l&t value fund
DESCRIPTION
Portfolio UpdateTRANSCRIPT
Equity Funds Monthly Update
September 2015
2
1. Market Round Up
2. Products
1. L&T India Large Cap Fund
2. L&T Equity Fund
3. L&T India Special Situations Fund
4. L&T Midcap Fund
5. L&T Infrastructure Fund
6. L&T India Value Fund
7. L&T Business Cycles Fund
3. Equity Investment Process
Contents
For product labeling please refer to the last slide.
Market Round Up
4
Title 1
Economy Country 1 Month (%
change)
3 Month (%
change)
6 Month (%
change)
1 Year (%
change)
YTD (%
change)
EM-Asia China -12.49% -30.48% -3.15% 44.60% -0.89%
DM-Asia Japan -8.23% -8.13% 0.49% 22.47% 8.25%
DM Germany -9.28% -10.11% -10.02% 8.33% 4.63%
DM France -8.45% -7.09% -6.03% 6.21% 8.90%
DM Sweden -7.09% -8.75% -11.23% 8.08% 2.49%
DM New Zealand -4.47% -3.23% -3.78% 8.29% 1.58%
DM Italy -6.78% -6.61% -1.77% 7.29% 15.41%
DM Switzerland -6.40% -4.47% -2.11% 1.91% -1.77%
EM-Asia India -6.58% -5.48% -9.87% 0.21% -3.76%
EM Phillippines -5.98% -6.35% -8.17% 0.68% -1.82%
DM USA -6.57% -8.23% -8.85% -3.34% -7.27%
DM Spain -8.24% -8.55% -8.22% -4.38% -0.20%
EM Mexico -2.30% -2.20% -1.06% -4.18% 1.34%
DM Australia -8.64% -9.87% -12.17% -7.45% -3.77%
DM-Asia Hong Kong -12.04% -20.98% -12.70% -12.41% -8.20%
DM UK -6.70% -10.54% -10.06% -8.38% -4.85%
EM-Asia South Korea -4.37% -8.20% -2.23% -6.14% 1.35%
EM-Asia Thailand -4.01% -7.60% -12.89% -11.48% -7.70%
DM-Asia Singapore -8.78% -13.88% -14.15% -12.19% -13.19%
DM Canada -4.21% -7.69% -9.03% -11.31% -5.28%
EM-Asia Indonesia -6.10% -13.55% -17.26% -12.21% -13.72%
EM-Asia Taiwan -5.66% -15.73% -15.04% -13.37% -12.17%
EM-Asia Malaysia -6.41% -7.71% -11.45% -13.58% -8.43%
EM Brazil -8.33% -11.63% -9.61% -23.92% -6.76%
Global Markets - Performance
Source: Bloomberg. Data as on 31st August 2015. DM – Developed Markets, EM – Emerging Markets
Returns are denominated in Local Currency
5
Indian Markets - Performance
Source: Bloomberg. Data as on 31st August 2015. Sectoral performances as represented by BSE indices.
Category Index 1 Month (%
change)
3 Month (%
change)
6 Month (%
change)
1 Year (%
change)
YTD (%
change)
Sectoral Healthcare 5.36% 6.28% 15.91% 35.09% 22.51%
Broad Market Midcap -4.78% 0.17% 0.69% 21.66% 5.92%
Sectoral Consumer Durable -0.34% 3.58% 4.18% 20.34% 14.21%
Sectoral Capital Goods -10.68% -3.88% -9.40% 8.29% 4.58%
Sectoral Auto -6.50% -6.37% -9.63% 3.31% -4.11%
Sectoral Bank -8.66% -8.71% -10.16% 9.07% -8.49%
Broad Market Smallcap -7.27% -2.74% -4.54% 9.11% -1.66%
Sectoral FMCG -4.25% -0.76% -8.00% 6.44% 1.09%
Broad Market BSE 500 -6.21% -4.42% -7.62% 4.36% -1.73%
Broad Market BSE 200 -6.14% -4.65% -7.87% 4.17% -1.74%
Sectoral Teck -1.97% -0.42% -4.59% 8.98% 4.36%
Sectoral IT 0.80% 2.30% -5.91% 9.68% 5.21%
Broad Market BSE 100 -6.15% -5.02% -9.22% 1.30% -2.97%
Broad Market Nifty -6.58% -5.48% -9.87% 0.21% -3.76%
Broad Market Sensex -6.51% -5.55% -10.05% -1.33% -4.42%
Sectoral Power -11.15% -11.37% -20.09% -10.16% -12.33%
Sectoral Oil & Gas -10.34% -7.94% -7.54% -20.63% -10.28%
Sectoral Realty -9.13% -18.02% -31.43% -27.02% -18.93%
Sectoral Metal -14.10% -23.46% -29.70% -39.23% -30.75%
• FIIs were net sellers in Aug-15, as they sold equities to the tune of $2.6bn
• Domestic mutual funds remained net buyer this month
6
Portfolio Flows - Trend
Source: SEBI, NSDL
Products
L&T India Large Cap Fund (An open-ended equity growth scheme)
For product labeling please refer to the last slide.
9
L&T India Large Cap Fund
• A diversified equity strategy with focus on investing in large cap companies
• Invests predominantly in top 100 companies by market capitalization
• Strong long-term performance track record
• Inception date: 23-Oct-07
• Fund Manager: Venugopal Manghat & Abhijeet Dakshikar (for foreign securities)
• Benchmark: S&P BSE 100
• Fund Size : 368 crores (QAAuM, June 2015)
For product labeling please refer to the last slide.
• Invests predominantly in large cap companies
• Focus on fundamentals: Quality and scalability of business, Management and Valuation
• Looking to own companies with strong balance sheets, attractive return ratios and strong
cash flows. Companies that are expected to grow relatively faster than market
• Individual stock weight is a function of fundamentals, valuation, market sentiment and
conviction
• Stable portfolio with relatively limited churn
10
Investment approach and portfolio construction
Market Cap >$ 10 bn (approx)
30-35 companies
Market cap between $ 2-10 bn
(approx)
100-105 companies
Market cap: $ 1-2 bn
(approx)
85-90 companies
Ultra
large cap
Large Cap
Aspirants
80-100% of
portfolio
0-20% of
portfolio
Portfolio of
40-60
stocks
Market capitalization cut offs used to define ultra large cap / large cap / aspirants are internal.
11
L&T India Large Cap Fund - Portfolio information
Top 10 sector positions Top active stock positions
Top 10 holdings
Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks
Market capitalization break-up
Large cap: 84.83%
Small and Midcap: 12.71%
Debt / Cash: 2.46%
Sector Weight
Banks 21.16%
Software 10.26%
Pharmaceuticals 9.72%
Auto 7.41%
Construction Project 6.61%
Finance 6.48%
Cement 6.31%
Petroleum Products 4.91%
Auto Ancillaries 4.34%
Consumer Non Durables 4.18%
Company Fund Bm Active
Shree Cement Ltd. 2.93% 0.00% 2.93%
Hindustan Petroleum Corporation Ltd. 3.22% 0.42% 2.80%
Bharat Electronics Ltd. 2.35% 0.00% 2.35%
Maruti Suzuki India Ltd. 3.76% 1.67% 2.09%
Eicher Motors Ltd. 2.66% 0.58% 2.08%
Amara Raja Batteries Ltd. 1.93% 0.00% 1.93%
Motherson Sumi Systems Ltd. 1.71% 0.00% 1.71%
Sadbhav Engineering Ltd. 1.71% 0.00% 1.71%
Lupin Ltd. 3.03% 1.39% 1.64%
Glenmark Pharmaceuticals Ltd. 2.08% 0.51% 1.57%
Company % of net assets
Infosys Limited 6.50%
HDFC Bank Limited 6.17%
Larsen & Toubro Limited 3.94%
Maruti Suzuki India Limited 3.76%
ICICI Bank Limited 3.68%
Axis Bank Limited 3.37%
Hindustan Petroleum Corporation Limited 3.22%
HDFC 3.19%
Lupin Limited 3.03%
Shree Cements Limited 2.93%
L&T India Large Cap Fund – Attribution Analysis
• The scheme is having marginally underweight to neutral position in Banking sector. Scheme is
currently overweight in Federal Bank and Indusind Bank. Among Financials, scheme is having
overweight position in Power Finance Corp and MCX India
• The scheme continues to be underweight in IT sector. Infosys ltd performed well for the scheme
this month
• The scheme continues to be overweight in Pharmaceuticals sector. Position in Lupin, Divi’s lab
and Glenmark Pharma contributed positively to performance
• The scheme continues to be overweight in Cement sector. Companies like Shree Cement and
Ultratech cement are the major bets within the sector for the scheme
• The scheme continues to be overweight in Auto Ancillaries sector. Amara Raja Batteries
contributed to performance this month
12 Source: Bloomberg
L&T Equity Fund (An open-ended equity growth scheme)
For product labeling please refer to the last slide.
14
L&T Equity Fund
• A diversified equity strategy with a flexible ‘go-anywhere’ approach
• Ability to harness opportunities across the market spectrum - No market cap, sector or style
bias
• Fundamentals driven stock picking approach
• Strong long-term performance track record
• Suitable as a core holding
• Inception date: 16-May-05
• Fund Manager: S N Lahiri & Abhijeet Dakshikar (for foreign securities)
• Benchmark: S&P BSE 200
• Fund Size : 2929 crores (QAAuM, June 2015)
For product labeling please refer to the last slide.
• Aims to capitalize on investment opportunities across the market spectrum
• Focus on fundamentals: Quality and scalability of business, Management and Valuation
• Looking to own companies with strong balance sheets, attractive return ratios and strong
cash flows
• Individual stock weight is a function of fundamentals, valuation, market sentiment and
conviction
• Bottom-up stock picking aided by internal research
15
Investment approach and portfolio construction
16
L&T Equity Fund - Portfolio information
Top 10 sector positions Top 10 active stock positions
Top 10 holdings Market capitalization break-up
Large cap: 75.44%
Small and Midcap: 22.64%
Debt / Cash: 1.92%
Sector Weight
Banks 22.83%
Software 10.08%
Pharmaceuticals 7.39%
Construction Project 7.13%
Auto Ancillaries 6.85%
Auto 6.04%
Consumer Non Durables 5.49%
Cement 5.20%
Transportation 4.92%
Finance 3.54%
Company Fund Bm Active
Gateway Distriparks Ltd. 2.51% 0.00% 2.51%
Kotak Mahindra Bank Ltd. 3.91% 1.74% 2.17%
Divis Laboratories Ltd. 2.29% 0.40% 1.89%
Techno Electric & Engg Co Ltd. 1.65% 0.00% 1.65%
WABCO India Ltd. 1.61% 0.00% 1.61%
Aditya Birla Nuvo Ltd. 1.89% 0.29% 1.60%
Shree Cement Ltd. 1.80% 0.25% 1.55%
Kajaria Ceramics Ltd. 1.44% 0.00% 1.44%
LIC Housing Finance Ltd. 1.79% 0.35% 1.44%
Hindustan Petroleum Corporation Ltd. 1.80% 0.37% 1.43%
Company % of net assets
Infosys Limited 6.53%
HDFC Bank Limited 5.81%
Larsen & Toubro Limited 4.36%
ICICI Bank Limited 4.22%
Kotak Mahindra Bank Limited 3.91%
Axis Bank Limited 3.12%
Tata Consultancy Services Limited 3.04%
Maruti Suzuki India Limited 2.65%
Gateway Distriparks Limited 2.51%
IndusInd Bank Limited 2.41%
Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks
L&T Equity Fund – Attribution Analysis
• The scheme continues to be overweight in Banking sector. Bank of Baroda contributed to relative
performance this month
• The scheme continues to be overweight on Auto Ancillaries sector. Wabco India and Exide
Industries contributed positively to performance this month
• The scheme continues to be underweight in Consumer Staples space. This contributed to relative
performance as the sector declined during the month
• The scheme continues to be overweight in Cement stocks, through positions in Shree Cement,
Ramco Cement, Ambuja Cements and Ultratech Cement
• The scheme is underweight in Pharmaceuticals sector. Overweight position in Lupin and Divi’s
Lab contributed to performance this month
17 Source: Bloomberg
L&T India Special Situations Fund (An open-ended equity growth scheme)
For product labeling please refer to the last slide.
19
L&T India Special Situations Fund
• A diversified equity strategy with focus on identifying companies going through “Special
Situations”
• No market cap or sector bias. Adds style diversification to investor’s portfolio.
• Provides access to those situations in the stock market that have the potential to deliver
superior returns if spotted early, analyzed carefully & held onto for the right amount of time
• Strong long-term performance track record
• Inception date: 22-May-06
• Fund Manager: S N Lahiri & Abhijeet Dakshikar (for foreign securities)
• Benchmark: S&P BSE 200
• Fund Size : 949 crores (QAAuM, June 2015)
For product labeling please refer to the last slide.
• No capitalization or sector bias
• Diversified portfolio built around high conviction stocks in ‘Special Situations’
• Can take significant overweight positions
• Bottom-up stock picking aided by internal research
20
Investment approach and portfolio construction
Special Situations
Turnaround
New Business Streams
Under-appreciated
growth
Asset plays
Corporate actions
Out of market favour
Special Situations are unusual circumstances
that companies sometimes find themselves in –
either in terms of their business or their stock
price or both, these could include:
Turnarounds,
New business streams,
Underappreciated growth,
Asset plays,
Corporate actions,
Companies whose stocks have fallen out of
market favour, etc.
21
L&T India Special Situations Fund - Portfolio information
Top 10 sector positions Top 10 active stock positions
Top 10 holdings Market capitalization break-up
Large cap: 54.14%
Small and Midcap: 41.36%
Debt / Cash: 4.50%
Sector Weight
Banks 18.10%
Software 14.57%
Consumer Non Durables 6.46%
Pharmaceuticals 6.40%
Finance 6.20%
Construction Project 5.29%
Pesticides 4.98%
Cement 4.80%
Industrial Products 3.74%
Petroleum Products 3.14%
Company Fund Bm Active
Bayer Cropscience Ltd. 3.45% 0.11% 3.34%
Sundaram Finance Ltd. 3.31% 0.00% 3.31%
Jyothy Laboratories Ltd. 3.18% 0.00% 3.18%
HCL Technologies Ltd. 4.30% 1.36% 2.94%
Federal Bank Ltd. 2.56% 0.27% 2.29%
Kalpataru Power Transmission Ltd. 2.12% 0.00% 2.12%
State Bank Of Bikaner & Jaipur 1.95% 0.00% 1.95%
Mindtree Ltd. 2.05% 0.26% 1.79%
ACC Ltd. 2.00% 0.33% 1.67%
Blue Dart Express Ltd. 1.66% 0.00% 1.66%
Company % of net assets
Infosys Limited 5.32%
HCL Technologies Limited 4.30%
Larsen & Toubro Limited 4.06%
Bayer Cropscience Limited 3.45%
ICICI Bank Limited 3.36%
Sundaram Finance Limited 3.31%
Jyothy Laboratories Limited 3.18%
HDFC Bank Limited 3.15%
The Federal Bank Limited 2.56%
Axis Bank Limited 2.48%
Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks
L&T India Special Situations Fund – Attribution Analysis
• The scheme is marginally underweight in the Banking sector. Scheme is overweight in Federal
Bank, Axis Bank and Kotak Mahindra Bank. Among Financials, scheme is overweight in Shriram
Transport Finance and MCX India
• The scheme continues to be overweight in the Cement sector. JK Cement, ACC Cement and
Shree Cement are the overweight bets in the portfolio
• The scheme continues to be underweight in Consumer Staples space. Position in Jyothy Labs
contributed to performance this month
• The scheme has overweight position in Pesticides and Agrochemicals sector with exposure to
Bayer Cropscience, UPL and Sharda Cropchem
• The scheme is underweight in Pharmaceuticals sector. Exposure to Divi’s Lab and Lupin
performed well for the fund this month
22 Source: Bloomberg
L&T Midcap Fund (An open-ended equity scheme)
For product labeling please refer to the last slide.
24
L&T Midcap Fund
• A midcap focused strategy aimed at delivering higher alpha in the long run
• Opportunity to exploit and benefit from anomalies existing in less researched segment of the
market
• Helps in style diversification
• Suitable for relatively aggressive investors looking for long-term wealth creation. Minimum
investment horizon of 3-5 years
• Inception date: 09-Aug-04
• Fund Manager: S N Lahiri
• Benchmark: CNX Midcap index
• Fund Size : 325 crores (QAAuM, June 2015)
For product labeling please refer to the last slide.
• Portfolio well diversified across sectors and stocks
• Bottom-up investment approach
• Looks to invest in fundamentally strong companies with good growth prospects
• Focus on valuations – aims to own stocks with high margin of safety to reduce overall portfolio risk
• Aims at broad diversification of portfolio, with a view to manage liquidity at the aggregate portfolio level
25
Investment approach and portfolio construction
Highest Constituent
of the CNX Midcap
Index
Lowest Constituent
of the CNX Midcap
Index
80% - 100% of the
total net assets
Approx 50-70
Stocks
Predominantly invests in companies whose market capitalization falls between the highest and the
lowest constituent of the CNX Midcap Index
26
L&T Midcap Fund - Portfolio information
Top 10 sector positions Top 10 active stock positions
Top 10 holdings Market capitalization break-up
Large cap: 18.81%
Small and Midcap: 77.63%
Debt / Cash: 3.55%
Sector Weight
Consumer Non Durables 9.82%
Auto Ancillaries 7.20%
Industrial Capital Goods 7.02%
Textile Products 6.26%
Transportation 6.24%
Banks 6.17%
Finance 6.05%
Construction Project 6.04%
Software 6.03%
Pesticides 5.67%
Company Fund Bm Active
K P R Mill Ltd. 3.2% 0.0% 3.2%
Sundaram Finance Ltd. 3.0% 0.0% 3.0%
Techno Electric & Engg Co Ltd. 3.0% 0.0% 3.0%
Jyothy Laboratories Ltd. 2.5% 0.0% 2.5%
Federal Bank Ltd. 2.5% 0.0% 2.5%
Pfizer Ltd. 2.2% 0.0% 2.2%
Bayer Cropscience Ltd. 2.0% 0.0% 2.0%
Centum Electronics Ltd 1.9% 0.0% 1.9%
Gateway Distriparks Ltd. 1.9% 0.0% 1.9%
Hitachi Home & Life Solutions Ltd 1.9% 0.0% 1.9%
Company % of net assets
K.P.R. Mill Limited 3.15%
Sundaram Finance Limited 3.03%
Techno Electric & Engineering Company Limited 3.00%
Britannia Industries Limited 2.63%
Jyothy Laboratories Limited 2.53%
The Federal Bank Limited 2.48%
Emami Limited 2.40%
Procter & Gamble Hygiene and Health Care
Limited 2.26%
Pfizer Limited 2.24%
Ashok Leyland Limited 2.23%
Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks
L&T Midcap Fund – Attribution Analysis
• The scheme continues to be overweight in Consumer Durable stocks. Stocks like Tube
Investments performed well this month
• The scheme is currently overweight in Banking sector. The scheme is overweight in Federal bank
and Karur Vysya Bank currently
• The scheme has overweight position in Industrials Capital Goods sector with major positions in
Alstom India and Centum Electronics
• The scheme continues to be overweight in Cement stocks. Birla Corp performed well for the fund
• The scheme is currently underweight in Consumer Staples space. Jyothy Laboratories aided
relative performance this month
27 Source: Bloomberg
L&T Infrastructure Fund (An open-ended equity scheme)
For product labeling please refer to the last slide.
29
L&T Infrastructure Fund
• A thematic fund which predominantly invests in companies which are likely to benefit from
India’s infrastructure growth
• Preference for companies with scalable businesses, proven execution track record and
strong balance sheets
• Focus on companies that offer best value relative to their long-term growth prospects
• No market capitalization or style bias
• Inception date: 27-Sep-07
• Fund Manager: S N Lahiri
• Benchmark: CNX Nifty index
• Fund Size : 213 crores (QAAuM, June 2015)
For product labeling please refer to the last slide.
• Provides opportunity to benefit from participation in India’s structural infrastructure
growth
• Potential to deliver higher returns, although with relatively higher risk
• A product with potential to generate significant alpha, especially during economic
recovery / high growth phase
• A product that could be used to complement core mutual fund portfolio holdings, with
a minimum investment horizon of 3-5 years
30
Product Positioning
31
Portfolio information
Top 10 sector positions Top 10 holdings
Sector Weight
Construction Project 21.62%
Industrial Capital Goods 18.40%
Transportation 12.89%
Cement 9.72%
Industrial Products 5.78%
Power 5.62%
Telecom - Services 4.72%
Finance 4.09%
Construction 3.69%
Non - Ferrous Metals 3.20%
Company % of net assets
Larsen & Toubro Limited 7.12%
Techno Electric & Engineering Company Ltd 4.45%
Power Grid Corporation of India Limited 4.20%
Grasim Industries Limited 3.50%
Idea Cellular Limited 3.49%
VRL Logistics Limited 3.30%
Gateway Distriparks Limited 3.08%
Centum Electronics Limited 2.70%
IDFC Limited 2.69%
Snowman Logistics Limited 2.68%
Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015
L&T India Value Fund (An open-ended equity growth scheme)
For product labeling please refer to the last slide.
33
L&T India Value Fund
• Diversified equity fund with strong value bias that aims to deliver long term superior risk-
adjusted returns
• Focus on identifying valuation anomalies versus the economic potential of the business over
the medium term
• Aims to minimize portfolio risk by investing in quality companies, monitoring corporate
fundamentals closely
• No sector / market cap bias
• Adds style diversification to portfolio
• Fund Manager: Venugopal Manghat & Abhijeet Dakshikar (for foreign securities)
• Benchmark: S&P BSE 200
• Fund Size : 234 crores (QAAuM, June 2015)
For product labeling please refer to the last slide.
What is Value Investing?
A strategy of investing in stocks that trade at less than their intrinsic value
Price to Earnings Enterprise Value / Sales
Price to Book ROE
Dividend Yield ROCE
Enterprise Value / EBITDA Cash Flows
PEG FCF / Sales
Business models / Fundamentals, Management, Market Sentiments
• The fund looks to invest in fundamentally strong companies that the fund manager believes
are trading at less than their assessed values thus offering higher upside potential
• This approach not only helps in identifying undervalued stocks but also factor-in the risk
elements while picking stocks
35
L&T India Value Fund - Portfolio information
Top 10 sector positions Top 10 active stock positions
Top 10 holdings Market capitalization break-up
Large cap: 37.48%
Small and Midcap: 53.46%
Debt / Cash: 9.06%
Sector Weight
Banks 13.28%
Construction 7.06%
Auto Ancillaries 7.06%
Software 6.74%
Finance 5.11%
Textile Products 4.79%
Petroleum Products 4.70%
Transportation 4.49%
Textiles - Cotton 4.12%
Cement 3.73%
Company Fund Bm Active
Hindustan Petroleum Corporation Ltd. 2.59% 0.37% 2.22%
Himatsingka Seide Ltd. 2.17% 0.00% 2.17%
TVS Srichakra Ltd. 2.05% 0.00% 2.05%
UPL Ltd. 2.44% 0.40% 2.04%
Indo Count Industries Ltd. 1.94% 0.00% 1.94%
ITD Cementation India Ltd. 1.81% 0.00% 1.81%
The Ramco Cements Ltd. 1.91% 0.11% 1.80%
FDC Ltd. 1.67% 0.00% 1.67%
VRL Logistics Ltd. 1.67% 0.00% 1.67%
Ahluwalia Contracts Ltd. 1.50% 0.00% 1.50%
Company % of net assets
Infosys Limited 4.95%
ICICI Bank Limited 4.47%
Hindustan Petroleum Corporation Limited 2.59%
UPL Limited 2.44%
Axis Bank Limited 2.37%
Himatsingka Seide Limited 2.17%
Reliance Industries Limited 2.11%
TVS Srichakra Limited 2.05%
State Bank of India 1.95%
Indo Count Industries Limited 1.94%
Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks
L&T India Value Fund – Attribution Analysis
• The scheme is currently underweight in Banking sector. Position in Bank of Baroda contributed to
performance
• Overweight position in Auto Ancillaries stocks like Wabco and Gabriel India contributed positively
to performance this month
• The scheme has overweight position in Textile sector. Himatsingka Seide and Indo Count
contributed to performance this month
• The scheme continues to be overweight in Cement stocks. JK Lakshmi Cement aided relative
performance this month
• The scheme has positions in Construction sector through stock like National Buildings
Construction and KNR Constructions
36 Source: Bloomberg
L&T Business Cycles Fund (An open-ended equity scheme)
For product labeling please refer to the last slide.
38
L&T Business Cycles Fund
• An open - ended equity scheme with business cycle approach to investing
• Focus on riding business cycles by strategically changing allocation between various
sectors and stocks at different stages of business cycles in the economy
• Portfolio positioning driven by medium term business cycle trends and not short term
market movement
• Focus on identifying companies that offer best value relative to their respective long-
term growth prospects, returns on capital and management quality
• Fund Manager: Venugopal Manghat and Abhijeet Dakshikar (foreign securities)
• Benchmark: S&P BSE 200
• Fund Size : 1225 crores (QAAuM, June 2015)
For product labeling please refer to the last slide.
Business Cycle approach
Business cycle patterns have historically tended to repeat themselves over time
Changes in some of the key indicators provide relatively reliable guide in identifying different phases of
an economic cycle
Cyclical factors linked with the state of the economy largely drive the performance of equity sectors over
the intermediate term
Business cycle approach focuses on riding business cycles by
strategically changing allocation between various sectors and
stocks at different stages of business cycle in the economy
Lower inflexion point
Higher inflexion point
Eco
no
mic
Act
ivit
y
Timeline
39
Phase 1 Phase 2 Phase 3 Phase 4
Trough to
recovery
Recovery to
expansion
Expansion
to Peak
Peak to
Contraction
Product positioning
• A product that is suitable for investors looking to benefit from strategic positioning of
portfolio based on stage of business cycle
• Potential to deliver higher alpha over long term.
• A product which could potentially outperform in both rising as well as falling market
• Suitable for investors looking to benefit from economic recovery over the next few
years
• Adds style diversification to investor’s portfolio
40
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L&T Business Cycles Fund - Portfolio information
Top 10 sector positions Top 10 active stock positions
Top 10 holdings Market capitalization break-up
Large cap: 52.26%
Small and Midcap: 43.02%
Debt / Cash: 4.72%
Sector Weight
Banks 23.89%
Construction Project 8.18%
Construction 7.78%
Finance 7.68%
Auto 7.52%
Industrial Capital Goods 7.45%
Industrial Products 6.66%
Transportation 6.50%
Cement 5.49%
Consumer Durables 4.27%
Company Fund Bm Active
Ashok Leyland Ltd. 2.27% 0.34% 1.93%
Maruti Suzuki India Ltd. 3.27% 1.45% 1.82%
Beml Ltd. 1.78% 0.00% 1.78%
KNR Constructions Ltd. 1.77% 0.00% 1.77%
Hindustan Petroleum Corporation Ltd. 2.11% 0.37% 1.74%
Sadbhav Engineering Ltd. 1.73% 0.00% 1.73%
National Buildings Construction
Corporation Ltd. 1.61% 0.00% 1.61%
Ashoka Buildcon Ltd 1.60% 0.00% 1.60%
Gateway Distriparks Ltd. 1.58% 0.00% 1.58%
ITD Cementation India Ltd. 1.56% 0.00% 1.56%
Company % of net assets
HDFC Bank Limited 5.49%
ICICI Bank Limited 4.81%
Housing Development Finance Corporation Ltd 3.57%
Axis Bank Limited 3.30%
Maruti Suzuki India Limited 3.27%
Larsen & Toubro Limited 2.64%
IndusInd Bank Limited 2.38%
Ashok Leyland Limited 2.27%
Hindustan Petroleum Corporation Limited 2.11%
State Bank of India 1.97%
Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks
L&T Business Cycles Fund – Attribution Analysis
• The scheme is currently overweight in Banking sector. Positions in Bank of Baroda contributed
positively to performance
• The scheme continues to have overweight position in Industrials Capital Goods sector. BEML and
Crompton Greaves are major bets within the sector
• The scheme continues to be overweight on Industrial Products sector. Cummins India contributed
to performance this month
• The scheme is overweight in Consumer Durable stocks. IFB Industries contributed to relative
performance during the month
• The scheme is overweight on Construction sector. Exposure to stocks like ITD Cementation
helped in relative outperformance this month
42 Source: Bloomberg
Equity Investment Process
Generation
of Ideas
Manufacturing
and monitoring
of Portfolios
• External Research:
• Broker research
• Industry research
• In house fundamental
research:
• Around 350 stocks
under coverage
• Filters / screens
• Business cycles
• Meet industry
experts,
competitors,
suppliers, regulators
Identify potential ideas
• Quality
• Profitability and attractiveness of business
• Competitive positioning
• Stage in business cycle
• People
• Management track record and management incentives
• Corporate governance
• Valuations
• P/E, EV / EBITDA
• good businesses at reasonable valuations or companies
on cheap valuations where fundamentals are improving
When buying a business, know the business
• Discussion in
Investment Committee
• Investment mandate –
scheme objectives,
stock and sector
diversification
• Regulatory limits
• Risk philosophy –
concentration, liquidity,
market cap size
• Tracking error
Implementation
Valuations
Evaluation
of
companies
Equity Investment Process – G.E.M.
44
45
Disclaimer
The views expressed herein are those of the fund managers and should not be construed as an advice. This
presentation is for general information only and does not have regard to specific investment objectives, financial
situation and the particular needs of any specific person who may receive this information. Investments in
mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and
financial advisors before investing. Recipient of this presentation should understand that statements made here
in regarding future prospects may not be realized. He / She should also understand that any reference to the
stocks / securities/ sectors/ indices in the document is only for illustration purpose and should not be construed
as advice to buy those securities. The portfolio information is as of August 31, 2015 and is subject to change at
the discretion of the fund manager(s).Neither this presentation nor the units of L&T Mutual Fund have been
registered in any jurisdiction except India. The distribution of this presentation in certain jurisdictions may be
restricted or totally prohibited and accordingly, persons who come into possession of this presentation are
required to inform themselves about, and to observe, any such restrictions.
Risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents
carefully.
CL02113
Product Labeling
46