Invesco India Caterpillar Portfolio - Investment Approach following Mid & Small Cap strategy
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Invesco India Caterpillar Portfolio
Investment Approach following Mid & Small Cap strategy
July 2021
Disclaimer: This document is prepared by Invesco Asset Management (India) Private Ltd ('IAMI'). for informational purposes only and is not an offering. Circulation, disclosure, or
dissemination of all or any part of this material to any unauthorized persons is prohibited.Invesco India Caterpillar Portfolio
Capitalizing on transformational opportunities in Mid & Small Cap Companies
Caterpillar Cocoon Butterfly
1Mid Cap:101st to 250th company in terms of full market capitalization. 2 Small Cap:251st company onwards in terms of full market capitalization. Please refer to full details on Investment
Approach on Page 25 of the presentation.
2Investment strategy & portfolio construction guidelines
Investment Focus Portfolio Construct
Fundamentally strong and high growth mid-sized1 and small-sized2 • Bottom-up stock selection Approach
companies
• Companies with emerging business • High conviction portfolio, 15 to 25 Stock Portfolio
• Niche players in established sector • Maximum exposure to single stock 8%* exposure & Sector 40%*
• Leader in smaller sectors
• Businesses where large cap companies have negligible presence
1Mid Cap:101st to 250th company in terms of full market capitalization. 2 Small Cap:251st company onwards in terms of full market capitalization. *Calculated at time of investment
Please refer to full details on Investment Approach on Page 25 of the presentation.
3Stock Selection Approach
Non-linear growth • Business with competitive advantages
potential • Scalable business model
• Generates adequate free cash flow
Low capital-intensive
• Delivers attractive returns on capital deployed
business
• Potential for earning growth
Comfortable entry
• Low Entry multiple with scope for P/E re-rating as execution / delivery gets established
valuation
Please refer to full details on Investment Approach on Page 25 of the presentation.
4Portfolio Construction Process
Stock Portfolio
Investment
Categorization Construction
Strategy
Framework# Levers
Stock Categorized Portfolio Portfolio
Universe Stocks Universe
259 175 103 15-25
Stocks Stocks Stocks Stocks
Data as on June 30, 2021
#For details on Stock Categorization Framework please refer next slide.
5Proprietary Stock Categorization Framework
Stock Descriptions Growth Prospects Company Attribute Financial Parameter
Category (e.g.) (e.g.) (e.g.) (e.g.)
In line or better than Track record of leadership, Industry leading
Leader Established companies
industry globally competitive margin / ROE
Young / established Unique proposition and / or Margin & ROE
Warrior Better than industry Growth
companies right place, right time expansion
Star Young companies High growth Entrepreneur vision, scalability Operating Leverage
Company with Management intent to Value of
Diamond Low growth
valuable assets unlock value asset / business
Value
Company in a Intrinsic strengths in
Frog Prince Back to growth P2P, ROE expansion
turnaround situation core business
Corporate event, restructuring,
Shotgun Opportunistic investment Positive surprise Event visibility Event
earnings news
Call on the cycle Integration, cost efficiency,
Commodities Positive Profit leverage
is paramount globally competitive
P2P: Path to Profit; ROE: Return on Equity.
Based on internal stock classification and subject to change from time to time
6Portfolio strategy in action
7Indraprastha Gas Ltd.
Stable business with high capital return ratios
Delivering strong RoCE Improving Return on Equity Stock / Benchmark Performance
Initial buy date Jul 03, 2018
Final sale date Jun 16, 2021
Holding period 1,079
58% Performance XIRR, CAGR
57% 31.84%
26%
55%
22% 22%
46% 21%
-4.03%
FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 Indraprastha Gas Ltd. Nifty Midcap 100
Data Source: Company reports, Capitaline & Internal.
Past performance may or may not be sustained in future. Note: Performance of the stock shown above is from the period when stock was included in the model portfolio. Stock Performance Return Method: XIRR (Extended internal rate of return)
CAGR: Compounded annualize growth rate. RoCE: Return on Capital Employed. RoE: Return on Equity
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. The Investment Approach / Client Portfolio’s
/ Other Investment Approaches offered by IAMI may or may not have any present or future positions in this stock. The performance of above stock should not be construed as performance of the Investment Approach or the Clients portfolio, as it would
be constituted of number of stocks having different weights & the individual stock held by the portfolio may or may not give positive returns. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any
returns.
8Balkrishna Industries Ltd.
Business leadership and cost advantages, lead to margin expansion
Increased Capacity Utilization Improving Gross profit per tonne Improving EBITDA/ MT (in INR) Stock / Benchmark Performance
(in INR) Initial buy date Nov 27, 2019
Final sale date Holding on Jul 31, 2021
79,725 Holding period 613 days
1,51,383 Performance XIRR, CAGR
81.10%
83.86%
70.40% 1,38,159
67.30% 1,35,229
66.40% 70,466
69,550 34.53%
1,28,330
1,26,577 67,594
67,222
58%
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 Balkrishna Industries Nifty Midcap 100
Ltd.
Data Source: Company reports, Capitaline & Internal.
Past performance may or may not be sustained in future. Note: Performance of the stock shown above is from the period when stock was included in the model portfolio. Stock Performance Return Method: XIRR (Extended internal rate of return)
CAGR: Compounded annualize growth rate. . EBITDA: or earnings before interest, taxes, depreciation, and amortization. MT: Metric tonne
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. The Investment Approach / Client Portfolio’s
/ Other Investment Approaches offered by IAMI may or may not have any present or future positions in this stock. The performance of above stock should not be construed as performance of the Investment Approach or the Clients portfolio, as it would
be constituted of number of stocks having different weights & the individual stock held by the portfolio may or may not give positive returns. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any
returns.
9TVS Motors Ltd.
Increased sales lead to improved topline and EBIDTA
Increased volume Growth in Net Revenues Improving EBITDA Stock / Benchmark Performance
Initial buy date Mar 28, 2019
Final sale date Sep 11, 2020
Holding period 533 days
14,333 Performance XIRR, CAGR
3,91,370
18,210 13,459
19.86%
16,423
3,46,608 11,750
15,175
3,26,330
9.38%
2,92,728
12,135 8,571
FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 TVS Motor Company Ltd. Nifty Midcap 100
Data Source: Company reports, Capitaline & Internal.
Past performance may or may not be sustained in future. Note: Performance of the stock shown above is from the period when stock was included in the model portfolio. Stock Performance Return Method: XIRR (Extended internal rate of return)
CAGR: Compounded annualize growth rate. . EBITDA: or earnings before interest, taxes, depreciation, and amortization. JLR: Jaguar Land Rover
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. The Investment Approach / Client Portfolio’s
/ Other Investment Approaches offered by IAMI may or may not have any present or future positions in this stock. The performance of above stock should not be construed as performance of the Investment Approach or the Clients portfolio, as it would
be constituted of number of stocks having different weights & the individual stock held by the portfolio may or may not give positive returns. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any
returns.
10TATA Motors Ltd.
Improving domestic market share & better EBITDA at JLR due to large cost cutting programs
Leader position in commercial Improving passenger vehicle Improving EBITDA on JLR Stock / Benchmark Performance
vehicles segment market share business, on low volume growth Initial buy date Oct 09, 2020
Final sale date Holding on July 31, 2021
Volumes (LHS) EBITDA margin (%, RHS)
Holding period 296 days
8.27%
51.20% 6,00,000 14 Performance XIRR, Absolute
12.83
13
5,50,000
5,07,892 12
6.85% 108.55
50.10% 5,00,000
4,75,952 %
11
6.39%
49.70%
4,50,000 10
49.30% 8.93
62.73%
9
4,00,000 8.26
4.98% 8
3,47,632
3,50,000
7
3,00,000 6
FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 FY19 FY20 FY21 Tata Motors Ltd. Nifty Midcap 100
Data Source: Company reports, Capitaline & Internal.
Past performance may or may not be sustained in future. Note: Performance of the stock shown above is from the period when stock was included in the model portfolio. Stock Performance Return Method: XIRR (Extended internal rate of return)
CAGR: Compounded annualize growth rate. EBITDA: or earnings before interest, taxes, depreciation, and amortization. JLR: Jaguar Land Rover
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. The Investment Approach / Client Portfolio’s
/ Other Investment Approaches offered by IAMI may or may not have any present or future positions in this stock. The performance of above stock should not be construed as performance of the Investment Approach or the Clients portfolio, as it would
be constituted of number of stocks having different weights & the individual stock held by the portfolio may or may not give positive returns. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any
returns.
11Jubilant Foodworks Ltd.
Improving EBITDA led to re-rating, however low growth & expensive valuation led to exit
Continuous declining same store sales However, cost rationalizing along focus on Stock / Benchmark Performance
growth, given the pandemic delivery, lead to improving EBITDA Initial buy date Mar 05, 2020
Final sale date Oct 16, 2020
Holding period 225 days
16% 26% Performance XIRR, Absolute
58.02%
22%
3%
17% 9.60%
-14%
FY19 FY20 FY21E FY19 FY20 FY21E Indraprastha Gas Ltd. Nifty Midcap 100
Data Source: Company reports, Capitaline & Internal.
Past performance may or may not be sustained in future. Note: Performance of the stock shown above is from the period when stock was included in the model portfolio. Stock Performance Return Method: XIRR (Extended internal rate of return)
CAGR: Compounded annualize growth rate. EBITDA: or earnings before interest, taxes, depreciation, and amortization.
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. The Investment Approach / Client Portfolio’s
/ Other Investment Approaches offered by IAMI may or may not have any present or future positions in this stock. The performance of above stock should not be construed as performance of the Investment Approach or the Clients portfolio, as it would
be constituted of number of stocks having different weights & the individual stock held by the portfolio may or may not give positive returns. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any
returns.
12Active Portfolio Positions
13Tata Elxsi Ltd.
Scalable ER&D services player, unique embedded design capability
• Business Profile: Leading participant in engineering, research and Financial Projections (Data / Estimate based on FY21 results )
development services for transportation, telecom, broadcast, consumer Sales (In Crs.) EBITDA (In Crs.) Profit after Tax (In Crs.)
electronics & healthcare industries. Based in FY20, generates over 75% 2,758
560
498
revenues from US & Europe, 12 % from India 2,338 687
771
1,826 368
522
• Large growth potential: ER&D (Engineering Research & Development)
services outsourcing market is just at ~5% of total worldwide ER&D spend
as compared to IT services outsourcing market at ~17%. India’s
penetration in ER&D outsourcing market is at ~30% compared to ~65% in
IT services. FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E
• Strong track record: Over the previous five years (FY15-FY20), its ROCE ROE EV/EBITDA
49.7
revenue grew by 14% CAGR and EBITDA at 16% CAGR and Profit after 33%
Tax (PAT) at 22% CAGR.
42% 37.7
• High return ratios and healthy free cash flow conversion: Over the 39% 30%
previous five years (FY16-FY20), average Return on Equity (ROE) was
36%, core Return on Capital Employed (ROCE) was 101% and average
EBITDA to Free Cash Flow (FCF) conversion was at 47%.
FY21 FY22E FY21 FY22E FY21 FY22E
Past performance may or may not be sustained in future.
Source: Company, Bloomberg, Internal Estimates. CAGR: Compounded annualized growth rate. ROE: Return on Equity. . ROCE: Return on Capital Employed. EV: Enterprise Value. EBITDA: Earnings before interest, tax, depreciation, and amortization.
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. IAMI may or may not have any present or
future positions in this stock or in any other portfolios offered by IAMI. The performance of above stock should not be construed as performance of IAMI portfolio offerings as each portfolio would be constituted of number of stocks having different weights
& the individual stock held by the portfolio may or may not give positive returns. The information provided herein may include statements/data of future expectations that are based on current views and assumptions and involves known and unknown risks
and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any returns.
14Teamlease Services Ltd.
Potential beneficiary of formalization in the labour economy
• Leader in Niche business: India’s leading provider of human resources Financial Projections (Data / Estimate based on FY21 results )
services in the organized segment across diverse set of industries. Sales (In Crs.) EBITDA (In Crs.) Profit after Tax (In Crs.)
6,790
• Business potential: Big addressable market for organized players in 169
141
flexible staffing as the penetration level is just ~0.6% in India against the 5,658
world average of ~2.3%. 134 105
4,715 81
100
• Saleable business model: As the scale of business increases, there is
scope for higher profitability driven by operating leverage as costs are non-
linear to growth FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E
• Growth Opportunity: Potential beneficiary of likely ‘formalization’ in the ROCE ROE EV/EBITDA
labour economy, post recent laws enacted by Central Govt
15% 60
13%
45
10% 13%
FY21 FY22E FY21 FY22E FY21 FY22E
Past performance may or may not be sustained in future.
Source: Company, Bloomberg, Internal Estimates. CAGR: Compounded annualized growth rate. ROE: Return on Equity. . ROCE: Return on Capital Employed. EV: Enterprise Value. EBITDA: Earnings before interest, tax, depreciation, and amortization.
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. IAMI may or may not have any present or
future positions in this stock or in any other portfolios offered by IAMI. The performance of above stock should not be construed as performance of IAMI portfolio offerings as each portfolio would be constituted of number of stocks having different weights
& the individual stock held by the portfolio may or may not give positive returns. The information provided herein may include statements/data of future expectations that are based on current views and assumptions and involves known and unknown risks
and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any returns.
15Indian Railway Catering & Tourism Corp Ltd.
Dominant Franchise
• Virtual monopoly: First mover in its largest segment of internet ticketing. Financial Projections (Data / Estimate based on Q3FY21 results )
Unique play on resumption of ‘Business as Usual’ travel as lockdown Sales (In Crs.) EBITDA (In Crs.) Profit after Tax (In Crs.)
phases out 876
796 678
622
2,131
• Beneficiary of ‘platform’ effect: Rising e-Booking penetration (90%+ 1,955
now, from 75% pre-Covid) to further drive operating leverage, conversion
of unreserved coaches to reserved category expands available booking 783
192 165
universe/capacity.
• Pricing Advantage: Price hike in Catering Services & Rail Neer segments FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E
to play out in FY22 earnings revival
ROCE ROE EV/EBITDA
• New Avenues: Tejas Express Trains - a precursor to privatization of 39%
162.3
passenger train operations by the Indian Railways provides decent 52%
optionality. Monetization potential of website (~60m active userbase) is
immense (e.g. Payment Gateway and/or Wallet)
12%
17% 39
• Free Cash Flow Generation: Strong cash conversion (OCF/EBITDA)
over last 5 years – 130%+;
FY21 FY22E FY21 FY22E FY21 FY22E
Past performance may or may not be sustained in future.
Source: Company, Bloomberg, Internal Estimates. CAGR: Compounded annualized growth rate. ROE: Return on Equity. . ROCE: Return on Capital Employed. EV: Enterprise Value. EBITDA: Earnings before interest, tax, depreciation, and amortization.
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. IAMI may or may not have any present or
future positions in this stock or in any other portfolios offered by IAMI. The performance of above stock should not be construed as performance of IAMI portfolio offerings as each portfolio would be constituted of number of stocks having different weights
& the individual stock held by the portfolio may or may not give positive returns. The information provided herein may include statements/data of future expectations that are based on current views and assumptions and involves known and unknown risks
and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any returns.
16Tata Motors Ltd.
Beneficiary of multi segment growth and margin improvement
• JLR, a 100% subsidiary is in the midst of major transformation from a Financial Projections (Data / Estimate based on Q3FY21 results )
relatively sub-scale luxury car manufacturer to a player with globally Sales (In Crs.) EBITDA (In Crs.) Profit after Tax (In Crs.)
relevant footprint. 14,620
50,677
3,64,760
42,879
• Margin Improvement: Cost optimization benefits coming out of more 3,23,622
9,509
30,555
models per platform can help in improving margins.
2,49,795
• Operating Leverage: India business operations expected to improve
given recovery in CV sales (Market leader) and steady comeback of -1,423
passenger Car division – can deliver operating leverage FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E
ROCE ROE EV/EBITDA
• Reasonable Entry Valuations provide substantial comfort; potential
beneficiary of a global cyclical/reflation, China-led recovery 17% 5.6
11%
4
5%
-2%
FY21 FY22E FY21 FY22E FY21 FY22E
Past performance may or may not be sustained in future.
Source: Company, Bloomberg, Internal Estimates. CAGR: Compounded annualized growth rate. ROE: Return on Equity. . ROCE: Return on Capital Employed. EV: Enterprise Value. EBITDA: Earnings before interest, tax, depreciation, and amortization.
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. IAMI may or may not have any present or
future positions in this stock or in any other portfolios offered by IAMI. The performance of above stock should not be construed as performance of IAMI portfolio offerings as each portfolio would be constituted of number of stocks having different weights
& the individual stock held by the portfolio may or may not give positive returns. The information provided herein may include statements/data of future expectations that are based on current views and assumptions and involves known and unknown risks
and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any returns.
17V-Mart Retail Ltd.
Niche businesses in sunrise industries
• Business with competitive advantages: Cater to the “under-consumed” Financial Projections (Data / Estimate based on Q3FY21 results )
India, extending across Tier II, III & IV cities and towns. It is a play on Sales (In Crs.) EBITDA (In Crs.) Profit after Tax (In Crs.)
organised retail, largely in Uttar Pradesh, Bihar and North-East 376
131
geographies where there is still a huge gap between aspirational growth 2,646
and organized retail presence.
• Growth potential: Key beneficiary of recovery in discretionary spending 166 9
1,339
as well as a potential shift in the spending pattern from unorganised to 1,075
131
organised retail chains. -6
FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E
• Scalable business model: Despite expanding its store base from 89 to
266 over the last 6 years the company has generated healthy free ROCE ROE EV/EBITDA
cashflow keeping balance sheet debt-free. 6%
4% 38.9
• Attractive returns on capital deployed: The high operating profitability 1% 30.7
has led to high ROCE compared to its peers.
-1%
FY21 FY22E FY21 FY22E FY21 FY22E
Past performance may or may not be sustained in future.
Source: Company, Bloomberg, Internal Estimates. CAGR: Compounded annualized growth rate. ROE: Return on Equity. . ROCE: Return on Capital Employed. EV: Enterprise Value. EBITDA: Earnings before interest, tax, depreciation, and amortization.
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. IAMI may or may not have any present or
future positions in this stock or in any other portfolios offered by IAMI. The performance of above stock should not be construed as performance of IAMI portfolio offerings as each portfolio would be constituted of number of stocks having different weights
& the individual stock held by the portfolio may or may not give positive returns. The information provided herein may include statements/data of future expectations that are based on current views and assumptions and involves known and unknown risks
and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any returns.
18Tata Power Co. Ltd.
Niche business in sunrise industries
• Strong Business Model: India’s largest private integrated utility with a Financial Projections (Data / Estimate based on Q3FY21 results )
presence across the value chain from coal mining to power distribution. Sales (In Crs.) EBITDA (In Crs.) Profit after Tax (In Crs.)
has high credibility as execution progressing on track (non-core
monetization and balance sheet deleveraging) 2,224
44,323 9,073
1,838
• Growth strategy & vison: Expected to transform into a green, consumer- 39,570 8,118
focused entity by 2025, reliant on scaling up Renewable Energy capacity 6,928
to 15GW; growing distribution as Government looks to privatize discoms 32,468 1,174
and incubate new age asset light B2C energy business (EV charging
stations, home automation and rooftop solar) Expected to double revenues FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E
and grow profits 3x till FY25
ROCE ROE EV/EBITDA
• Reasonable Valuation: Entry valuation fair 1.1x P/B FY23e; with reported
10.2
RoE journey from 6.7% in FY20 to 9.3% in FY23. Successful completion of 9%
8%
asset recycling (via InvIT) and change in Mundra asset PPA will endorse 7%
the turnaround.
8.7
5%
FY21 FY22E FY21 FY22E FY21 FY22E
Past performance may or may not be sustained in future.
Source: Company, Bloomberg, Internal Estimates. CAGR: Compounded annualized growth rate. ROE: Return on Equity. . ROCE: Return on Capital Employed. EV: Enterprise Value. EBITDA: Earnings before interest, tax, depreciation, and amortization.
Disclaimer: The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. IAMI may or may not have any present or
future positions in this stock or in any other portfolios offered by IAMI. The performance of above stock should not be construed as performance of IAMI portfolio offerings as each portfolio would be constituted of number of stocks having different weights
& the individual stock held by the portfolio may or may not give positive returns. The information provided herein may include statements/data of future expectations that are based on current views and assumptions and involves known and unknown risks
and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied. Invesco Asset Management (India) Private Ltd. is not guaranteeing or promising or forecasting any returns.
19Portfolio Update
20Sector allocation, an outcome of stock selection
Sector Investment Approach Weight (%) Nifty Midcap 100 Index Weight (%) Over / (Under) Weight (%) Top Holdings
Consumer Discretionary 25.60 15.48 10.12 Balkrishna Industries Ltd., Tata Motors Ltd.
Industrials 23.12 14.83 8.29 Teamlease Services Ltd., Bharat Electronics Ltd.
Information Technology 15.13 5.30 9.83 Tata Elxsi Ltd., Honeywell Automations India Ltd.
Materials 10.89 16.39 -5.50 National Aluminium Co. Ltd., Tata Metaliks Ltd.
Consumer Staples 8.32 2.19 6.13 United Breweries Ltd., Balrampur Chini Mills Ltd.
Utilities 5.37 7.98 -2.61 Tata Power Co. Ltd., Mahanagar Gas Ltd.
Real Estate 2.70 2.55 0.15 Brigade Enterprises Ltd.
Financials 2.52 22.69 -20.17 City Union Bank Ltd.
Communication Services 0.00 2.53 -2.53 N.A.
Energy 0.00 0.49 -0.49 N.A.
Health Care 0.00 9.58 -9.58 N.A.
Model Portfolio data as on July 31, 2021. Data Source: Internal / Bloomberg. Based on Global Industry Classification Standard (GICS) Sector classification.
Disclaimer: The sectors referred above should not be construed as recommendations, advice to buy, sell or in any manner transact in the sector and neither should it be considered as Research Report from (IAMI). The allocation of the above Sector is
of the Model Portfolio of the concerned Investment Approach. This Investment Approach / Client Portfolio’s / Other Investment Approaches offered by IAMI may or may not have any present or future positions in the sectors referred above. The portfolio
composition of individual clients may vary vis-à-vis the composition of model portfolio due to various factors viz. timing of investment/additional investment in client’s portfolio, timing of withdrawals in client’s portfolio, mandates given by respective client,
expenses charged to respective portfolio, dividend income in the respective portfolio etc. Securities investments are subject to market risks, please read the Disclosure Document carefully before investing.
21Portfolio characteristics & attributes
Characteristics Portfolio Nifty Midcap 100 Performance Attributes* Portfolio Nifty Midcap 100
Earnings Growth Standard Deviation (Monthly) 7.67% 8.20%
2 Sharpe Ratio (Monthly) 0.14 0.14
EPS Growth - FY22e 38.9% 23.6%
2 Beta 0.90 1.00
EPS Growth - FY23e 23.4% 18.4%
2 R-Squared 0.94 1.00
2 Year EPS CAGR (FY21-FY23) Estimate 27.4% 19.2%
Valuation
Price to Earnings1 FY 21 36.4 22.1 Market Capitalization Split
Price to Earnings1 FY 22 Estimate Large Cap allocation 9.8%
26.2 17.9
1
Price to Earnings FY 23 Estimate Mid Cap allocation 46.0%
21.2 15.1
1
Return on Equity FY 22 Estimate Small Cap allocation 37.9%
17.5% 14.6%
Avg. Weighted Market Capitalization ₹25,935 crs.
Median Market Capitalization ₹17,173 crs.
Large Cap:1st 100 company in terms of full market capitalization. Mid Cap: 101st to 250th company in terms of full market
capitalization. Small Cap: 251st company onwards in terms of full market capitalization.
Past performance may or may not be sustained in future.
Model Portfolio data as on July 31, 2021.
Notes on Characteristics: Source: Factset. 1 Weighted Harmonic Mean. 2 EPS growth is derived from P/E ratios. 3 Weighted Arithmetic Mean. “Weighted Harmonic Mean” is an average resulting from the multiplication of the reciprocal of the observation
for each component by the weightage of that stock in the portfolio/index. It reduces the impact of outliers. ROE: Return on Equity. EPS: Earnings Per Share. E denotes estimates. Disclaimer: Return on Equity, expected earnings growth & forward
earnings mentioned herein above are based on prevailing market conditions / various other factors / data points and is subjec t to change from time to time. It should not be construed as future returns of the investment approach. Invesco Asset
Management (India) Pvt. Ltd. is not guaranteeing or promising or forecasting any returns. Invesco Asset Management (India) Pvt. Ltd. is not guaranteeing or promising or forecasting any returns.
Notes on Performance Attributes: Source: Internal. *Risk ratios based on 3 years, monthly data history. (Risk- free rate of 3.39% based on overnight MIBOR).
22Investment Approach Performance
Net of Fees & Expenses Performance (in %) – As on July 31, 2021
Invesco India Caterpillar Portfolio Nifty Midcap 100
88.87
79.79
36.19
33.02 33.60 32.15
20.74
14.96 13.07 13.79 11.49 13.49 12.04 14.41 13.02 13.24 10.93
13.69
4.44 3.13
1 Month 3 Months 6 Months 1 Year 2 Years 3 Years 5 Years 7 Years 10 Years Since Inception
Disclaimer: Past performance may or may not be sustained in future. Invesco Asset Management (India) Private Ltd. (“IAMI” / “ Portfolio Manager”) does not offer guaranteed or assured returns. Returns up to 1 year are absolute & over 1
year are Compounded Annualized. Return Calculation Method: Time Weighted Rate of Return (TWRR). Investment Approach aggregate level return has been calculated after taking into account all applicable expenses (including applicable exit load) &
charges across client portfolios. The above returns may be subject to charging of expenses & charges at the time of closure of books of client accounts on periodic basis. The performance related information is not verified by SEBI. Returns of client wise
portfolio may vary vis‐à‐vis as compared to Investment Approach aggregate level returns due to various factors viz. timing of investment / additional investment, timing of withdrawals, specific client mandates, variation of expenses charged & dividend
income. Securities investments are subject to market risks, please read the Disclosure Document carefully before investing.
23Comparatively low drawdown vs mid & small cap indices
Invesco India Caterpillar Portfolio Nifty Midcap 100 Nifty Smallcap 100
-6% -7%
-10% -9% -9%
-13% -13% -13%
-16% -15% -17%
-20% -20%
-24% -23% -23%
-26%
-40% -39% -40%
-47%
CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 CY2020
Disclaimer: Past performance may or may not be sustained in future. Invesco Asset Management (India) Private Ltd. (“IAMI” / “ Portfolio Manager”) does not offer guaranteed or assured returns. Note: Drawdown is a measure that tells
investors how much would have been lost if the investor bought an investment at the absolute peak and sold it at rock bottom for respective period. It thus measures the largest single drop from peak value to bottom value in a portfolio before a new peak
is achieved. Drawdown based on absolute returns for respective Calendar Year. The above simulation is for illustration purpose only and should not be construed as a promise on minimum returns and safeguard capital. Return Calculation Method:
Time Weighted Rate of Return (TWRR). The above drawdown is calculated of the Investment Approach. Investment Approach return considers all applicable expenses (including applicable exit load) & charges across client portfolios. The performance
related information is not verified by SEBI. Returns of client wise portfolio may vary vis‐à‐vis as compared to Investment Approach aggregate level returns due to various factors viz. timing of investment / additional investment, timing of withdrawals,
specific client mandates, variation of expenses charged & dividend income. Securities investments are subject to market risks, please read the Disclosure Document carefully before investing.
24Investment Approach: Invesco India Caterpillar Portfolio
Investment The investment objective of the portfolio is to achieve capital appreciation over a long term by investing in Benchmark & Nifty Midcap 100
Objective a diversified portfolio Basis of Basis of Benchmark Section: The Nifty Midcap 100 index consist most actively traded mid-sized
Benchmark companies which captures the movement of the midcap segment thus providing an appropriate
Basis of The Portfolio shall invest in mid and small cap stocks that can get re-rated either because of growth in Section representative of the universe of stocks that the portfolio endeavors to invest in.
selection earnings, change in business environment or companies that may have been overlooked or are out of
of such types favour. While selecting stocks, the portfolio would prefer companies which exhibit scalable business Indicative The portfolio is suitable for investors seeking long term wealth creation by investing in equities with
of securities as model coupled with sustainable growth prospects and companies operating in niche or emerging business tenure an investment horizon of 5 years and above
part of the areas. For shortlisting opportunities, the portfolio would screen companies with good quality management, Or investment
investment sound corporate governance, competitive advantages, attractive returns on capital employed, adequate horizon
approach cash flow, potential for earning growth and P/E multiple expansion. The portfolio would filter manufacturing
companies based on Return on Capital Employed & Free Cash Flow and Financial Companies on the
Risks The portfolio invests in relatively smaller companies commonly referred to as mid cap and small cap
basis of Return of Equity & Return on Assets. The portfolio follows a bottom up stock selection approach
associated stocks. These companies may lack operational strength, which may make them vulnerable during
and would normally invest in 15 - 25 stocks, with no single stock having more than 8% exposure of the
with the weaker economic cycles. Additionally, stocks of these companies usually have lower trading
portfolio value and no single sector having more than 40% exposure of the portfolio value at time of
investment volumes on the exchanges, which may result into higher impact costs and longer execution time
investment.
approach compared to large cap stocks. These companies tend to be less researched compared to large cap
stocks and this may result into longer waiting period for the stock to reach their potential intrinsic
Type of Equity & Equity Related Instruments (Including Equity Derivatives), Money Market Instruments, Units of value.
Securities Liquid, Money Market and Overnight Mutual Fund Schemes and Cash & Cash Equivalents
Allocation of Under normal circumstances, the asset allocation of the portfolio shall be as follows: Subscription Minimum Investment: ₹50 Lacs
portfolio across Mode: Funds and/or Stock Transfer
Indicative Allocations (% of
types of Instruments
portfolio value)
securities Direct We do offer direct onboarding of clients, please write to us at pms@invesco.com for more details.
Equity & Equity Related Instruments (Including Equity Derivatives)# 90% to 100% Onboarding:
Money Market Instruments, Units of Liquid, Money Market and Overnight
0% to 10%
Mutual Fund Schemes and Cash & Cash Equivalents
# The Portfolio may have exposure to derivatives upto 30% of portfolio value in accordance with
guidelines issued by SEBI. The asset allocation pattern indicated above may change from time to time,
keeping in view market conditions. It must be clearly understood that the percentages stated above are
only indicative and not absolute and that they can vary substantially depending upon the perception of
market conditions of the Portfolio Manager, the intention being at all times to seek to protect the interests
of the Client. Such changes in the asset allocation pattern will be for defensive considerations.
25Portfolio Manager
Mr. Sameer Narayan
Principal Officer – Portfolio Management Services
Sameer has more than 20 years of experience in Indian equity markets. In his role as Principal Officer,
Sameer will be responsible for the PMS division within the firm. His last assignment was with Adani Advisory
LLP as Sr. Vice President where he established the Family Office and was responsible for advising
investments in Indian equities. In the past, he has also worked with BNP Paribas Investments managing
onshore and offshore funds under Portfolio Management Services. Sameer has also worked with SSKI,
Enam Securities and Motilal Oswal in the Research Function. He holds Masters in Management Studies
(MMS) from Narsee Monjee Institute of Management Studies (NMIMS), Mumbai and B.E degree with
specialization in Production Engineering.
26We are a leading independent global investment firm
Invesco Ltd. Invesco Asset Management (India) Private Ltd.
• $1.5 trillion in assets under management around • Expertise across equity, fixed income and gold investments with assets under management & advisory
the globe mandates of INR 50,147 crores (US$ 6.7 bn)
• Specialized investment teams managing • More than 34 investment strategies across fixed income, equity and gold
investments across a wide range of asset classes
• Proprietary stock selection process for Equity & Proprietary Credit Appraisal process for Debt.
and investment styles
• Experienced Investment Management Team of 19 members with combined experience of over 300+ years.
• More than 8,200 employees worldwide
• Believe in being True to Mandate
• On-the-ground presence in more than 20
countries, serving clients in more than 120 • Broad, deep and stable research platform.
countries • Defined and robust Risk Management Processes
Data of Invesco Ltd.: Invesco Ltd. Client-related data, investment professional, employee data and AUM are as of June 30, 2021 and include all assets under advisement, distributed and overseen by Invesco. Data of Invesco Asset Management (India)
Private Ltd.: AUM represents Average AUM for the quarter ending June 2021. Decimals have been rounded off.
27Disclaimer
Disclaimer: This presentation does not solicit any action based on the material contained herein. Risk Factors: All securities investments are subject to market risks and there can be no assurance that
Invesco Asset Management (India) Private Ltd. (“the Portfolio Manager / the Company”) will not treat the objectives of the portfolio(s) will be achieved. Each portfolio will be exposed to various risks
recipients as clients by virtue of their receiving this presentation. It does not constitute a personal depending on the investment objective, investment strategy and the asset allocation. The performance of
recommendation or take into account the particular investment objectives, financial situation / the portfolio may be affected by changes in factors affecting the securities markets such as volume and
circumstances and the particular needs of any specific person who may receive this presentation. The volatility in the capital markets, interest rates, currency exchange rates, changes in law/policies of the
Co's/sectors referred in this presentation are only for the purpose of explaining the concept of Portfolio Government, taxation laws, political, economic or other developments, general decline in the Indian
and should not be construed as recommendations from Portfolio Manager. The Portfolio may or may not markets, which may have an adverse impact on individual securities, a specific sector or all sectors.
have any present or future positions in these stock. The Portfolio(s) discussed in the presentation may Further, the investments by the portfolio shall involve investment risks such as trading volumes,
not be suitable for all the investors. The recipient of this material alone shall be fully responsible / liable settlement risk, liquidity risk, default risk including the possible loss of capital. The portfolio with
for any decision taken on the basis of this material. The appropriateness of a particular investment or investment objective to invest in a specific sector / industry would be exposed to risk associated with
strategy will depend on an investor’s individual circumstances and objectives. The distribution of this such sector / industry and its performance will be dependent on performance of such sector / industry.
presentation in certain jurisdictions may be restricted or totally prohibited to registration requirements and The Portfolio Manager in accordance with the features of respective Portfolio may use derivatives which
accordingly, persons who come into possession of this presentation are required to inform themselves require an understanding not only of the underlying instrument but of the derivative itself. Derivative
about and to observe any such restrictions and/ or legal compliance requirements. Persons who may products are leveraged instruments and can provide disproportionate gains as well as disproportionate
receive this presentation should consider and independently evaluate whether it is suitable for his / her / losses to the investor. Execution of such strategies depends upon the ability of the Portfolio Manager to
their particular circumstances and are requested to seek professional / financial advice. Past identify such opportunities. The decisions of Portfolio Manager may not always be profitable. The
performance is not a guide for future performance. Future returns are not guaranteed and a loss of portfolio, returns and expenses charged including Portfolio Management fees for each Client may differ
principal may occur. The Company and its affiliates accept no liabilities for any kind of loss arising out of from that of the other Client. Investors of the Portfolio Management Services are not being offered any
the use of this presentation. With respect to all information found in this presentation the Company has guaranteed / assured returns. The Portfolio Manager may invest in shares, debt, units of mutual funds,
obtained data from sources it considers reliable however, the Company and its directors, officers, agents, deposits or other financial instruments of associate/ group Co's. The name of the portfolio(s) does not in
or employees and its affiliates make no warranty, express or implied, including the warranties of any manner indicate either the quality of the product or their future prospects and returns. Investors are
merchantability and fitness for a particular purpose, or assume any legal liability or responsibility for the advised to read the risk factors given in the Portfolio Management Services Agreement and Disclosure
accuracy, completeness, or usefulness of any information contained therein and the Company shall not Document before making investments. Securities investments are subject to market risks, please read
be liable for any indirect, incidental or consequential damages sustained or incurred in connection with the Disclosure Document carefully before investing.
the use, operation, or inability to use this presentation and information contained therein. Under no
circumstances will the Portfolio Manager be liable for any loss or damage caused by anyone’s reliance
on information contained in this presentation.
28Get in touch Corporate Office: Invesco Asset Management (India) Private Limited 2101 A, 21st Floor, A- Wing, Marathon Futurex, N.M. Joshi Marg, Lower Parel, Mumbai – 400 013 +91 22 67310000 F +91 22 23019422 To invest: Call 1800-209-0007 ∆ sms ‘Invest’ to 56677 Invest Online www.invescomutualfund.com
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