

Source: Bloomberg

Flows have continued to be buoyant in Equities and Debt markets in the January 2015. Equities saw Net Inflows of Rs 12,364 Crs whereas Debt market has seen a whooping net inflow of Rs 20,706 Crs.

Sector Returns

Source: Bloomberg

Realty, Capital goods and Consumer Durables have

been outperformers for January 2015. Metals, PSUs and

Oil & Gas have been the laggards during the same

period.

6.4%

2.1%

0.7%

2.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Equity 10 yrTresuries

Cash Gold

Asset Class Returns For January 2015

47 3771

-53

83133

-3

128 113 97

12

-6

4

9

12

5

46

42

35

-51

160

21

-100

-50

0

50

100

150

200

250

300

Dec

-05

Dec

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Dec

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Dec

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Dec

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Dec

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Dec

-11

Dec

-12

Dec

-13

Dec

-14

CYT

D

FII F

low

s (i

n `

00

0 C

rs)

Equity Debt

-5

0

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6

6

6

6

7

7

7

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16

-10 0 10 20

S&P BSE METAL Index

S&P BSE PSU

S&P BSE Small-Cap

S&P BSE OIL & GAS Index

S&P BSE Mid-Cap

S&P BSE TECk Index

S&P BSE IT

S&P BSE BANKEX

S&P BSE SENSEX

S&P BSE Power Index

S&P BSE FMCG

S&P BSE Health Care

S&P BSE AUTO Index

S&P BSE Consumer Durables

S&P BSE Capital Goods

S&P BSE Realty Index

Sector Returns for Jan 2015 (%)

February 2015 5


Global Macro

Inflation:

US

US annual inflation rate slowed to 0.8 % in December

from 1.3 % in the previous month. It is the lowest figure

since October of 2009 as the cost of energy plunged. On

a monthly basis, consumer prices dropped 0.4 %, the

biggest decline in six years.

Over the last twelve months, the cost of energy has

declined 10.6 %. The core inflation rate (less food and

energy) edged down to 1.6 % from 1.7 % in the previous

month. In contrast, food inflation continued its upward

trend rising 3.4 %, its largest 12-month increase since

February 2012.

Eurozone: That “D” Word ! Eurozone annual inflation rate was recorded at -0.2 % in

December, matching preliminary estimates. It is the first

fall in consumer prices since September of 2009, due to

a drop in energy cost. Signs of “D”eflation, is precisely

what’s keeping the European Central Bankers awake at

night. Presently they are busy throwing money at the

problem, forgetting its known diminishing utility at this

stage of the elusive recovery.

The biggest downward impacts on Euro area annual inflation came from fuels for transport (-0.53 %), heating oil (-0.17 %) and telecommunications (-0.08 %), while restaurants & cafés and rents (+0.11 % each) and tobacco (+0.07 %) had the largest upward impacts.

In December 2014, negative annual rates were observed in sixteen Member States. The lowest annual rates were registered in Greece (-2.5 %), Bulgaria (-2.0 %), Spain (-1.1 %) and Cyprus (-1.0 %). The highest annual rates were recorded in Romania (1.0 %), Austria (0.8 %) and Finland (0.6 %). Compared to November 2014, annual inflation fell in twenty-six Member States, remained stable in Sweden and rose in Estonia.

European Union inflation was -0.1 % MoM in December 2014, down from 0.3 % in November. A year earlier the rate was 1.0 %

China China's annual consumer inflation edged up to 1.5 % in

December from 1.4 % in the previous month. The

politically sensitive food prices accelerated to 2.9 % while

non-food cost rose at a slower 0.8 %.

For the year 2014, consumer inflation was recorded at 2

%, well below the government target at around 3.5 %. Interest Rates: US

The monetary tightening scare has been deferred for at least another month. Latest US wage data has again disappointed economists’ longstanding expectations that wages are about to get traction in America. Moreover, previous wage data was revised downwards. Thus, US average hourly earnings growth for private employees slowed from 1.9%YoY in November (revised down from 2.1%) to 1.7%YoY in December, the slowest growth rate since October 2012. Unless we see any traction in wage data, it will not be prudent to say that the American economy is nothing like as robust as the consensus assumes.

Source: Bloomberg

Eurozone

The ECB has launched an expanded asset purchase program, with combined monthly purchases of public and private sector securities of €60bn per month until the end of September 2016. To be precise, the Eurosystem will start to purchase euro-denominated investment-grade securities issued by euro area governments and agencies and European institutions in the secondary market in March. This asset purchase program is intended to be carried out until end-September 2016 and will be conducted until a sustained adjustment in the path of inflation consistent

0

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Mar

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-11

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-11

Mar

-12

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-12

Mar

-13

Sep

-13

Mar

-14

Sep

-14

US Employee hourly wage rate

February 2015 6


with ECB’s aim of achieving inflation rates below, but close to 2% over the medium term. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility were left on hold at 0.05 %, 0.30 % and -0.20 % respectively. Japan The Bank of Japan decided by an 8-1 vote to keep buying enough government bonds to boost monetary base at an annual pace of about 80 trillion yen. Policymakers said the economy continues to recover moderately as a trend, while an increase in year-on-year consumer prices is between 0.5 to 1.0 %, reflecting a decline in energy prices.

Currency: Global divergence

Central bank actions have been very mixed. The new Federal Reserve (Fed) Chair Janet Yellen brought an end to the Fed's quantitative easing (QE) program and signaled monetary tightening in 2015, all without significant market volatility. Meanwhile, the European Central Bank (ECB) loosened monetary policy and announced a €60bn a month QE till September 2016 or till achieving the targeted inflation of 2%. The Bank of Japan (BoJ) surprised most economists and investors in October by increasing its target of asset purchases to 80 trillion yen per year. Relative monetary policy stances drove currency divergence. The outperformance of the US economy and end of QE purchases helped drive the US dollar up against its main trading partners.

February 2015 7


Domestic Macro

Inflation

Dec-14 WPI inflation was marginally higher at 0.1%

against 0.0% in November. The current easing of

inflation is not just on account of the base effect, but

actual fall of prices across many categories. Signifying

the widespread nature of disinflation, the index fell

MoM for each major component within WPI; primary

articles (-1.3%), food articles (-1.9%), fuel group (-2.4%)

and manufacturing (-0.3%). Hence, the uptick seen in

food inflation (to 5.2% in Dec-14 from 0.6% during Nov-

14) was purely due to the base effect.

Whereas, Indian CPI inflation increased for the first time

in five months to 5% in December of 2014 from a record-

low of 4.3% the previous month and driven by higher

food prices.

Cost of food and beverages rose 5 %, accelerating from

a 3.5 % increase in November, provisional estimates

showed. The food index alone rose 4.78 % (3.14 % in

November). Cost of vegetables went up 0.58 % and fruit

prices increased 14.84 % (13.74 % in November). In

contrast, price decreases were reported for oils and fats

(-1.24 %) and sugar (-0.84 %).

Cost of fuel and light rose 3.41 % in December, slightly

up from 3.27 % in November and cost of clothing and

footwear slowed to 6.51 % from 6.97 % in the previous

month.

The corresponding provisional inflation rates for rural

and urban areas for December of 2014 are 4.71 % and

5.32 %.

Interest Rates

RBI cut its key policy rates by 25bp keeping with its

stated policy in Dec-14 to initiate rate cuts even in-

between scheduled policy events if the disinflationary

trend persists. The repo rate and the reverse repo rate

under the LAF stands adjusted to 7.75 % and 6.75 %

respectively, and the marginal standing facility (MSF)

rate and the Bank Rate to 8.75 %. RBI bi-monthly

monetary policy statement also stated that once the

monetary policy stance shifts, subsequent policy actions

will be consistent with this stance.

The rate cut should be seen as a windfall gift from the

deep leg-down in oil prices. The lion’s share of monetary

easing in 2015 and 2016 will hinge on what the

government does to alleviate structural bottlenecks in

India’s economy.

RBI’s Bi-monthly Monetary Policy Review

The Reserve Bank of India (RBI)

Kept policy repo rate under the liquidity

adjustment facility (LAF) unchanged at 7.75 %

Kept cash reserve ratio (CRR) of scheduled banks

unchanged at 4.0 % of net demand and time

liability (NDTL)

Reduced the statutory liquidity ratio (SLR) of

scheduled commercial banks by 50 basis points

from 22.0 % to 21.5 % of their NDTL with effect

from the fortnight beginning February 7, 2015

Replaced the Export Credit Refinance (ECR)

facility with the provision of system level

liquidity with effect from February 7, 2015

Will continue to provide liquidity under

overnight repos of 0.25 % of bank-wise Net

Demand and Time Liabilities (NDTL) at the LAF

repo rate and liquidity under 7 and 14-day term

repos of up to 0.75 % of NDTL of the banking

system through auctions

Will continue with daily variable rate term repo

and reverse repo auctions to smooth liquidity

Noted improved economic outlook including

expectations of i) CPI staying at 6% by Mar-16, ii)

FY16 GDP growth accelerating to 6.5% from

5.5% in FY15, iii) CAD staying lower at 1.3% in

FY15 and even lower in FY16 and iv) government

delivering on fiscal goals.

Gave no future guidance but later clarified that

the easier stance of Jan-15 would be carried

forward.

February 2015 8


Currency

As the WPI and CPI are on a downtrend due to falling oil

prices and steps taken by the new government - such as

cautious hikes in minimum support prices, checks on

hoarding and offloading excess grain stocks – this has

lowered food inflation to an average 7.5% this fiscal

(April-December) from over 10% in the last five. As a

result, even in the recent risk-off mode triggered by the

sharp fall in oil prices, and concerns over a Greek exit

from the European Monetary Union, the rupee has been

stable.

That compares with an over 50% decline in the Russian

Rouble, an almost 20% fall in Colombian peso, around

9% depreciation each in Mexican peso and Malaysian

Ringgit and nearly 8% fall in the Brazilian Real between

November 2014 and January 23, 2015. This has helped

India exit the pejorative club of ‘Fragile Five’ – Brazil,

Turkey, Indonesia, South Africa and India.

February 2015 9


Key concerns The three key concerns for India are:

Valuations look stretched on ECB QE

announcement and budget expectations

The growth cycle remains hesitant

Grexit – a catastrophic event?

Valuations look stretched on ECB QE

announcement and budget expectations: Nifty is up by 6.4% in January on ECB QE of 1.1 trillion euro

and budget expectations. The earnings are yet to pick up

momentum whereas the valuations have soared up to

22.5x from 21.0x at the end of January last year on TTM

basis due to exceptional performance from Nifty. We

have taken TTM for a change, as against forward

estimates that now look a tad too aggressive, in light of

the recent tepid growth in corporate results.

Source: Bloomberg

Source: Bloomberg

The growth cycle remains hesitant:

Source: Bloomberg

Though the earnings cycle seems to have bottomed

out, the momentum is yet to pick up. Revenues have

been passable for the last couple of quarters and the

current quarter results do not show much promise

either. We have covered the same in the later part of

the monthly note. The various levers ahead for

margin improvement are capacity utilization,

interest burden reduction and better working capital

management on economic ?. All of which will augur

well for earnings improvement going forward. RBI

changing its stance with a 25 basis rate cut in January

has made our case much stronger on the easing of

interest rates of 50 - 100 basis over the next 12 to 18

months. The easing in interest rates augur well to

corporates by reducing interest burden further and

adding to margins.

Important implications of the new GDP estimates:

Service sector contributes lesser now. Its

contribution has declined to 51.3% compared to 57%

earlier.

Contribution of Industrial GDP to overall Real

GDP has increased to 30.7% now (for FY14), compared to

24.8% earlier.

High frequency data will become unreliable to

depict actual growth

Lower growth for financial, real estate & business

services from 10.9% to 8.8% for FY13 and from 12.9% to

7.9% for FY14, also reflect inclusion of several financial

intermediaries and regulatory bodies outside of the

banking industry.

28.25

10.68

22.48

19.2

0

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30

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-05

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-15

CNX Nifty Index PE Long term Avg (10 yrs)

-10%

0%

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20%

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40%

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/07

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/14

EPS YoY (%) Nifty Index PE

30%

-8%

12%

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30%

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EPS YoY (%)

February 2015 10


These changes will make monthly and quarterly

data releases less credible compared to annual estimates

as data for several variables will be available on annual

basis. This makes Policy changes based on less credible

high frequency data hazardous.

Is FY15 a growth recovery or still finding a bottom?

The revisions in numbers imply that FY14 real GDP growth

at 6.6% was a better growth than earlier estimates and

even better than 5.5% during H1FY15. Hence, FY15 now

stands to reflect slowdown instead of a recovery year. The

advance estimates for FY15 along with quarterly

estimates of Q1, Q2 and Q3 will be released next Monday

(February 09, 2015). Indeed if FY15 numbers are not

changed dramatically, it will mean that we have not yet

reached the bottom. In that case, the case for monetary

easing is stronger. On the other hand, if FY15 numbers are

revised upwards (higher than 6.6% of FY14), then we are

comfortably past the worst phase and the case of

monetary support turns weak. This has implications for

the bond markets.

Grexit – a catastrophic event?

The prospect of the far left-wing Syriza party winning the

Greek snap presidential elections on January 25 has

heightened uncertainty within the European Union and

other countries doing business with it. Pushing populist

measures, Syriza (or the Coalition of the Radical Left)

wants significant debt write-offs and freedom from the

austerity measures that came with previous bailout

packages — moves that could trigger Greece’s exit from

the Eurozone.

Greece’s troubles have been building up over the past

eight years, during which the country has suffered three

recessions and has seen its debt burden rise to a

staggering 175% of its gross domestic product of $242

billion.

The so-called ‘troika’ of the European Union, the

European Central Bank and the IMF put together two

bailout packages in 2010 and 2011 totaling 240 billion

euros ($285 Billion), and a third package of an estimated

17 billion euros ($20 billion) is in negotiations.

Syriza wants to take a traditional view, which is to write

off the debt, increase spending and stimulate the

economy in a Keynesian fashion. If they are successful in

writing off the debt and staying in the eurozone or leaving

it, there is likely to be a big contagion effect to other

countries.

ECB statement that it would no longer accept Greek

government bonds as collateral for lending money to

commercial banks on 4th Feb 2014 depicts a clear signaling

to the Greek government that “You're going to have to

talk to the troika and get a deal, otherwise really bad

things are going to happen.”

We feel that once the new Greek government settles

down, they and the Troika will meekly find their way to

the negotiating table, notwithstanding their present

grandstanding. It’s simple, “Grexit = Catastrophe” and

every policy maker in Eurozone worth the salt knows it. If

they don’t, they will first ignore Greece like US

Government ignored Bear Sterns rescue before

prostrating in front of the market forces as Lehman caved

in. The Syriza Govt knows this roll of dice and is trying to

extract its pound of flesh before it is finally seen as

cooperating. Else, they too know that a Greek tragedy of

untold misery awaits them, if the financial lifeline from

the Troika is cut-off.

February 2015 11


Budget Session Expectations Fiscal Consolidation

The government needs to put higher emphasis on

capital expenditure on infrastructure projects while

sticking to the fiscal consolidation path. The government

also needs to recapitalize public sector banks because

that is easiest way to revive investment with least cost.

RBI governor Raghuram Rajan made it clear in his out-

of-cycle policy rate cut on 15 January that the key to

further interest rate easing would be “sustained high

quality” fiscal consolidation as well as steps to overcome

supply constraints and assured availability of key inputs

such as power, land, minerals and infrastructure. The

government is also expected to incorporate the interim

recommendations of the expenditure management

commission headed by former RBI governor Bimal Jalan

in the budget proposals for 2015-16. Jalan is expected to

have suggested various steps to rationalize subsidies

and public expenditure.

Tax Issues

We expect this budget to provide more clarity on tax

policy and lay down measures to resolving disputes in a

time-bound manner. If the government is willing to roll

out Goods and Services Tax from 1 April, 2016, we may

see changes in excise and customs duties and

amendment of the central sales tax Act. The government

is likely to announce deferring the implementation of

the General Anti-Avoidance Rule which is scheduled to

be implemented from 1 April 2015.

The government will also have to take a call on the

minimum alternate tax imposed on units in special

economic zones (SEZs). Among other measures, the

government needs to raise the income tax exemption

limit and the tax exemption limit on home loans.

Legislative Agenda

The government will likely, push for the passage of bills

related to six ordinances propagated recently. The

ordinances include those on coal, mines and minerals, e-

rickshaws, amendment to Citizenship Act, land

acquisition and foreign direct investment in insurance.

We believe that national highways, railways, rural roads,

rural housing and urban housing are the most likely

areas where the government may spend. The budget

may also include import heavy spending (e.g., defense,

renewable energy) or tax sops for local manufacturing:

these would only have medium- to longer-term

implications.

Apart from above key areas the government may likely

cater few of the BJP’s Lok Sabha manifesto such as,

Developing high impact domains like labour

intensive manufacturing, tourism, and

strengthening traditional employment bases of

agriculture and allied industry.

Harnessing opportunities provided by the

upgradation of infrastructure and housing.

Strengthening physical infrastructure with

expediting work on freight and industrial corridors

Launching of diamond quadrilateral project of high-

speed rail network (Bullet trains).

Setting up of agri-rail network catering to needs of

perishable farm products.

Launching a massive Clean Rivers Programme with

people’s participation.

Implementation of national education policy. UGC

to be restructured and transformed into higher

education commission.

The NDA-led Government may explore the option of

calling a joint sitting of Parliament to pass crucial bills as

they expect a strong resistance from the Congress-led

opposition party trying to block the reform agenda.

February 2015 12


Result Review Q3 2015

Technology

TCS is the only company which has fared marginally

better than the consensus estimates with an EPS of INR

29.16 (INR 28.54 consensus estimates) in technology

segment. Tech Mahindra too has just been on the

expectations mark with an EPS of INR 33.69 (INR 33.70

consensus estimates)

For all the other 3 major nifty tech companies the 3rd

quarter FY2015 numbers have been disappointing

, Wipro has missed the expectations by 12% with an EPS

of INR 33.69 (INR 33.70 consensus estimates)

Financials

Bank of Baroda has missed the earnings by a huge margin

with an EPS of INR7.78 (INR 27.73 consensus estimates)

with negative surprises not only on asset quality front,

but also on credit growth front as well.

Other major PSU bank has been Punjab National Bank

with an EPS of INR4.28 (INR 5.69 consensus estimates) as

miss of roughly 25% from the consensus. Private banks

have fared reasonably well as their results were in-line,

ICICI Bank with an EPS of INR4.99 (INR 5.06 consensus

estimates) and Indusind Bank with an EPS of INR 8.46

(INR 8.51 consensus estimates).

Energy

Cairn India’s results were below expectation by 22% as

its EPS was INR 7.2 (INR 9.18 consensus) for the quarter.

Whereas, Reliance Industries missed the expectations

marginally with an EPS of INR 15.72 (INR 16.64

consensus).

Consumers

HUL has published its earning numbers which has been

fairly better than the consensus estimates with an EPS

of INR 5.79 (INR 5.02 consensus estimates).

ITC results were in-line with an EPS of INR 3.30 (IINR 3.38

consensus estimates).

Auto and Auto-ancillaries

Q3 earnings numbers for Bajaj Auto were in-line with the

estimates with an EPS of INR 29.76 (INR 30.80 consensus

estimates).

Whereas, Maruti Suzuki missed the expectations by 10%

with an EPS of INR 26.55 (INR 29.46 consensus

estimates)

Metals and Mining

Sesa Sterlite surprised the street with an EPS of INR 5.35

(INR 4.38 consensus estimates).

Paints

Asian paints has missed the earnings by a huge margin

of 19% with an EPS of INR 3.68 (INR 4.54 consensus

estimates) main reasoning being the auto OEM business

which was affected by subdued consumer demand.

February 2015 13


Threadbare BNP Paribas Midcap Fund

Fund Manager: Shreyash Devalker

(since Oct 2011)

Fund Objective: Fund Style

The fund seeks to generate long-term capital appreciation by investing primarily in companies with high growth opportunities in the middle and small capitalization segment, defined as 'Future Leaders. The fund will emphasize on companies that appear to offer opportunities for long-term growth and will be inclined towards companies that are driven by dynamic style of management and entrepreneurial flair

Large

Medium

Small

Growth Blend Value

Portfolio Allocation Portfolio Behaviour

Low Medium High

Asset Class Allocation Consistency with Fund Objective

Modified Portfolio Churn 0.51

NAV Fluctuation - (St’d. Deviation) 32.37

Compensation for risk - (Sharpe Ratio) 0.73

Market Cap Allocation Responsive to benchmark - (Beta) 0.86

Correlation to Benchmark - (R-Squared) 0.97

Fund Managers out-performance - (Jensen's Alpha)

11.04

Consistency of out-performance - (Information Ratio)

1.20

Downside risk adjusted returns - (Sortino)

2.52

Equity

Debt

Cash

Others

Large Cap

Mid Cap

Small Cap

Others

February 2015 14


Top 10 Holdings Top 10 Sectors

Company Name % Holding Sector Name % Holding

IndusInd Bank Ltd. 3.88 Bank - Private 11.02

Jet Airways (India) Ltd. 3.74 Telecommunication 7.13

HPCL 3.64 Pharmaceuticals & Drugs 6.87

VA Tech Wabag Ltd. 3.12 Cement & Construction Materials 6.23

The Federal Bank Ltd. 3.08 Finance - NBFC 6.22

Bharti Airtel Ltd. 2.96 IT - Software 4.59

Idea Cellular Ltd. 2.85 Engineering – Construction 4.5

Repco Home Finance Ltd. 2.72 Airlines 3.74

Bharat Electronics Ltd. 2.53 Refineries 3.64

Bajaj Finance Ltd. 2.53 Consumer Food 3.54

Multibagger Analysis Portfolio Attributes

No of Stocks

Multiples For Last 1 yr 2 yr 3 yr Ratio Fund

0x-1x 22 45 45 Price to Earnings 27.07x

1x-2x 67 70 74 Price to Book Value 3.72x

2x-3x 8 13 15 Return on Equity 16.95%

3x-4x 2 3 6 Earnings Growth 37.86%

4x-5x 0 0 4 Dividend yield 0.75%

5x and Above 0 0 3

Commentary:

The Fund has outpaced its category by a massive 12.0 % and its benchmark by 6.2 % on CAGR basis in the last five years. Stability in the fund manager since 2011 after a furious shuffle in the initial years has helped both stock selection and returns. This fund leans more towards GARP (growth at a reasonable price) than pure value, probably the reason why it lagged some of its peers in the recent market rally. The focus is on identifying businesses which can scale up over the long term. Three types of companies find place in the portfolio- Leaders in emerging sector, eg. Page Ind.; challengers-emerging companies which can give the sector leader a run for its money, eg. Repco Home Finance; consolidators or companies that can cash in on a shake-out. The investment approach the fund manager follows for company selection is “BMV”, Business: Company growing faster than industry, industry faster than market Moats such as Brand franchise, cost advantage and Industry structure Management: Leadership, Governance and Competence Valuation: Reasonable valuation with bottom stock picking Cash flows are considered more important than profits Margin of safety The companies are selected based on high growth anticipated and no calls are based on the valuation re-rating and that seems to be the basic crux of outperforming its benchmark across various market cycles.

February 2015 15


Our take : As per consensus estimates on individual stocks held by the fund, the average earnings growth expected in FY16 is roughly 38%, whereas the Price to earnings multiples are at 27x which reasonably justify the valuations at portfolio level. A high weighted average ROE of 16.9% depicts the capability to generate such high earnings growth estimated by the companies held by the Fund. The Fund's market cap allocations lean towards mid-cap stocks, which made up anywhere between 60 and 77 % of the portfolio since last year, In May 2014, the allocation towards Mid cap was highest at 76.9%. The fund is overweight in mid-caps and under exposed to small-caps relative to its category. This may lead to some missed opportunities on returns as small-caps can soar faster in a bull run, but this leads to a better quality portfolio, as mid-caps usually have better fundamentals and protect downside better than the small-caps. In the rising markets of 2010 and 2012, it beat its benchmark by 5 and 13 % points. When the category tumbled in 2011 this fund contained its losses to 20.8 % against the 30.9% fall in the benchmark. In recent months, the fund has been overweight mainly on cyclicals such as financials, telecom and cement, and underweight in healthcare, services and energy relative to its peers. This is clearly a fund which relies heavily on the stock selection and trading skills of the portfolio manager rather than on top down calls. Overall recommendation : Good to invest !

February 2015 16


Model Portfolio : Conservative

Conservative Market Cap wise (%)

Asset Class Sub-Asset Class Mutual Fund Schemes

Strategic

Tactical

Large cap Mid & Small cap

Others

Equity - - PMS - - Large Cap - - ICICI Pru Focused BlueChip Eq Fund - - 97.4 - 2.6

UTI Opportunities Fund - - 98.1 1.9 -

Mirae Asset India Opportunities Fund - - 80.5 12.2 7.3

Mid & Small Cap - - Religare Invesco Mid N Small Cap Fund - - 65.7 29.4 4.9

HDFC Mid-Cap Opportunities Fund - - 74.9 21.2 3.9

BNP Paribas Mid Cap Fund - - 62.3 35.6 2.2

Multi Cap - - L&T India Spl.Situations Fund - - 81.8 14.3 3.8

ICICI Pru Value Discovery Fund-Reg - - 74.8 16.3 8.9

Axis Midcap Fund - - 65.2 32.2 2.7

Thematic / Sectoral Funds - - Equity Hybrid Funds - - Average

Maturity Years

Mod Duration Years

YTM (%)

Debt 90.0% 92.5% Short Term 30.0% 30.0% Axis Short Term Fund 10.0% 10.0% 2.1 1.7 8.7

Franklin India ST Income Plan 10.0% 10.0% 2.6 2.3 10.5

HDFC STP 10.0% 10.0% 2.0 1.6 9.7

Dynamic Bond Funds 30.0% 32.5% IDFC Dynamic Bond Fund-Reg 10.0% 10.8% 14.5 8.1 8.2

SBI Dynamic Bond 10.0% 10.8% 13.9 7.4 8.4

UTI Dynamic Bond Fund-Reg 10.0% 10.8% 5.2 NA NA

Income Funds 30.0% 30.0% DWS Premier Bond Fund 10.0% 10.0% 2.3 1.9 8.5

HDFC Income Fund 10.0% 10.0% 12.9 7.0 8.4

UTI Bond Fund 10.0% 10.0% 11.6 NA NA

Gilt - - Debt Hybrid Funds - -

Cash 5.0% 5.0% Liquid Funds - - Ultra Short Term 5.0% 5.0%

Gold 5.0% 2.5% Gold 5.0% 2.5% Total 100.0% 100.0%

0.0%

90.0%

5.0%5.0%

Strategic Portfolio

Equity Debt Cash Gold

0.0%

92.5%

5.0%2.5%

Tactical Portfolio


98.0

99.0

100.0

101.0

102.0

31-Dec-14 31-Jan-15

Conservative UCI Index

For Advisory Value Add process please click here

https://gallery.mailchimp.com/0df9ced5fe165c9cbfd02d4cb/files/Advisory_Value_Add_process.pdf

February 2015 17


Model Portfolio : Moderately Conservative

Mod Conservative Market Cap wise (%)


Strategic

Tactical


Others

Equity 25.0% 25.0% PMS - - Large Cap 25.0% 25.0% ICICI Pru Focused BlueChip Eq Fund 8.3% 8.3% 97.4 - 2.6

UTI Opportunities Fund 8.3% 8.3% 98.1 1.9 -

Mirae Asset India Opportunities Fund 8.3% 8.3% 80.5 12.2 7.3

Mid & Small Cap - - Religare Invesco Mid N Small Cap Fund - - 65.7 29.4 4.9

HDFC Mid-Cap Opportunities Fund - - 74.9 21.2 3.9

BNP Paribas Mid Cap Fund - - 62.3 35.6 2.2





Maturity Years

Mod Duration Years

YTM (%)



HDFC STP 10.0% 10.0% 2.0 1.6 9.7


SBI Dynamic Bond 10.0% 10.8% 13.9 7.4 8.4


Income Funds 5.0% 5.0% DWS Premier Bond Fund 1.7% 1.7% 2.3 1.9 8.5

HDFC Income Fund 1.7% 1.7% 12.9 7.0 8.4

UTI Bond Fund 1.7% 1.7% 11.6 NA NA

Gilt - - Debt Hybrid Funds - -

Cash 5.0% 5.0% Liquid Funds - - Ultra Short Term 5.0% 5.0%

Gold 5.0% 2.5% Gold 5.0% 2.5% Total 100.0% 100.0%

25.0%

65.0%

5.0%5.0%

Strategic Portfolio


25.0%

67.5%

5.0% 2.5%

Tactical Portfolio


96.0

98.0

100.0

102.0

104.0

31-Dec-14 31-Jan-15

Mod Conservative UCI Index



February 2015 18


Model Portfolio : Balanced

Balanced Market Cap wise (%)


Strategic

Tactical


Others




Mid & Small Cap 15.0% 7.5% Religare Invesco Mid N Small Cap Fund 5.0% 2.5% 65.7 29.4 4.9

HDFC Mid-Cap Opportunities Fund 5.0% 2.5% 74.9 21.2 3.9

BNP Paribas Mid Cap Fund 5.0% 2.5% 62.3 35.6 2.2





Maturity Years

Mod

Duration Years

YTM (%)



HDFC STP 10.0% 10.0% 2.0 1.6 9.7


SBI Dynamic Bond 5.0% 6.7% 13.9 7.4 8.4


Income Funds - - DWS Premier Bond Fund - - 2.3 1.9 8.5

HDFC Income Fund - - 12.9 7.0 8.4

UTI Bond Fund - - 11.6 NA NA

Gilt - - Debt Hybrid Funds - 7.5% DSPBR Dynamic Asset Allocation Fund - 7.5% - - -

Cash - - Liquid Funds - - Ultra Short Term - -

Gold 10.0% 5.0% Gold 100.0% 100.0%

45.0%45.0%

0.0%10.0%

Strategic Portfolio


37.5%

57.5%

0.0%

5.0%

Tactical Portfolio


96.0

98.0

100.0

102.0

104.0

106.0

31-Dec-14 31-Jan-15

Balanced UCI Index



February 2015 19


Model Portfolio : Moderately Aggressive

Mod Aggressive Market Cap wise (%)


Strategic

Tactical


Others







Multi Cap 10.0% 10.0% L&T India Spl.Situations Fund 3.3% 3.3% 81.8 14.3 3.8

ICICI Pru Value Discovery Fund-Reg 3.3% 3.3% 74.8 16.3 8.9

Axis Midcap Fund 3.3% 3.3% 65.2 32.2 2.7


Maturity Years

Mod Duration Years

YTM (%)



HDFC STP 6.7% 6.7% 2.0 1.6 9.7

Dynamic Bond Funds - 5.0% IDFC Dynamic Bond Fund-Reg - 1.7% 14.5 8.1 8.2

SBI Dynamic Bond - 1.7% 13.9 7.4 8.4

UTI Dynamic Bond Fund-Reg - 1.7% 5.2 NA NA




Gilt - 0.0% Debt Hybrid Funds - 18.0% DSPBR Dynamic Asset Allocation Fund - 18.0% - - -

Cash - -

Liquid Funds - - Ultra Short Term - -

Gold 10.0% 5.0%

Gold 10.0% 5.0% Total 100.0% 100.0%

70.0%

20.0%

0.0%10.0%

Strategic Portfolio


52.0%43.0%

0.0%5.0%

Tactical Portfolio


90.0

95.0

100.0

105.0

110.0

31-Dec-14 31-Jan-15

Mod Aggressive UCI Index



February 2015 20


Model Portfolio : Aggressive

Aggressive Market Cap wise (%)


Strategic

Tactical

Large cap Mid &

Small cap

Others







Multi Cap 30.0% 30.0% L&T India Spl.Situations Fund 10.0% 10.0% 81.8 14.3 3.8

ICICI Pru Value Discovery Fund-Reg 10.0% 10.0% 74.8 16.3 8.9

Axis Midcap Fund 10.0% 10.0% 65.2 32.2 2.7


Maturity Years

Mod

Duration Years

YTM

(%)

Debt - 20.0% Short Term - - Axis Short Term Fund - - 2.1 1.7 8.7

Franklin India ST Income Plan - - 2.6 2.3 10.5

HDFC STP - - 2.0 1.6 9.7

Dynamic Bond Funds - 5.0% IDFC Dynamic Bond Fund-Reg - 1.7% 14.5 8.1 8.2

SBI Dynamic Bond - 1.7% 13.9 7.4 8.4

UTI Dynamic Bond Fund-Reg - 1.7% 5.2 NA NA




Gilt - - Debt Hybrid Funds - 15.0% DSPBR Dynamic Asset Allocation Fund - 15.0% - - -

Cash - - Liquid Funds - - Ultra Short Term - -

Gold 10.0% 5.0% Gold 10.0% 5.0% Total 100.0% 100.0%

90.0

95.0

100.0

105.0

110.0

31-Dec-14 31-Jan-15

Aggressive Nifty

75.0%

20.0%

0.0% 5.0%Tactical Portfolio


90.0%

0.0%0.0%10.0%

Strategic Portfolio




February 2015 21


Citadelle Growth Opportunities Portfolio Company Name

% Allocation

Recommended Price

Market price

% Incr/Decr

Rationale Result Update

Axis Bank Ltd. 5% 502.05 588.70 17%

Axis Bank is geared up to ride the next growth cycle with strong capitalization (12.6% Tier I), healthy ROA (1.7%) and expanding liability franchise (2,505 branches). Leveraging on the strong distribution network AXSB increased the share of retail deposits and CASA increased to 79% as compared 59% in FY11. It has delivered stable numbers with improving margins though economy was at a recovery mode. We remain confident of bank’s ability of strengthening its retail franchise further.

Axis Bank delivered decent set of numbers with spike in credit uptick, stable margins and credit costs within expected lines. It reported strong trends (a) Loan growth picked up (+8% QoQ and +23% YoY) led by strong growth in retail (+10% QoQ and +24% YoY) and Mid/Large corporate segment (+10% QoQ and 25% YoY), (b) fees growth picked up to 16% YoY (1H-10%) led by retail fees (+50% YoY, 30% in 1H).

Bharat Forge Ltd.

5% 942.30 1034.60 10%

It is global leader in forging business having transcontinental presence across India, Germany and Sweden, serving several sectors including automotive, power, oil and gas,etc. CV business will benefit from pre-buying in US before emission norm changes and strong cyclical recovery in India. This coupled with scale-up in PVs would drive strong growth in Auto segment.

Net revenue grew by ~44% YoY to ~INR11.9b (v/s est. INR10.5b), driven by 53% growth in exports (led by ~122% growth in US) and ~24% growth in domestic revenue. Non-auto revenue grew 69% YoY to ~INR5.8b (~48% of revenue). EBITDA margin expanded 440bp YoY (+170bp QoQ) to 30.2% (v/s est. 28.2%), driven by RM cost savings and benefit of operating leverage. Adj. PAT grew 109% YoY (~11% QoQ) to ~INR1.96b (v/s est. ~INR1.59b).

Crompton Greaves Ltd.

5% 187.65 189.70 1%

Crompton Greaves is part of the USD4b Avantha Group, and is a global leader in the management and application of electrical energy Crompton Greaves is aggressively focusing on increasing exports and leveraging the Indian manufacturing base.

Not yet announced

Dewan Housing Fin Corpn Ltd.

5% 395.15 471.40 19%

Dewan Housing is a good play on Tier 2 and Tier 3 cities housing demand growth. Strong visibility on business growth and margins, superior asset quality, healthy provision cover and healthy return ratios augurs well for Dewan Housing.

DHFL delivered strong earnings growth (28% YoY) on the back of healthy NII growth (37% YoY). High loan growth (28% YoY) and NIM expansion due to higher share of debt market borrowings are key drivers.

Eicher Motors Ltd.

5% 15103.50 16303.50

8%

Eicher Motors is a leader in Cruise bikes in India and No.2 player in Medium Commercial Vehicles. The management has increased its production target to 280,000 units in CY2014 (from 250,000 units) and is expected that demand can reach 500,000 units in 3-4 years. Eicher Motors will invest Rs. 6 bn over the next two years in the Royal Enfield business to expand capacity in the Oragdum plant.

Not yet announced

Gujarat Pipavav Port Ltd.

5% 206.50 206.50 0%

GPPV is favorably positioned on the West coast which enables access to the global trade route/rich northern hinterland. Strong parentage and robust evacuation further provides comfort. GPPV is expanding its container handling facility from 0.8m TEUs to 1.35m TEUs, which would be key driver of volume growth. In addition, higher throughput of liquid volume (2m tons capacity) would aid volume growth.

Not yet announced

HDFC Bank Ltd. 5% 952.00 1076.00 13%

HDFC Bank is best-placed in the current environment, with a CASA ratio of ~45%, growth outlook of at least 1.3x of industry and least asset quality risk.

Not yet announced

Hero MotoCorp Ltd.

5% 3103.40 2869.55 -8%

Strong franchise of Splendor & Passion, and wide distribution reach makes it best placed to tap strong demand growth, especially in rural markets. It is targeting exports of 1m units over by FY17 Post split from Honda, Hero MotoCorp is free to tap global opportunity in 2W.

Not yet announced

IndusInd Bank Ltd.

5% 802.55 871.00 9%

IndusInd Bank Ltd is one of the new generation private sector banks in India. Asset quality performance remains healthy, despite a challenging environment and significant slowdown in the CV segment. The management expects that the worst for CV financing is behind and gradual improvement is likely to be seen in coming quarters

We believe that IndusInd Bank has the potential to grow faster than the industry and strengthen its market share as it expands its network.

Kotak Mahindra Bank Ltd.

5% 1263.15 1320.85 5%

Kotak Mah. Bank is one of the fastest growing bank. Merger with ING Vysya Bank will be BV accretive for Kotak Mah. Bank at standalone and consolidated level. Merger places Kotak Bank in a sweet spot for the next growth cycle with strong presence across geographies, expertise in key product lines and continued healthy capitalization.

Kotak Mahindra Bank’s 3QFY15 consolidated PAT missed our estimate by 18%. While banking business’ profits were in line with consensus estimates, aided by strong loan (+22% YoY) and fees (+45% YoY in 3Q/9M) growth, continued competitive pressure on other businesses (EPS INR 9.29) impacted overall profitability (est. EPS of INR 11.3).

Larsen & Toubro Ltd.

5% 1496.50 1700.10 14%

L&T is well placed to capitalize on long-term infrastructure demand. L&T's order inflow prospects is expected to double from last year's level, to US$75bn. L&T’s preparedness to exploit the evolving India defence opportunity. The stock's underperformance vs. the BSE Sensex.

Not yet announced

Lupin Ltd. 5% 1427.55 1584.35 11%

Lupin is amongst the larger pharma companies that is actively targeting the regulated generics markets. Strategy of focusing on niche, low-competition products for the US market likely to benefit in the long run. US generics is expected to grow 20-22% due to a rich generic pipeline.

Not yet announced

Maruti Suzuki India Ltd.

5% 3328.30 3645.25 10%

Maruti is the best auto OEM play on macro-economic recovery in India. Following flat volumes for the past four years, we expect car sales to bounce back, led by high pent-up demand, economic recovery, and deceleration in car ownership costs. Maruti’s strong product pipeline, coupled with lower competitive intensity, should help it consolidate its leadership.

Maruti Suzuki (MSIL) Q3FY15 results surprised positively at operating level as adjusted EBITDA margin surpassed 13% on softer RM costs. MSIL continued to outpace industry growth and gain market share which stood at 45% during 9MFY15. We believe this trend to continue for some time until industry growth normalizes.

Company Name

% Allocation

Recommended Price

Market price

% Incr/Decr


Company Name

% Allocation

Recommended Price

Market price

% Incr/Decr


February 2015 22


Company Name

% Allocation

Recommended Price

Market price

% Incr/Decr


HDFC Bank Ltd. 5% 952.00 1076.00 13%

HDFC Bank is best-placed in the current environment, with a CASA ratio of ~45%, growth outlook of at least 1.3x of industry and least asset quality risk.

Not yet announced

Hero MotoCorp Ltd.

5% 3103.40 2869.55 -8%

Strong franchise of Splendor & Passion, and wide distribution reach makes it best placed to tap strong demand growth, especially in rural markets. It is targeting exports of 1m units over by FY17 Post split from Honda, Hero MotoCorp is free to tap global opportunity in 2W.

Not yet announced

IndusInd Bank Ltd.

5% 802.55 871.00 9%

IndusInd Bank Ltd is one of the new generation private sector banks in India. Asset quality performance remains healthy, despite a challenging environment and significant slowdown in the CV segment. The management expects that the worst for CV financing is behind and gradual improvement is likely to be seen in coming quarters

We believe that IndusInd Bank has the potential to grow faster than the industry and strengthen its market share as it expands its network.

Kotak Mahindra Bank Ltd.

5% 1263.15 1320.85 5%

Kotak Mah. Bank is one of the fastest growing bank. Merger with ING Vysya Bank will be BV accretive for Kotak Mah. Bank at standalone and consolidated level. Merger places Kotak Bank in a sweet spot for the next growth cycle with strong presence across geographies, expertise in key product lines and continued healthy capitalization.

Kotak Mahindra Bank’s 3QFY15 consolidated PAT missed our estimate by 18%. While banking business’ profits were in line with consensus estimates, aided by strong loan (+22% YoY) and fees (+45% YoY in 3Q/9M) growth, continued competitive pressure on other businesses (EPS INR 9.29) impacted overall profitability (est. EPS of INR 11.3).

Larsen & Toubro Ltd.

5% 1496.50 1700.10 14%

L&T is well placed to capitalize on long-term infrastructure demand. L&T's order inflow prospects is expected to double from last year's level, to US$75bn. L&T’s preparedness to exploit the evolving India defence opportunity. The stock's underperformance vs. the BSE Sensex.

Not yet announced

Lupin Ltd. 5% 1427.55 1584.35 11%

Lupin is amongst the larger pharma companies that is actively targeting the regulated generics markets. Strategy of focusing on niche, low-competition products for the US market likely to benefit in the long run. US generics is expected to grow 20-22% due to a rich generic pipeline.

Not yet announced

February 2015 23


Company Name

% Allocation

Recommended Price

Market price

% Incr/Decr


Maruti Suzuki India Ltd.

5% 3328.30 3645.25 10%

Maruti is the best auto OEM play on macro-economic recovery in India. Following flat volumes for the past four years, we expect car sales to bounce back, led by high pent-up demand, economic recovery, and deceleration in car ownership costs. Maruti’s strong product pipeline, coupled with lower competitive intensity, should help it consolidate its leadership.

Maruti Suzuki (MSIL) Q3FY15 results surprised positively at operating level as adjusted EBITDA margin surpassed 13% on softer RM costs. MSIL continued to outpace industry growth and gain market share which stood at 45% during 9MFY15. We believe this trend to continue for some time until industry growth normalizes.

Thermax Ltd. 5% 1067.65 1145.60 7%

Thermax is benefiting from few structural trends: (1) energy shortages and inconsistent availability of power, driving demand for energy efficiency products, (2) hunt for alternative energy, given demanding regulations and improving viability, (3) increased environmental concerns and stringent regulatory intervention, (4) currency depreciation leading to increased possibilities of exports etc. Thermax is likely to report acceleration in revenue growth, driven by improvement in GFCF particularly in base industries) and interplay of several structural trends.

Earnings at EPS of INR 6.40 were roughly in-line with consensus estimates (EPS of INR 6.70) with revenues at INR11.5b, up 13% YoY (estimate of INR11.2b) and EBIDTA margins at 11.5%, up 250bps YoY (meaningfully above estimates of 10.5%).

PVR Ltd. 5% 703.10 680.40 -3%

India’s largest and fastest growing multiplex chain with 23-25% bollywood market share and 33-35% Hollywood market share. Movie screening is an under-penetrated business in India and we believe PVR will be the biggest beneficiary of revival in discretionary spends.

Earnings came in 25% above expectation on higher EBITDA and lower tax rate of 1%, versus our expectation of 5%. Revenue of Rs4.2bn (+24.6% yoy) was in line.

Shree Cement Ltd.

5% 9412.10 10956.45 16%

Shree Cement is one of the most cost efficient cement producers in India. Shree Cement is the largest single-location integrated cement plant in North India, with an installed capacity of 13m ton.

Net sales at Rs16.05 bn (+28.7% yoy, -2.8% qoq) was in-line with consensus estimate of Rs16.21 bn. Also, EBITDA at Rs3.37bn (+35% yoy) in line with estimate. Expansion plans of 4mtpa on track (2mt in Raipur and Uttar Pradesh each). We believe that the new capacities would help the co. to continue its growth momentum, which has already been above industry growth rate (14% in FY14 against industry growth rate of 3-4%).

Tech Mahindra Ltd.

5% 2591.55 2878.30 11%

Satyam's acquisition will help Tech Mahindra to diversify its client base and industry focus. Large deals like those of KPN and a gradual revival in the telecom vertical will help volume growth. Deals have kept growth coming (outside the BT account) despite challenged IT budgets in the telecom vertical.

Result for Tech Mahindra has been in-line with an EPS of INR 33.69 (INR 33.70 consensus estimates). EBITDA margin of 20.2% is also in line with consensus estimate of 20.3%.

February 2015 24


Company Name

% Allocation

Recommended Price

Market price

% Incr/Decr


TVS Motor Company Ltd.

5% 268.30 308.15 15%

TVS is well positioned to benefit from the scooterization wave with its complete scooter portfolio. With international presence in more than 50 countries in Asia, Africa and Latin America it plans to launch multiple products across segments to reinforce and fill gaps in portfolio in next 2 years.

Not yet announced

Ultratech Cement Ltd.

5% 2671.25 3139.80 18%

Ultratech is the largest cement company with pan-India presence. It has potential to increase its output without incurring major capex by increasing utilization and blending, along with locational advantage, gives it the flexibility to either export or sell in the domestic market. Significant potential to increase output by increasing blending. Allied businesses of white cement and RMC lend stability to overall performance.

Earnings at EPS of INR 13.28 were way below the consensus estimates (EPS of INR 15.75) Earnings miss partially attributed to lower RMC revenue. We expect double-digit cement demand growth next year with the Indian government's oilrelated savings translating into higher investments in national highways, rural roads, rural and urban housing and railways (driving >70% of the cement demand). We believe Ultratech is the best proxy to participate in a potential cement upcycle.

VA Tech Wabag Ltd.

5% 1474.80 1613.45 9%

VA Tech wabag (VATW) is one of the leading players in water treatment industry, is attempting to expand into new geographies, including South East Asia, Sub-Sahara Africa, LatAm, Central Asia, etc. In FY14, the company received initial orders in Nepal, Tanzania, etc which also opens up interesting growth possibilities to ramp-up the business. Order intake in overseas subsidiaries has increased from INR6-7b in FY12-13 to INR16.4b in FY14

Not yet announced

Alpha Edge Current Asset Allocation

Equity Cash

109

106

95

100

105

110

31

-Dec

-2

01

4

06

-Jan

-2

01

5

12

-Jan

-2

01

5

18

-Jan

-2

01

5

24

-Jan

-2

01

5

30

-Jan

-2

01

5

Alpha Edge Portfolio Performance

Alpha Edge Portfolio NAV Nifty Index

Alpha Edge | One false move, and..!

Thank you for your time !

Safe harbour statement !

This document has been prepared by Citadelle Asset Advisors Private Limited (CAAPL). CAAPL, its holding company and associate companies offer full range of, integrated investment banking, portfolio management and brokerage services, through own and or partnerships.

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The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. The investment discussed or views expressed may not be suitable for all investors. We and our affiliates, group companies, officers, directors, and employees may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as advisor or lender/borrower to such company (ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. This information is strictly confidential and is being furnished to you solely for your information.

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The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. Any dispute arising out of the document shall be subject to the exclusive jurisdiction of the Courts in Mumbai, India

February 2015 25

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