India Special Opportunities Portfolio

Focus on Strong Filters

Fundamentally strong companies help to provide downside protection

Quantitative factors: — Strong balance sheets — Good capital allocation track record — High return on capital over a longer time frame

Qualitative factors: — High corporate governance — Established business model — Prominent market share — Skilled management

Portfolio Construct

Portfolio Weight Catalysts that drive stock selection Rationale

65% - 70%

• Micro turnaround• Macro / Change in business cycle• Management change• Deleveraging• Demerger

Higher upside potential withcatalyst expected to play outover a period of 2-3 years

30%-35% • Mid to large cap potential• Secular growth names Consistent performers

• Diversified, Multi cap portfolio of 15-25 stocks • Core focus on companies that are primed to benefit from micro and macro catalysts• Endeavours to exploit the inefficiencies in the market that leads to mispricing of stocks that are fundamentally strong• Focus on strong Quantitative filters and Qualitative factors

Portfolio Management ServicesAditya Birla Sun Life AMC Limited

1800-270-7000

Investment Process:

ROE/ ROCELeverage and debt servicingManagement Quality

Risk / Reward Analysis

Apply Quantitative & Qualitative Screeners

Portfolio Universe

Micro / Macro Turnaround

Demerger / Deleveraging

Management Change

Potential upside of 100% in 3 - 4 years

Identify Companies that benefit from the catalysts

Portfolio optimisation

Select 15 - 25 quality companies with high growth and potential upside

Reject the companies which do not filter through the screeners

Narrow down the list to 50 - 60 stocks

Current Portfolio Allocation

Basis the above investment framework the current portfolio is invested as below:

Portfolio Data as on March 31, 2020.

% of NetIndust allocation

Financials

Health Care

Consumer Staples

Industrials

Consumer Discretiona

Utilities

Communication Services

Materials

Cash

27.4

18.5

15.2

11.5

9.3

7.0

5.7

3.2

2.3

Allocation %Catalyst

Micro turnaround

Secular Growth

Macro turnaround

Management change

Mid to Large Cap potential

Deleveraging

Cash

30.6

24.9

20.4

12.6

6.0

3.3

2.3

Weight %Market cap bias

Largecap

Midcap

Smallcap

Cash

58.2

31.9

7.6

2.3

Equity Outlook

Portfolio vs Benchmark- Higher Growth/ROE’s with lower leverage

Top 10 Portfolio Holdings

Over the past four-six weeks We have seen a ve sharp correction in equity valuations, mainly due to selling by FIIs. FII’s have pulled out nearly $16 billion as of 20 April 2020 from India since the beginning of the crisis. Also, the Market cap-to-GDP ratio has fallen swistly from 79% as on FY19 to 58% (FY20E GDP), much below long-term average of 75% and closer to levels last seen during FY09.

The recent waves of fear and panic has led to extreme volatility in the equity markets. While we appreciate the risk of health & lives of people worldwide and expect most people to be fearful, we expect these market turns are perhaps the best opportunities one can sight. Historically, investing during these volatile times has rewarded investors handsomely over following 1 year and 3 years’ period. Periods like this are opportunities to cher pick quality businesses which have been facing market turbulence but remain strong fundamentally.

While there is some pick up seen across pockets of stocks in the Indian markets, the broad markets are still down around 20-25% on 1 year basis due to the impact of Covid 19. While China is scraping back to normalcy, other major economies still are fighting to flatten the curve.

While the price movements have been sharp in the last couple of weeks, we have been buying selectively and are keenly observing the behaviour of the markets. In our view, we expect a few trends to play out in the next 12 months, some of them being 1. Faster recove in businesses levered to rural sector vs. urban, 2. Faster rebound in low ticket discretiona items vs. high ticket purchases, and 3. Cash rich businesses could come out stronger from the crisis. Also, this could provide structural opportunities for few sectors. For e.g., many countries are moving or seriously contemplating to move their manufacturing bases out of China. India must capitalize on this opportunity & few Indian industries like Chemicals can be a beneficia of this move

We believe that one should take advantage of this opportunity and invest now to generate strong returns in the near future. Our portfolio is expected to benefit on account of exposure to high quality companies with strong earnings growth visibility.

Sr. No.

1

2

3

4

5

6

7

8

9

10

% to Net AssetsCompany Name

HDFC Bank

Torrent Power

Dr. Lal Pathlabs

Trent

ICICI Bank

Kotak Mahindra Bank

ITC

Bharti Airtel

Avenue Supermarts

Torrent Pharmaceuticals

8.6

7.0

6.4

6.0

5.8

5.2

5.2

4.9

4.7

4.6

ISOPNisty 500Nisty

34.0

25.3

23.3

24.7

16.4

15.2

22.0

14.7

13.6

49.2%

PE (x) FY1 9 FY20EPrem/Disc

to benchmark(FY20E)

ISOPNisty 500Nisty

5.0%

ISOPNisty 500Nisty

64.7%

FY21E

ISOPNisty 500Nisty

-73.8%

ROE (%) FY1 9 FY20E FY21E

EPS growth(%)

FY1 8 FY19E FY20E

Net debt toEquity (%)

FY1 9

Prem/Discto benchmark

(FY20E)

Prem/Discto benchmark

(FY20E)

Prem/Discto benchmark

(FY19E)

10.2%

12.8%

13.3%

12.7%

12.0%

12.8%

13.7%

13.0%

14.0%

41.7%

12.0%

12.8%

36.9%

10.1%

10.3%

18.5%

11.2%

11.8%

18.70%

71.4%

82.2%

Alembic Pharmaceuticals Ltd: The company manufactures pharmaceutical products, pharmaceutical substances and intermediates. Alembic Pharma is gearing to reap ₹2000 cr. capex spent over past three years towards setting up four new facilities and expanding API capacities. Alembic’s base business in US is expected to remain steady in FY21/FY22, on the back of new products launches from existing facilities, continued traction in sartan and with an upside potential from azithromycin. Post the rationalization of distribution channel in Indian formulation business, growth is set to pick up in FY21. We expect India business to grow by 10%/9% in FY21/22. We also expect normalization of business in Europe, as most of its products have been brought under mandato serialization. While new facilities provide a long-term growth trajecto, near-term performance of the company would be driven by (a) continued traction in sartan drugs (c) pick up in India/European business on normalization (d) scale up in API business.

Thermax Ltd: Thermax’s order book has been shrinking & new order flow has seen decline, as observed in the Q3 results. Order inflows increased 8.5% YoY as the company booked a large FGD order (INR 4.3bn), but its order book continues to contract and was down 16% YoY to INR 54.3bn (0.8x TTM sales). We expect the sales decline to accelerate over the next 2 quarters as Thermax’s order book continues to shrink and believe revenue accretion from long-gestation FGD orders will start in 2QFY21. Slowing pace of execution in FGD as the specialised segment faces global sourcing challenges, push back of Danstoker break even by 1 year to FY21 and a slowdown in the FGD order award pace by NTPC.

In the month of March, we added Alembic Pharmaceuticals Ltd to the portfolio and exited Thermax Ltd from the portfolio.

Portfolio Update

Risk Ratios

Analytics for period ending March 31, 2020

India Special Opportunities (Model) Portfolio

*Risk free rate assumed to be 4.81%( MIBOR as on March 31, 2020)Above ratios are calculated on Annualised basis using 1 year histo of monthly data points

Benchmark

Nisty 500

Standard Deviation

11.05%

Sharpe Ratio*

1.30

Beta

1.00

PTO

40%

Risk Factors and Disclaimers:

Investments in securities are subject to market risks and there can be no assurance or guarantee that the objectives of the Product will be achieved. Any information contained in this publication does not constitute and shall be deemed not to constitute an advice, an offer to sell/ purchase or as an invitation or solicitation to do so for any securities ofany entity. Please note that this is not an advertisement. The document is solely for the information and understanding of intended recipients only. If you are not the intended recipient, you are hereby notified that any use, distribution, reproduction or any action taken or omitted to be taken in reliance upon the same is prohibited and may be unlawful. Aditya Birla Sun Life Asset Management Company Ltd. (ABSLAMC) / its subsidiaries / affiliates or their officers, employees, personnel, directors shall not be liable for any loss, damage, liability whatsoever for any direct or indirect loss arising from the use or access of any information that may be displayed in this publication from time to time. Recipients of the information contained herein should exercise due care and caution and read the disclosure document (including if necessa, obtaining the advice of tax / legal / accounting / financial / other professionals) prior to taking of any decision, acting or omitting to act, on the basis of the information contained herein. Aditya Birla Sun Life AMC Limited-Portfolio Managers has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the PMS and / or its affiliates and which may have been made available to the PMS and / or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The PMS however does not warrant the accuracy, reasonableness and / or completeness of any information. The actual investments / portfolio decisions are a result of complex technical & fundamental valuations at the disposal of the portfolio manager. Investors are advised against replication of strategies implemented. Information contained herein shall not be copied/circulated/reproduced/quoted in any form or manner (in part or whole) without the express written consent of Aditya Birla Sun Life Asset Management Co. Ltd. Any forward-looking word, phrase or expression is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the said forward-looking word, phrase or expression.

Model Portfolio refers to portfolio of earliest investor in the product and in case of redemption of the model client, portfolio of earliest client in the said product rebased for computation of returns. It refers to specific investments that the investor will have in his portfolio when it is completely built-up over a period of time. Past performance may not be sustained in the future. Investments in securities are subject to market risks. Please refer to disclosure document. The returns are absolute for the period mentioned less than 1 year and in CAGR for the period more than 1 year. Individual portfolios of investors may va from the model portfolio due to factors such as timing of ent and exit, timing of additional flows and redemptions, individual investor mandates (if any), specific portfolio construction characteristics or structural parameters. These factors may have bearing on individual portfolio performance and hence individual returns of investors for the said portfolio type may va from the data on performance of the portfolio depicted above. Neither the Portfolio Manager nor the Asset Management Company, its Directors, employees or sponsors shall in any way be liable for any variation in the actual returns of individual portfolios.

One India Bulls Centre, Tower 1, 17th Floor, Jupiter Mill Compound, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai - 400 013.

Tel: 4356 8000. Fax: 4356 8110 / 8111

Security investments are subject to market risks and there is no assurance or guarantee that the investment objective will be achieved.

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For any service related queries, please contact us:

1800 270 7000 care.pms@adityabirlacapital.com