Equities – Wealth Creation Journey

Source: Morgan Stanley. QE – Quantitative Easing, EU – European Union, GDP – Gross Domestic Product, GST – Goods and Services Tax

Historically despite short term volatilities, equity markets have created wealth for investors over long term

CASE FOR

SMALLCAP

INVESTING

Benefits of Smallcap investing

FUTURE LEADERS

Fundamentally sound,

well managed small companies

may have the potential to become

future leaders (Largecaps)

P/E RE-RATING

Re-expand potential of

quality stocks in their

growth phase is relatively

high.

HIGH GROWTH POTENTIAL

Offers good growth prospects

as the companies are in

the early stage of their life cycle.

SHARE PRICES FOLLOW RE-RATING

Once re-rated, the companies are

fairly valued which may lead to

appreciation in share price

Wealth Creation Journey

The Smallcap segment maybe volatile in the short term, but in the long term the category has created wealth

Source: BSE. All data as of December 31, 2020. Smallcap Index considered is S&P BSE Smallcap Index. Past performance may or may not sustain in future. The performance figures pertain to the

Index and do not in any manner indicate the returns/performance of the Scheme.

Rs. 10 Lakhs

Rs. 34.9 Lakhs

5,00,000

15,00,000

25,00,000

35,00,000

Aug-0

5

May-07

Jan-0

9

Oct-10

Jun-12

Feb-14

Nov-15

Jul-

17

Mar-19

Dec-2

0

Value of Rs. 10 Lakhs invested in S&P BSE Smallcap Index

Multibagger Category

In the last 5 Years, out of the top 500 stocks listed,

Smallcap segment has created most of the multi-baggers

The universe considered Nifty 500 Index. Top 100 Companies by market cap are classified as Largecap, The next 101st-250th companies by market cap are classified as Midcap; 250 and beyond are considered as Smallcaps. Data is as of

December 31, 2020. Source: Capitaline. Returns generated are of the past 5 years and in absolute terms. Securities which are currently listed and were not listed 5 years ago are not considered. Past performance may or may not sustain in

future

52

2 0

15

67

2 1

11

82

1 0

16

0

20

40

60

80

100

1x-5x 5x-10x >10x Between 50-100% returns

No. of S

tocks

Largecap Companies Midcap Companies Smallcap Companies

Ample Opportunities

Owing to a relatively broader universe, the opportunity to identify quality stocks increases manifold

Total securities available

on NSE for trading: 3880

Mcap between Rs. 10,024 Crs and Rs.

33,508 Crs No. of Stocks: 150

Mcap > Rs. 33,508 Crs

No. of Stocks: 100

Mcap between Rs. 500 Crs and Rs. 8,626 Crs

No. of Stocks: 688

TOTAL STOCKS in the Smallcap category is 3550

The universe considered is all listed stocks on NSE. Top 100 Companies by market cap are classified as Largecap, The next 101st-250th companies by market cap are classified as Midcap; 250 and beyond are considered as Smallcaps. Data is

as of Dec 31, 2020. Source: Capitaline and NSE. Securities for which Marketcap data is not available are not considered. The above data consists of only actively traded securities on NSE. This is only for reference purpose.

Ample Opportunities

Smallcaps can explore a relatively wide range of sectors which remain undiscovered otherwise.

This further helps in reducing sector skewness

Unexplored

Unexplored

Less skewed

Largecap: Nifty 50 Index, Smallcap is Nifty Smallcap 100 Index, Data as of Dec 31, 2020. Source: NSE. The sectors mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any

future position in this sectors..

Unexplored

Sector Smallcap Largecap

Financial Services 16.16% 38.79%

Construction 8.53% 2.61%

IT 13.46% 16.29%

Consumer Goods 12.50% 11.52%

Oil & Gas 1.17% 12.49%

Chemicals 5.27%

Industrial Manufacturing 5.68%

Healthcare Services 1.17%

Pharma 14.96% 3.61%

Fertilisers & Pesticides 3.66% 0.43%

Textiles 2.67%

Media & Entertainment 2.87%

Services 3.92% 0.59%

Cement & Cement Products 3.18% 2.15%

Automobile 0.80% 5.38%

Metals 1.37% 2.50%

Telecom 1.12% 2.03%

Power 0.77% 1.61%

Paper 0.74%

WHY

SMALLCAPS

NOW?

Current Smallcap Valuations

Source: NSE. Data as of December 31, 2020

The small-cap space has seen significant correction with current valuations close to the historic average.

This indicates that it is a good time to add smallcaps

2.6

1.0

1.4

1.8

2.2

2.6

Aug-1

7

Jun-18

Apr-19

Feb-20

Dec-2

0

Nifty Smallcap 250 Index P/BV

Average: 2.0

Current Smallcap Valuations

The correction in Smallcap space, has led to Marketcap divergence.

This indicates that it is time to add Smallcaps in a staggered manner

Top 100 indicates top 100 companies by market capitalization,101-250 indicates next 150 companies by market cap and above 250 indicates companies post the top 250 companies by market cap. Source : Edelweiss Research,

Data as of December 31, 2020

Share in the Overall Market Cap (%)

Index 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-20 Oct-20 Nov-20 Dec-20

Top-

10079 75 74 71 79 77 78 79 78 81 75 74 72 65 70 74.0 74.1 73.5 73.3

101-

25011 12 12 13 11 12 13 13 14 13 14 15 15 16 16 15.6 15.5 15.9 15.6

Above

25011 13 14 16 10 11 9 8 8 6 10 11 14 18 14 10.4 10.5 10.6 11.0

Recent Underperformance

Smallcaps have underperformed sharply since Jan-18; making a case for adding Smallcaps to the portfolio

Source: NSE India. Data as of December 31, 2020. Data in % terms. Returns mentioned are absolute returns. Past performance may or may not sustain in future. The performance figures pertain to the Index and do

not in any manner indicate the returns/performance of the Scheme.

30

50

70

90

110

130

Jan-1

8

May-18

Aug-1

8

Dec-1

8

Mar-1

9

Ju

l-19

Oct-19

Feb-20

May-20

Sep-20

Dec-2

0Index

Levels

Re

-based t

o 1

00

Nifty 50 Vs Nifty Smallcap 250 Index

Nifty 50 Nifty Smallcap 250

10.2% Returns

-5.8% Returns

Benign Interest Rates & Smallcaps

Source: RBI, BSE India, Data as of December 31, 2020. Smallcap Index considered is S&P BSE Smallcap Index. The performance figures pertain to the Index and do not in any manner indicate the returns/performance of the Scheme.

Low interest rates, create conducive environment for Smallcaps, as

the cost of capital – a key driver of profitability for small quality companies comes down

Repo Rate Movement Vs S&P BSE Smallcap Index

4

5

6

7

8

9

10

1,000

5,000

9,000

13,000

17,000

21,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Repo R

ate (

%)

S&

P B

SE

Sm

allcap I

ndex

S&P BSE Smallcap Index Repo Rate

Smallcaps recover faster

Source: RBI, BSE India, Data as of December 31, 2020. Past performance may or may not sustain in future. The performance figures pertain to the Index and do not in any manner indicate the returns/performance of the Scheme.

Smallcaps have outperformed large caps in 7 out of 14 time periods by a significant margin post corrections.

Hence, post the recent corrections, the Smallcap category offers a good entry point

-70%

-20%

30%

80%

130%

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20

Nifty Smallcap 100 Nifty 50

15

Presenting

ICICI Prudential Smallcap Fund

Big things come in

small packages

Why ICICI Prudential Smallcap Fund ?

Robust research &

screening process

Well Defined

Investment Strategy

& Portfolio Construct

Young and Agile:

AUM as on December 31,

2020 is Rs. 1,778.40 Crs

Robust Investment

Process

Young & Agile

YOUNG: TIMELINE FOR ICICI PRUDENTIAL SMALLCAP FUND AGILE

MAY 2018

ICICI Prudential Indo-

Asia Equity Fund gets

repositioned to ICICI

Prudential Smallcap

Fund post SEBI

scheme categorisation

Small fund size

enables the scheme

to better manoeuvre

across opportunities.

(AUM as on

December 31, 2020

is Rs. 1,778.40 Crs)

JULY 2018

Closure of Lump sum

investment:

Expectation of heightened

volatility & small cap

valuations which continued

to climb; prompted to

close lump sum subscription

under ICICI Prudential

Smallcap Fund

MARCH 2019

Opened the scheme for

lumpsum subscription

Post the correction in the

small-cap space,

valuations have become

reasonable & provides a

good opportunity to build

long term portfolio.

Research & Screening Process

The team of analysts provide the Fund Manager with their top picks and the same is reviewed by the fund manager.

Subsequently, weights are assigned. The small-cap universe of 250+ stocks is reduced to about 40-65 stocks following

the research and screening process. Filters used for the screening process is as follows

RoE – Return on Equity

Earnings growth potential

Leverage levels

Opportunity-size of the Sector

Corporate Governance

Valuations

Portfolio Construct & Strategy

The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. The asset allocation and investment

strategy will be as per Scheme Information Document

No. of Stocks

Small-cap Exposure

Mid- & Large-cap Exposure

40-65 Stocks

70-90% of the portfolio

10-30% (Tactical allocation and

for liquidity purpose)

Why Systematic

Investment Plan

(SIP)

Wealth Creation through SIP

Investing at regular intervals

irrespective of market

volatility averages out the

buying cost thus avoiding the

common mistake of buying

‘HIGH’ and selling ‘LOW’.

Regular, bite-sized

investments making it

affordable for investors

with small investible

corpus

Helps reap the

benefits of

compounding

Lower risk as exposure is

spread over a long period

of time

Ease of

investment

Top Stock Holdings

Portfolio Statistics of ICICI Prudential Smallcap Fund

Source: CRISIL; Data as of December 31, 2020; The stocks/sectors mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in these stocks/sectors. the asset

allocation and investment strategy will be as per Scheme Information Document.

Top Sector Holdings

Company Name % to NAV

Dixon Technologies (India) Ltd. 3.6

Mahindra Lifespace Developers Ltd. 3.6

Birlasoft Ltd. 3.3

Inox Leisure Ltd. 3.3

Brigade Enterprises Ltd. 3.0

Computer Age Management Services Ltd. 2.9

Jm Financial Ltd. 2.9

SRF Ltd. 2.8

Cholamandalam Financial Holdings Ltd. 2.8

Heidleberg Cement India Ltd. 2.7

Company Name % to NAV

Finance 16.3

Construction 11.4

Industrial Products 8.4

Consumer Non Durables 8.3

Software 7.4

Consumer Durables 7.2

Cement 5.5

Chemicals 4.5

Pharmaceuticals 4.0

Healthcare Services 3.9

Portfolio Features

Type of Scheme An open-ended equity scheme, predominantly investing in smallcap stocks

Plans

ICICI Prudential Smallcap Fund &

ICICI Prudential Smallcap Fund – Direct

Options Growth & Dividend (Monthly Dividend & Others)

Minimum Application Amount Rs. 5,000 (plus in multiples of Re.1)

Minimum Additional Application Amount Rs. 1,000 (plus in multiples of Re.1)

Minimum Redemption Amount Any amount

Entry Load Not applicable

Exit Load

Upto 1 Year 1% of applicable NAV

More than 1 Year Nil

Fund Manager S. Naren & Harish Bihani

Priyanka Khandelwal for Overseas Investments.

Benchmark Index Nifty SmallCap 250 TRI

SIP / SWP / STP Available

Riskometer & Disclaimer

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

All figures and other data given in this document are dated. The same may or may not be relevant at a future date. The AMC takes no responsibility of updating any data/information in this material from

time to time. The information shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written

consent of ICICI Prudential Asset Management Company Limited. Prospective investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other finan-

cial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. Data source: Bloomberg, except as mentioned specifically.

Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, including informa-

tion developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available

to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness

and / or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe”

and similar expressions or variations of such expressions, that are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to

risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which

have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or

other rates or prices etc. ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors, personnel and employees, shall not

liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material

in any manner. Further, the information contained herein should not be construed as forecast or promise. The recipient alone shall be fully responsible/are liable for any decision taken on this material.

ICICI Prudential Smallcap Fund is suitable for investors who are seeking*:

Long Term wealth creation

An open ended equity scheme that seeks to generate capital appreciation by predominantly investing in equity and

equity related securities of small cap companies.

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them

The Risk-o-meter(s) specified above will be evaluated and updated on a monthly basis. Please refer https://www.icicipruamc.com/news-and-updates/all-news for more details