Core Infra Portfolio DRAFT PPT * The presentation should not be - - PowerPoint PPT Presentation
L&T INVESTMENT MANAGEMENT LTD. PMS Introduces Core Infra Portfolio DRAFT PPT * The presentation should not be construed as sector recommendation from the Portfolio Manager. 1 *Not For Solicitation *For Information Purpose Only *Not For
*Not For Solicitation *For Information Purpose Only *Not For Further Circulation * The presentation should not be construed as sector recommendation from the Portfolio Manager. 1
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* The presentation should not be construed as sector recommendation from the Portfolio Manager. 2
Henning Holck-Larsen and Soren Kristian Toubro
Construction, Electrical and Electronics, Industrial Products and Information Technology, and Financial Services
across seven decades
partnerships across geographies and across sectors
comprehensive marketing and distribution network
experienced personnel enable it to offer integrated services in world markets
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Source: Bloomberg,* as on 30th Dec, 2011
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Data as on 31/3/11
Assets 64,114 Net worth 25,051 Gross Sales 53,204 PAT 4,456 Market Cap* 60,884
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* The presentation should not be construed as sector recommendation from the Portfolio Manager.
Mutual Funds 13% FI's & Insurance Companies 20% FII's 16% L&T Welfare Trust 12% Domestics Companies 7% Others 34%
Shareholding Pattern
Source :BSE *Data as on 30th Sept’11 4
Reputable Companies” survey
2009)
Past performance may or may not be sustained in future and is no guarantee of future results.
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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Finance Company - Non Deposit Taking’
L&T Finance Limited is mainly involved in the following businesses:
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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Larsen & Toubro Ltd L&T Finance Holdings Ltd L&T Finance Limited L&T Investment Management Ltd. L&T Infrastructure Finance Co Ltd L&T General Insurance Ltd L&T Capital Company Ltd
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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(September 2011 onwards) MBA and B.Com
responsible for strategy and business development of the Financial Services Group of L&T. Since, September 2011, Mr. Bishnoi has been deputed to L&T Investment Management Limited (LTIML) as an Acting CEO to supervise and oversee the AMC and Mutual Fund business. He has been associated with several leading financial services brands like HSBC India Investments Ltd., UTI Asset Management Ltd., DSP Merrill Lynch Mutual Fund and JM Mutual Fund over the past 17 years. Apart from this, he was also associated with consumer services for over 13 years.
Investment Management Limited (July 2010 onwards) CFA from AIMR, USA, MMS from
Jamnalal Bajaj, Mumbai
AMC Pvt. Ltd and has more than 6 years of experience in buy side and 8 years on the sell side. He has worked as an Analyst and as a Head of Research. Prior to joining LTIML - PMS, he was a senior member of the fund management team at ICICI Prudential PMS. He has experience in managing a wide variety of funds.
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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Why Infra now?
years in the stock market; hence it could provide attractive valuations.
issues, sector valuations seem to have taken a beating in the last 3 years.
available at attractive valuation.
Why Core Infra Portfolio?
the sector.
funds – Local as well as Offshore.
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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(ACA, L.L.B.)
Ex-CFO and WTD, Larsen & Toubro Limited and is associated with L&T Group for more than 37
Infrastructure Finance Limited.
(ACA)
mergers and acquisitions and investor relations. He is currently, heading the financial services business of L&T Group. He played a key role in structuring the demerger of the cement business of L&T and inducting private equity investors in L&T Infrastructure Development Projects Limited.
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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Investment Management Group, L&T Finance Holdings Limited
(PGDM- IIM, Bangalore, BE- Electronics & Power, Nagpur University)
CRISIL, BNP Paribas, SBI Funds Management and Cholamandalam Cazenove AMC over the past 23 years. His previous assignment was as the Managing Director & Chief Executive Officer of Tata Asset Management Limited, which is a position he held for over 8 years.
(MBA from the Symbiosis Institute of Business Management, Pune)
& corporate finance, private equity business and advisory on infrastructure & energy sector reforms.
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11 * The presentation should not be construed as sector recommendation from the Portfolio Manager.
Private Limited
(B. Sc (Econ.) from the Wharton School of business, CFA Charter Holder)
been a developer of Global Rational Analysis Framework™, a research based valuation and investment platform. Important notes:
a) Investment Advisory Board (IAB) is an internal committee formed specifically for this Portfolio. Accordingly, the Portfolio Manager reserves the right to remove the concept of IAB, without providing prior notice to the Investors. b) Members mentioned are indicative list. The list of members can be changed at the sole discretion of the Portfolio Manager, without providing prior notice to the Investors. c) The Portfolio Manager also reserves the right to change the scope of the said Board, without providing prior notice to the Investors. *Not For Solicitation *For Information Purpose Only *Not For Further Circulation
12 * The presentation should not be construed as sector recommendation from the Portfolio Manager.
with the investment expertise in the Infrastructure Space
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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Investment Advisory Board (IAB) – Key highlight of the Portfolio
direction
request
the IAB
be approved by the IAB
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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The above process is indicative in nature and actual process may vary.
– Operators who run infra project – Developers who develop projects to offload to others (operators typically) – EPC contractors who do the engineering of the project – Structural material producers / traders – Pure Infra Financiers – Some combinations of above
paradigm, based on business realities and cycles that needs to be factored
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and low quality companies
fundamentally different from investing in a low quality stock
relevant to use
when selecting stocks and their holding horizon
The above approach of the Portfolio Manager is indicative in nature and actual approach may vary.
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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longer period for e.g. next four-five years
times within the four-five years window
long visibility of free cash flows, operating efficiencies etc. Look for Moat Businesses
balance sheet based valuations
The above process is indicative in nature and actual process may vary. * The presentation should not be construed as sector recommendation from the Portfolio Manager.
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exposure of maximum weightage of 5% of the portfolio (at the time of making investments). Any increase/ decrease of the limit would be done in consultation with the IAB.
buys + pro-rata sales)*0.5) / average assets under management. Pro-rata buys & sales are all those trades that are done on behalf of all clients under that portfolio, and do not include trades done for specific client instructions including capital inflows and outflows. Annual portfolio turnover will be kept below 2.
PMS holding is 5% or more of the companies equity, should not be greater than 10% of the portfolio.
* The presentation should not be construed as sector recommendation from the Portfolio Manager. * The Limits mentioned above are internal and can be changed without prior notice at the discretion of the Portfolio Manager.
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between 0%-100%; mid-cap between 0%-75%. Small Cap stocks could be considered in the portfolio on case to case basis in consultation with the
the stocks should be sold in 1 day, 75% in 3 days and 100% in 5 days.
Large cap – top 150 companies, Mid cap – next 300 and remaining small cap in market cap rankings on trailing 6 months basis, in the listed universe
* The presentation should not be construed as sector recommendation from the Portfolio Manager. * The Limits mentioned above are internal and can be changed without prior notice at the discretion of the Portfolio Manager.
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Important Notes:
investments.
mentioned in earlier slides) to respond to the dynamic market conditions and market opportunities.
reserves the right to change all or any of them without giving any prior notice.
internal risk control measures.
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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Around 85% of the planned expenditure for the XIth plan is
Telecommunication, Railways and Irrigation.
Sectoral spend of planned Infrastructure Sector in XIth Five Year Plan
The private sector contribution is expected to be 36% of the spend for the XIth Five Year Plan as against 30% planned originally and 25% for the Xth Five Year Plan. Source: infrastructure.gov.in
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CNX Infra has delivered CAGR return of
* The presentation should not be construed as sector recommendation from the Portfolio Manager.
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Source: Bloomberg, as on 30th December, 2011
* Returns mentioned above are for information purpose only.
* This slide/ presentation should not be construed as any sector recommendation from the Portfolio Manager. 24
* Past Performance may or may not be sustained in future.
Benchmark Indices 1 yr 3 yr 4 yr 5 yr
Sensex (24.20) 16.73 (6.58) 2.31 BSE IT (15.75) 37.22 6.15 1.75 BSE Teck (16.21) 20.08 (4.21) (1.53) BSE Metals (46.92) 21.31 (17.46) 0.55 BSE FMCG 9.85 26.58 14.84 15.83 BSE Oil& Gas (28.65) 7.21 (13.26) 4.03 BSE Auto (19.70) 49.82 9.49 8.08 BSE PSU (32.29) 6.41 (11.70) 1.07 BSE Bank (30.63) 18.32 (5.38) 5.25 BSE Capital Goods (47.43) 5.46 (20.06) (2.36) BSE Real Estate (50.68) (15.54) (42.66)
(39.49) (0.52) (20.73) (2.59)
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* This slide/ presentation should not be construed as any sector recommendation from the Portfolio Manager. 25
* Past Performance may or may not be sustained in future.
(60.00) (40.00) (20.00)
40.00 60.00
Sensex BSE IT BSE Teck BSE Metals BSE FMCG BSE Oil& Gas BSE Auto BSE PSU BSE Bank BSE Capital Goods BSE Real Estate BSE Power 1 yr (24.20) (15.75) (16.21) (46.92) 9.85 (28.65) (19.70) (32.29) (30.63) (47.43) (50.68) (39.49) 3 yr 16.73 37.22 20.08 21.31 26.58 7.21 49.82 6.41 18.32 5.46 (15.54) (0.52) 4 yr (6.58) 6.15 (4.21) (17.46) 14.84 (13.26) 9.49 (11.70) (5.38) (20.06) (42.66) (20.73) 5 yr 2.31 1.75 (1.53) 0.55 15.83 4.03 8.08 1.07 5.25 (2.36)
BSE Indices
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* This slide/ presentation should not be construed as any sector recommendation from the Portfolio Manager. 26
* Past Performance may or may not be sustained in future.
Benchmark Indices 1 yr 3 yr 4 yr 5 yr
Nifty (24.21) 15.78 (6.84) 3.11 CNX Bank (31.48) 16.33 (5.19) 5.80 CNX Nifty Junior (31.07) 22.28 (9.62) 3.23 CNX IT (18.19) 40.84 6.27 2.47 CNX FMCG 9.07 26.01 12.72 14.55 CNX Reality (50.41)
(38.03) (6.40) (22.92) (7.17) CNX PSE Index (30.96) 4.98 (12.44) 1.81
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* This slide/ presentation should not be construed as any sector recommendation from the Portfolio Manager. 27
* Past Performance may or may not be sustained in future.
(60.00) (50.00) (40.00) (30.00) (20.00) (10.00)
20.00 30.00 40.00 50.00 Nifty CNX Bank CNX Nifty Junior CNX IT CNX FMCG CNX Reality CNX Infra CNX PSE Index 1 yr (24.21) (31.48) (31.07) (18.19) 9.07 (50.41) (38.03) (30.96) 3 yr 15.78 16.33 22.28 40.84 26.01
4.98 4 yr (6.84) (5.19) (9.62) 6.27 12.72
(12.44) 5 yr 3.11 5.80 3.23 2.47 14.55
1.81
NSE Indices
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Companies mentioned above is for illustration purpose only and should not be construed as recommendation.
* This presentation should not be construed as sector recommendation from the Portfolio Manager. 28 * Past Performance may or may not be sustained in future.
Company Name 4 Years CAGR(%) Sales* PAT* MCAP
Bharat Heavy Electricals Ltd. 32.30 30.41 (16.7) Crompton Greaves Ltd. 17.97 31.26 (12.6) Jaiprakash Associates Ltd. 53.59 13.21 (34.0) Larsen & Toubro Ltd. 27.69 28.75 (16.3) Mundra Port & Special Economic Zone Ltd** 22.12 39.60 (16.6)
* 3.75 years; ** 2.75 years
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Stock selection to be the key- Need insights to separate the grain from the chaff
The presentation should not be construct as sector recommendation for AMC. * data for last 3 years only
Companies mentioned above is for illustration purpose only and should not be construed as recommendation.
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* Past Performance may or may not be sustained in future.
Data as of 30/12/11 6 years
Company Name Highest P/E Lowest P/E Average Current Crompton Greaves Ltd. 40.9 8.3 20.45 14.2 Jaiprakash Associates Ltd. 56.5 9.4 20.9 11.7 Larsen & Toubro Ltd. 54.9 12.2 25.7 13.8 Reliance Infrastructure Ltd.* 60.5 5.7 18.1 6.0 Siemens Ltd. 46.4 10.1 29.2 23.6 Tata Power Company Ltd. 51.7 7.3 18.7 10.4 Voltas 43.8 4.9 19.8 10.6 Thermax 36.0 6.0 20.7 11.9
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Switchgears/Relays/Circuits
The above universe is indicative only and can be revised at the sole discretion of the Portfolio Manager.
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Core Infra Portfolio
investment experience
managing Infra funds – local as well as offshore
* The presentation should not be construed as sector recommendation from the Portfolio Manager. 31
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Objective: To seek long-term capital appreciation by investing primarily in
listed equity and equity related securities of companies engaged in Infrastructure sectors which are expected to benefit from the growth and development of economy. The Fund Manager also reserves the right to either invest in debt/ fixed income instruments of companies engaged in the Infrastructure sectors or remain in cash or invest in the units of mutual fund for extended periods of
and/ or to take position calls on the long side.
Benchmark Index: CNX Infra Minimum Investment: Rs 5 Lakh
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4 years. The Portfolio Manager reserves the right to extend/ early terminate the Defined Tenure of the Portfolio
a) When the Portfolio Manager believes extension of Portfolio in the interest of the Clients to extend the defined portfolio tenure.
b) When the portfolio returns are below the hurdle rate (10% CAGR)
a) When the portfolio objectives are termination of Portfolio met or exceeded and the Portfolio Manager believes it to be the
Portfolio. b) When the Portfolio Manager believes that the portfolio objectives are unlikely to be met during the Defined Tenure of the Portfolio
Client are requested to note that the above conditions may not be exhaustive.
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10% p.a. (CAGR) on pre tax basis
Upto 2.5%
Upto 2% p.a.
20% profit sharing (applicable service tax & other taxes) for returns above the hurdle rate of 10% p.a. (CAGR) to be calculated at the end of the Portfolio tenure or early exit by the Client (whichever is earlier).
In case of extension/ early termination
would be charged to the Clients. Please note that fixed management fees and performance linked fees would be charged by the Portfolio Manager on pro-rata basis depending on the period
Sheet of the Product for further details.
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Distribution will be net of all taxes as applicable
Within 45 days from the end of the Portfolio tenure or early exit by the Client (whichever is earlier).
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Client hereby agrees and undertake that Portfolio Manager reserves the sole discretion to change the attributes of the Proposed Product Structure.
In the event of early termination of the Portfolio by the Client in writing, following exit load will be charged:
a) If the Portfolio is commenced b) If the Portfolio is commenced on
Investment days Exit load (%) 0 - 366 4 367 - 731 3 732 - 1096 2 1097 - 1461 1 > 1461
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Client hereby agrees and undertake that Portfolio Manager reserves the sole discretion to change the attributes of the Proposed Product Structure.
Investment days Exit load (%) 0 – 365 4 366 – 730 3 731 – 1095 2 1096 – 1461 1 > 1461
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All services and investments advices rendered by Portfolio Manager are subject to market risks and the performance of the Product and securities may vary depend upon the factors and forces affecting the securities market, including price and volume volatility in the stock markets, interest rates, currency exchange rates, foreign investments, changes in government policies, taxation, political, economic or other developments and closure of the stock exchanges and that there is also risk of loss due to lack of adequate external systems for transferring, pricing, accounting and safekeeping or record of securities. Investments/Disinvestments in Products and securities also involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal. Past performance of the Portfolio Manager does not guarantee future performance of the Product and the Portfolio Manager does not give any kind of assurance of whatsoever nature, as regards the returns on this Product The name of the Product does not in any manner indicate either the performance/ quality of this Product or its future prospects and returns, and is only the indicative name for identification and convenience. The Portfolio Manager gives no assurance on the returns or that the investment objective
Associates/ Group entities are not responsible or liable for any loss or shortfall resulting from this product.
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The value of the product offered may be affected by the performance of individual companies, change in the general market conditions, factors and forces affecting capital markets in particular, factors specific to the issuer of the securities, various
various risks including but not limited to risk associated with investment/ disinvestment in Equity and Equity related Instruments Investment in Derivatives, etc. Derivatives including futures and options are affected by various risks including counterparty risk, market risk, valuation risk, liquidity risk and basis risk. Derivative products are specialized instruments that require investment techniques and risk analysis different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivatives require maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and other related capabilities. Investment decisions made by the Portfolio Manager may not always be profitable.
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Please read the Product related Documents, Term Sheet, Application Form, Client Agreement for fees/ expenses and other information carefully before investing. The information (including market views expressed herein) is for general information
and the particular needs of any specific person who may receive this information. The information is non binding and the recipient of this information is not obligated to make investments. Investments/ Disinvestments in Products and securities inherently involve risks and recipient should consult their legal, tax and financial advisors before
herein regarding future prospects may not be realized or achieved. The recipient should understand that any reference to the securities/ sectors in the document is
Fund Manager or the Portfolio Manager or any of its Associates/ Group Entities. Any performance information shown refers to the past should not be seen as an indication
herein nor the Products of the Portfolio Manager have been registered in any jurisdiction; hence please be guided by applicable laws before investing in the Products of the Portfolio Manager. No representations or warranties are made (express or implied) as to the reliability, accuracy or completeness of such information; L&T Investment Management Limited or any of its Associates/ Group Entities cannot be held liable for any loss arising directly or indirectly from the use of, or any action taken in on, any information appearing in this presentation. The Source if not defined in the presentation is Internal.
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