Invesco India DAWN Portfolio - December 2018

 
Invesco India DAWN Portfolio - December 2018
Invesco India DAWN Portfolio
                                         DAWN: D - Demand recovery across cyclical & consumer discretionary sectors, A - Attractive
                                         valuation to provide margin of safety, W - Winning companies on the cusp of a new demand cycle
                                         leading to operating & financial leverage efficiencies, N - New credit & investment cycle to provide
                                         a boost to earnings recovery

                                         December 2018

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 DAWN Portfolio - December 2018
Invesco India DAWN Portfolio
DAWN: D - Demand recovery across cyclical & consumer discretionary sectors, A - Attractive valuation to provide margin of safety, W - Winning
companies on the cusp of a new demand cycle leading to operating & financial leverage efficiencies, N - New credit & investment cycle to
provide a boost to earnings recovery

                             Demand recovery across cyclical & consumer discretionary sectors

                             Attractive valuation to provide margin of safety

                             Winning companies on the cusp of a new demand cycle leading to operating
                             & financial leverage efficiencies

                             New credit & investment cycle to provide a boost to earnings recovery

Invesco India DAWN Portfolio (DAWN: D - Demand recovery across cyclical & consumer discretionary sectors, A - Attractive valuation to provide margin of safety, W - Winning companies on the cusp of a new
demand cycle leading to operating & financial leverage efficiencies, N - New credit & investment cycle to provide a boost to earnings recovery) henceforth will be referred as “DAWN”.

2
Invesco India DAWN Portfolio - December 2018
Investment philosophy
Value strategy investing at the cusp of recovery

    Catalyst for investing                                                                                                                                 Benefit to investors

    Cyclical recovery                                                                  Focused strategy on earnings
     Financials                                                                        recovery
     Industrials                                                                      Mean Reversion – key driver
     Consumer Discretionary                                                            of returns
    Levers for recovery                                                                Exposure to under owned
     Operating Leverage                                                                companies
     Financial Leverage                                                               Complement to existing
    Under owned to Value style                                                          growth oriented strategies
     Pharma                                        Investment style
     IT
                              Portfolio of 20 – 25 companies
                              Focus on mean reversion & value style
                              High impetus on quality business models & management
                              Bottom up stock picking approach without bias towards market cap or
                               sector

Value style investing is an investment strategy where stocks are selected that trade for less than their intrinsic values. Disclaimer: The sector referred above should not be construed as recommendations from
Invesco Asset Management (India) Private Ltd. The Portfolio may or may not have any present or future positions in these sectors or in any other portfolios offered by Invesco Asset Management (India) Private Ltd.

3
Invesco India DAWN Portfolio - December 2018
Invesco India DAWN Portfolio

    Portfolio Name     Invesco India DAWN Portfolio
                       (DAWN: D - Demand recovery across cyclical & consumer discretionary sectors, A - Attractive valuation to provide margin of safety, W -
                       Winning companies on the cusp of a new demand cycle leading to operating & financial leverage efficiencies, N - New credit & investment
                       cycle to provide a boost to earnings recovery)

    Portfolio          To generate capital appreciation by investing in companies available at reasonable valuations.
    Objective

    Portfolio          The focus of this portfolio would be on identifying sectors and stocks which are expected to benefit from revival in cyclical recovery. The
    Description        portfolio will also favour companies that will benefit from operating /financial leverage and are available at a discount to their fair/intrinsic
                       value.

    Indicative Asset   Under normal circumstances, the asset allocation of the portfolio shall be as follows:
    Allocation
    Pattern            Instrument                                                                       Indicative Allocations (% of portfolio value)

                       Equity & Equity Related Instruments                                              65% to 100%

                       Cash & Cash Equivalent                                                           0% to 35%

                       The portfolio will not have any capitalization bias. 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.

    Benchmark          S&P BSE 500

4
Invesco India DAWN Portfolio - December 2018
Equity Market Outlook
Valuations – Premium to long-term average

Sensex PE Ratio (trailing twelve months)
    30

    25                                                                                 Average since Dec ‘2003 : 18.73x
                                                                                                                                                                                        23.78x

    20

    15

    10

      5

      0
          Dec-03

                    Dec-04

                                Dec-05

                                           Dec-06

                                                       Dec-07

                                                                   Dec-08

                                                                              Dec-09

                                                                                          Dec-10

                                                                                                     Dec-11

                                                                                                                 Dec-12

                                                                                                                             Dec-13

                                                                                                                                        Dec-14

                                                                                                                                                    Dec-15

                                                                                                                                                             Dec-16

                                                                                                                                                                      Dec-17

                                                                                                                                                                               Dec-18
Despite recent correction, Sensex trades at a 27% premium to its long-term trailing 12 months average P/E multiple.

Source: MOSL, Invesco Asset Management (India) Research, Bloomberg, Data as on December 31, 2018. Past performance may or may not be sustained in future.

5
Invesco India DAWN Portfolio - December 2018
Equity Market Outlook
Profitability - Below long term average

Corporate profit as a share of GDP is lowest in more than a decade

                                                                                  7.36%
                                                                        7.04%

                                                             5.81%                                      5.78%
                                                  5.36%                                      5.20%                 5.38%

                                       4.60%                                                                                  3.80%                             Average : 4.17%
                                                                                                                                         3.76%
                                                                                                                                                   3.50%
                                                                                                                                                              3.33%
                            2.94%                                                                                                                                                   2.82%
                                                                                                                                                                         2.63%
                  2.06%                                                                                                                                                                      1.90%
       1.76%
          FY01

                    FY02

                               FY03

                                          FY04

                                                     FY05

                                                                FY06

                                                                          FY07

                                                                                     FY08

                                                                                                FY09

                                                                                                           FY10

                                                                                                                      FY11

                                                                                                                                FY12

                                                                                                                                           FY13

                                                                                                                                                      FY14

                                                                                                                                                                 FY15

                                                                                                                                                                            FY16

                                                                                                                                                                                      FY17

                                                                                                                                                                                              FY18
                       PAT (% of GDP)                                  Average

    Cyclically low corporate profits have significant room to recover

Source: CMIE, IIFL Research. Based on a standalone financials of more than 15,000 companies. PAT: Profit After Tax. Disclaimer: Past performance may or may not be sustained in future.

6
Invesco India DAWN Portfolio - December 2018
Where do we see opportunity

7
Invesco India DAWN Portfolio - December 2018
Cyclical Recovery: Financials
Credit growth recovering; credit cost expected to normalise

Credit growth – on path of recovery                                                                                            Credit cost at cyclical high, expected to come down

                                                                                                                                                                                                                   1.5%
                                                                                                                               1.6%
    30%

                                                                                                                                                                                                            1.4%
                                                                                                                               1.4%

                                                                                                                                                                                                                          1.2%
    25%

                                                                                                                                                                                                                                 1.1%
                                                                                                                               1.2%

                                                                                                                                             Average: 0.79%

                                                                                                                                                                                                                                         0.9%
    20%
                                                                                                                               1.0%

                                                                                                                                                                                                     0.8%
                                                                                                               13.58%

                                                                                                                                                                                              0.7%
                                                                                                                                                                                       0.7%
                                                                                                                                                                  0.7%

                                                                                                                                                                                0.7%
                                                                                                                               0.8%

                                                                                                                                                                         0.7%
    15%

                                                                                                                                                           0.5%
                                                                                                                                                    0.5%
                                                                                                                               0.6%
    10%

                                                                                                                                             0.3%
                                                                                                                               0.4%

                                                                                                                                      0.2%
    5%
                                                                                                                               0.2%

    0%                                                                                                                         0.0%
          Apr-10

                                                       Nov-13
                   Jan-11

                            Oct-11

                                     Jun-12

                                              Mar-13

                                                                Aug-14

                                                                         Apr-15

                                                                                  Jan-16

                                                                                           Sep-16

                                                                                                    Jun-17

                                                                                                             Feb-18

                                                                                                                      Nov-18

                                                                                                                                      FY06

                                                                                                                                             FY07

                                                                                                                                                    FY08

                                                                                                                                                           FY09

                                                                                                                                                                  FY10

                                                                                                                                                                         FY11

                                                                                                                                                                                FY12

                                                                                                                                                                                       FY13

                                                                                                                                                                                              FY14

                                                                                                                                                                                                     FY15

                                                                                                                                                                                                            FY16

                                                                                                                                                                                                                   FY17

                                                                                                                                                                                                                          FY18

                                                                                                                                                                                                                                 FY19E

                                                                                                                                                                                                                                         FY20E
Source: IAMI. Credit Cost = Provisions for NPA’s/Average total assets. The sector referred above should not be construed as recommendations from Invesco Asset Management (India) Private Ltd. The Portfolio may
or may not have any present or future positions in the above sector or in any other portfolios offered by Invesco Asset Management (India) Private Ltd.

8
Invesco India DAWN Portfolio - December 2018
Cyclical Recovery: Financials
Asset Quality – Improvement ahead

Impaired asset as % of total advances                                                                      Gross slippages outside stress pool as % of previous
                                                                                                           year advances

                           5.07%                                                                                    3.88%
                                       4.92%
                                                   5.06%
                                                               2.71%                                                                3.06%
                                                                           3.21%
    % of total advances

                                                                                       3.10%
                                                                                                                                                                                  2.46%
                                                                                                                                                                   2.22%
                                                               5.74%                                                                               1.99%                                          2.00%
                           5.21%
                                       4.99%                               4.80%
                                                                                       4.50%
                                                   4.11%

                          1Q FY18     2Q FY18    3Q FY18     4Q FY18      1Q FY19      2Q FY19                     1Q FY18        2Q FY18         3Q FY18        4Q FY18         1Q FY19         2Q FY19
                          Net NPA as % of advance Unrecognised stressed assets as % of advances

 Impaired assets for corporate lenders have consistently come down over last few quarters
 Incremental gross slippages outside known stress pool has come down indicating recovery ahead
Source: Invesco Internal Research, companies covered : SBI, Bank of Baroda, Indian Bank, ICICI Bank and Axis Bank. NPA: Non Performing Assets. The list is not exhaustive. It represents the companies which are
the largest corporate lenders within Indian banking system. Impaired asset: Includes unrecognized stress assets and net non performing assets. Gross slippages: Include accounts that have become NPA during the
quarter. The sector referred above should not be construed as recommendations from Invesco Asset Management (India) Private Ltd. The Portfolio may or may not have any present or future positions in the above
sector or in any other portfolios offered by Invesco Asset Management (India) Private Ltd.

9
Invesco India DAWN Portfolio - December 2018
Cyclical Recovery: Financials
Catalyst: Significant De-leveraging underway across corporate India

Deleveraging (Rs. bn)

  350

                      303
  300
                                                 275

  250

                                                                            193                        189
  200

  150

  100

                                                                                                                                   52
     50                                                                                                                                                       28
                                                                                                                                                                                           5
      0
                   Power                     Cement                       Roads                       Ports                      Land                     Airports                     Metro

                                    Stressed assets belonging to Steel sector being addressed
                                          through resolutions under the bankruptcy code
Source: IDFC, De-leveraging data as on December 31, 2017. The sector referred above should not be construed as recommendations from Invesco Asset Management (India) Private Ltd. The Portfolio may or may
not have any present or future positions in the above sector or in any other portfolios offered by Invesco Asset Management (India) Private Ltd.

10
Cyclical Recovery: Financials
Catalyst: Stressed assets coming down across various stress buckets, early
recognition of net performing assets

%100%
  change in the asset quality of large borrowers between March 2017 and March 2018: Based on Exposure

                                                                                          58.6%

     50%

       0%
                                                                                                                                                          -3.2%                           -4.3%
                                                                                                                         -14.4%

                          -30.7%
     -50%
                                                          -52.8%

  -100%
                          SMA-0                           SMA-1                           SMA-2                    Restructured                            NPAs                     Total Stressed
                                                                                                                 Standard Advance                                                     Advances

Source: Reserve Bank of India, Financial Stability Report Issue No. 18. December 2018. SMA-0: Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress, SMA-1:
Principal or interest payment overdue between 31-60 days, SMA-2: Principal or interest payment overdue between 61-90 days, NPAs: Gross Non-Performing Advances. The sector referred above should not be
construed as recommendations from Invesco Asset Management (India) Private Ltd. The Portfolio may or may not have any present or future positions in the above sector or in any other portfolios offered by Invesco
Asset Management (India) Private Ltd.

11
Cyclical Recovery: Industrials
Current Trends: Capex led by Government spending

    Road project award – NHAI delivers strong performance                                                    Project award cost ~2x during FY17-18
         18,000                                                                                                           1400
         16,000                                                                                                           1200
         14,000
                                                                                                                          1000
         12,000
                                                                                                                          800

                                                                                                                 Rs. bn
         10,000
 Km.

          8,000                                                                                                           600
          6,000                                                                                                           400
          4,000
                                                                                                                          200
          2,000
              0                                                                                                              0
                    FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19                                                                 FY11                   FY12               FY13              FY14               FY15                FY16               FY17                   FY18
             NHAI award    MoRTH award                                                                                    BOT (Toll/Annuity)                               EPC                      Hybrid annuity

    Order award (ex Roads)                                                                                   Share of Government capex has increased
                                                                                                                      80,000
                      Average orders – Rs. 1,347.25 bn
                                                                                                                      60,000

                                                                                                             INR bn
                                                                                                                      40,000
    Rs. bn

                                                                                  1603
                                                1449

                                                                                                                      20,000
                                                                      1399
                             1375

                                                                                              1366
                                                          1271
                                      1177
               1138

                                                                                                                             -

                                                                                                                                  Dec-09

                                                                                                                                                    Dec-10

                                                                                                                                                                                                           Mar-14

                                                                                                                                                                                                                             Mar-15

                                                                                                                                                                                                                                                                          Nov-17

                                                                                                                                                                                                                                                                                             Dec-18
                                                                                                                                           Jun-10

                                                                                                                                                              Jul-11
                                                                                                                                                                       Jan-12
                                                                                                                                                                                Jul-12
                                                                                                                                                                                         Feb-13
                                                                                                                                                                                                  Aug-13

                                                                                                                                                                                                                    Sep-14

                                                                                                                                                                                                                                      Oct-15
                                                                                                                                                                                                                                               Apr-16
                                                                                                                                                                                                                                                        Oct-16
                                                                                                                                                                                                                                                                 May-17

                                                                                                                                                                                                                                                                                    Jun-18
              FY11         FY12      FY13      FY14      FY15       FY16        FY17        FY18
                      Order award (ex Roads)             Average                                                                 Government                                     Private

            NHAI Awarded projects worth Rs. 1220 bn in FY18 but current year data is weak. BoT model may no longer exist as funding norms gets stricter
            Overall Order awards, ex-Roads, still remain subdued
            Share of Government capex in gross projects has increased to almost 63% till December 2018
Source: Government Documents, SBICAP securities, Investec Research, Companies, MoRTH – Ministry of Road Transport and Highways, NHAI – National Highway Authority Of India, Powergrid, Media Reports,
Motilal Oswal Research. FY19: April 18-November 18.The sector referred above should not be construed as recommendations from Invesco Asset Management (India) Private Ltd. The Portfolio may or may not have
any present or future positions in the above sector or in any other portfolios offered by Invesco Asset Management (India) Private Ltd. BOT: Build–operate–transfer. EPC: Engineering, Procurement, and Construction

12
Cyclical Recovery: Consumer Discretionary
Current Trends: Consumption rebounds; Sustainability key

 Domestic two wheeler sales                                                                                                                                       Staples volume growth
       30%                                                                                                                                                                                                                                                                6.00%
                                               25.50% 25.70%                                                                                                                                                              5.60%
                                                                                                                                                                                               5.50%
       20%                                                                 15.70%                                                        14.80%
                     Average:                                                                      7.90%
              11.10% 9.58%
                                                                                              7.30%                           6.90%                      9.60%            4.00%
       10%
  %

                                            1.60%                                   2.90%                         3.00%

                                                                                                                                                                  %
        0%

      -10%                    -7.50%                                                                                                                                                                                                            1.10%
                     Mar-07

                                 Mar-08

                                             Mar-09

                                                       Mar-10

                                                                  Mar-11

                                                                           Mar-12

                                                                                    Mar-13

                                                                                               Mar-14

                                                                                                         Mar-15

                                                                                                                     Mar-16

                                                                                                                                Mar-17

                                                                                                                                            Mar-18

                                                                                                                                                         Dec-18
                     Two wheeler sales                                              Average Growth                                                                        FY14                  FY15                      FY16                   FY17                     FY 18

 Air Passenger Traffic – Number of Passengers Flown                                                                                                               Tractor sales growth
                                                                                                                                                                                      32.20%
                                                                                                                                                                       35%
      30%                                                                                                                                                              30%                                                       22.10%
      25%                                                                                                                                                              25%                 19.80%         20.20%
                                                                                                                                                                       20%                                         Average: 18.00%    14.00%
      20%                                                                                                                                                              15%                      11.30%
                                                                                                                                                                                                                   9.13%
                                                                                                                                                                       10%
      15%                                                                                                                                                 14.3%         5%       0.60%
 %

                                                                                                                                                                        0%
      10%                                                                                                                                                              -5%
                                                                                                                                                     11.0%                                           -1.70%
       5%                                                                                                                                                             -10% -3.50%
                                                                                                                                                                      -15%                                            -10.50%
                                                                                                                                                                      -20%                                    -13.00%
       0%

                                                                                                                                                                             Mar-08

                                                                                                                                                                                      Mar-09

                                                                                                                                                                                               Mar-10

                                                                                                                                                                                                        Mar-11

                                                                                                                                                                                                                 Mar-12

                                                                                                                                                                                                                           Mar-13

                                                                                                                                                                                                                                    Mar-14

                                                                                                                                                                                                                                             Mar-15

                                                                                                                                                                                                                                                        Mar-16

                                                                                                                                                                                                                                                                 Mar-17

                                                                                                                                                                                                                                                                          Mar-18

                                                                                                                                                                                                                                                                                   Dec-18
                                   Dec-13

                                                         Nov-14
                                             May-14

                                                                  Apr-15

                                                                                     Mar-16

                                                                                                                               Dec-17
                                                                                                        Jan-17

                                                                                                                  Jun-17

                                                                                                                                         May-18

                                                                                                                                                     Oct-18
            Feb-13

                        Jul-13

                                                                           Sep-15

                                                                                               Aug-16

      -5%

            YoY(%)                                    YoY(%), 3MMA                                                                                                                Tractor Domestic Sales growth                                       Average Growth

 Overall consumption demand momentum has slowed down in recent months;
 Growth outcomes are reasonably strong

Source: Bloomberg, Morgan Stanley, CEIC. 3 MMA: 3 months moving average. Past performance may or may not be sustained in future. The sector referred above should not be construed as recommendations
from Invesco Asset Management (India) Private Ltd. The Portfolio may or may not have any present or future positions in the above sector or in any other portfolios offered by Invesco Asset Management (India)
Private Ltd.

13
Cyclical Recovery: Consumer Discretionary
Catalyst: Unorganised to Organised

Share of Unorganised Business with in each sector

  90%
                  80%                 80%
  80%
                                                          70%
  70%
                                                                             60%
  60%
                                                                                                 50%
  50%                                                                                                                45%

  40%                                                                                                                                   35%                 35%
                                                                                                                                                                                30%                30%
  30%

  20%

  10%

     0%
               Jewellery            Apparel            Plywood                Tiles              Pipes           Footwear               Fans               Wires               Paint             Lighting

Source: Antique Stock Broking Limited. The Force Awakens: GST implementation to drive large scale benefits. The sector referred above should not be construed as recommendations from Invesco Asset
Management (India) Private Ltd. The Portfolio may or may not have any present or future positions in the above sector or in any other portfolios offered by Invesco Asset Management (India) Private Ltd.

14
Operating & Financial Leverage
Levers for Recovery

Capacity Utilisation vs. EBITDA Margin trends & Gross Profit                                   Financial Leverage
Margin                                                                                                32%
     60                                                                           80                                                                                                3,05,000
                                                                                                      30%                                               28.8%
                                                        51       51                                                                                                                 2,55,000
                                                                        49                            28%                                                                2,13,775
     50     46                                  47
                              43      44                                          77                                                     26.4%                    1,90,777
                     43                                                                               26%                                            1,96,988                       2,05,000
                       77
           78                                                                                         24%                          22.5%
     40                                                                                                                                                                           1,55,000
                                                                                                                                                1,37,218     24.0%           24.0%

                                                                                                                                                                                               RS. Crs
                             75                                              73   74                  22%                20.7%
                                                                 72

                                                                                                  %
                                     74         72      72                                                                               98,543                                     1,05,000
     30                                                                                               20%
 %

                                                                                       %
                                                                                                                  17.8%
                                                                                  71                  18%                                                                           55,000
     20                                                                  15.77                        16%                       20,471
                   13.89    12.98    13.87            14.55    15.72                                                                                                                5,000
                                              13.39
                                                                                                      14% 13.3%
                                                                                  68
     10 15.94                                                                                                                                                                       -45,000
                                                                                                      12%             -37,819
                                                                                                            -65,506
                                                                                                      10%                                                                           -95,000
      0                                                                           65                          FY        FY       FY       FY      FY        FY     FY      FY
          FY 11    FY 12    FY 13    FY 14    FY 15    FY 16    FY 17    FY 18                               2011      2012     2013     2014    2015      2016   2017    2018

          EBITDA Margins (LHS)             Gross Profit Margin (LHS)          CU (RHS)                          Free Cash Flow (RHS)                       Interest Exp/EBIT (LHS)

    While current earning's cycle is weak, there are levers to earning's recovery
    India's incorporation’s capacity utilization has improved from 72.3% in FY 17 to 73.1% in FY 18
    Interest expense in FY18 constitutes 24% of EBIT as compared to 13.3% in 2011 highlighting significant financial leverage; this
     should improve despite rise in interest rates as free cashflows are improving
    Any cyclical recovery in demand should result in more than proportionate uptick in earnings due to a higher degree of operating
     and financial leverage

Source: RBI, IIFL, Capitaline, Invesco Asset Management (India) Research. EBITDA: Earnings before interest, taxes, depreciation, and amortization. EBIT: Earnings before interest and
tax. Above graphs include company data, which are constituents of S&P BSE 200 Index (excluding financials and insurance). CU: Capacity utilization. Note: Free cash flow (FCF) is arrived
at after reducing capital expenditure from companies cash flow from operations.

15
Value
Growth Index trading at Premium to long term average

MSCI India Growth Index at premium to the MSCI Value Index
       140%

       120%

       100%

        80%
                                                                  Average: 55%                                                                        66%
        60%

        40%

        20%

          0%
               May-06
               Aug-06
               Dec-06
               Apr-07
               Aug-07
               Dec-07
               Apr-08
               Aug-08
               Dec-08
               Apr-09
               Aug-09
               Dec-09
               Apr-10
               Aug-10
               Dec-10
               Apr-11
               Aug-11
               Dec-11
               Apr-12
               Aug-12
               Dec-12
               Apr-13
               Aug-13
               Dec-13
               Apr-14
               Aug-14
               Dec-14
               Apr-15
               Aug-15
               Dec-15
               Apr-16
               Aug-16
               Dec-16
               Apr-17
               Aug-17
               Dec-17
               Apr-18
               Aug-18
               Dec-18
               Jan-06

MSCI growth index presently trades at 66% premium to the MSCI Value index, which is higher than long period average of
55%

Source: Invesco Asset Management (India) Research, Bloomberg, Data as on December 31, 2018. Past performance may or may not be sustained in future.

16
Portfolio details

17
Model Portfolio Holdings
December 31, 2018

Portfolio Holdings                                                                                          Sector
Top 15 Holdings                                                            % of Net Assets                  Sector                                                                      % of Net Assets
ICICI Bank Ltd.                                                                              9.99           Financials                                                                                  30.69

Reliance Industries Ltd.                                                                     8.10           Industrials                                                                                 11.79
                                                                                                            HealthCare                                                                                  11.17
I T C Ltd.                                                                                   5.91
                                                                                                            Consumer Staples                                                                            10.14
Infosys Ltd.                                                                                 5.56
                                                                                                            Information Technology                                                                      10.06
Exide Industries Ltd.                                                                        5.23
                                                                                                            Energy                                                                                        8.10
Axis Bank Ltd.                                                                               5.05
                                                                                                            Consumer Discretionary                                                                        6.93
Tech Mahindra Ltd.                                                                           4.50
                                                                                                            Utilities                                                                                     3.66
Indusind Bank Ltd.                                                                           4.47           Materials                                                                                     2.84
L & T Finance Holdings Ltd.                                                                  4.41           Cash & Cash Equivalent                                                                        4.63
Apollo Hospitals Enterprises Ltd.                                                            4.28
United Spirits Ltd.                                                                          4.23
                                                                                                            Theme
                                                                                                            Theme                                                                       % of Net Assets
Cipla Ltd.                                                                                   4.17
                                                                                                            Operating & Financial Leverage                                                              39.59
Equitas Holdings Ltd.                                                                        3.81
                                                                                                            Cyclical Recovery                                                                           35.35
Gujarat State Petronet Ltd.                                                                  3.66
                                                                                                            Value                                                                                       20.44
Container Corporation Of India Ltd.                                                          3.36

The stocks & sectors referred above should not be construed as recommendations from Invesco Asset Management (India) Private Ltd. (“the Portfolio Manager”). The Portfolio Manager may or may not hold position
in these stocks in future. This should not be seen as an investment advice. Cyclical Recovery: Transition of a company from a period of recession to expansion as part of business cycle which is affected by ups and
downs in the overall economy. Operating Leverage: Companies currently operating at low capacity utilization and have large portion of costs fixed in nature. These companies can make more money from each
additional sale as demand recovers. Financial Leverage: Companies which can generate returns greater than the interest expense associated with the debt they use to fund growth. Further, could increase their profit
margin from decline in interest rates and reduction in debt due to profit growth. Value: Stocks trading at discount to their intrinsic value. Securities investments are subject to market risks, please read the
Disclosure Document carefully before investing.

18
Model Portfolio Characteristic
December 31, 2018

Parameters                                                                                                                               Portfolio                  S&P BSE 500

Value1
12 Month Trailing Price to Earnings1                                                                                                              26.0                   20.9

Price to Earnings1 FY 19 Estimate                                                                                                                 21.5                   20.4

Price to Earnings1 FY 20 Estimate                                                                                                                 16.7                   16.9

Growth
Earnings Per Share Growth - FY19e2                                                                                                              21.2%                    3.4%

Earnings Per Share Growth – FY20e2                                                                                                              28.4%                    20.8%

2 Year EPS Growth - Forecast (FY18-FY20)                                                                                                        22.3%                    11.4%

Return on Equity - FY18                                                                                                                         11.6%                    14.9%

Weighted Market Cap (Rs. Crs)                                                                                                                  1,52,312                 2,20,707

1.     Weighted Harmonic Mean
2.     Weighted Arithmetic Mean, EPS Growth is derived from P/E ratios
“Weighted Arithmetic Mean” is an average resulting from the multiplication of observation for each company by the weightage of that stock in the portfolio/index.
“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. Note: Excludes companies with net loss for appropriate results for various ratios
Source: Factset, Bloomberg, IAMI

19
Cyclical Recovery
ICICI Bank Ltd.

                                                                                                                                           Stressed asset watch list has reduced significantly
 Credit growth below long term average                               Credit costs above long term average
                                                                                                                                           (in Rs. Crs)

20%                                                                  3%

                17%                                                                                                                                 44,065
18%
                               17%

16%
        14%            14%            14%                                                                                          2.1%
14%
                                             12%                     2%
12%
                                                                                                                           1.6%
                                                           10%
10%
                                                                                                                   1.2%                                                19,039
 8%
                                                    7%
                                                                     1%
 6%
                                                                           0.6%                            0.6%
 4%                                                                                                0.5%
                                                                                    0.4% 0.4%
                                                                                                                                                                                           4,728
 2%

 0%                                                                  0%
                                                                             FY11

                                                                                     FY12

                                                                                            FY13

                                                                                                    FY14

                                                                                                            FY15

                                                                                                                    FY16

                                                                                                                            FY17

                                                                                                                                    FY18
                                                                                                                                                   FY2016              FY2017             FY2018
         FY11

                FY12

                        FY13

                               FY14

                                      FY15

                                             FY16

                                                    FY17

                                                           FY18

Source: IAMI, Bloomberg.
Disclaimer: Past performance may or may not be sustained in future. The above analysis is based on internal research done by IAMI. The stock referred above should not be construed as recommendations from
Invesco Asset Management (India) Pvt. Ltd. (“the Portfolio Manager”). The Portfolio Manager may or may not hold position in this stock.

20
Cyclical Recovery
KNR Constructions Ltd.

Pick up in order book and revenue Growth                                                                Improvement in Margins and Return Ratios

     7,000                                                                                3,000          25%                                                                                          500
                                                                             6,300

     6,000                                                                                                                                                                               20%
                                                                                          2,500          20%                                                                                          400
                                                                                                                                                                        17%
     5,000

                                                                                                                                                       15%
                                                                                          2,000          15%                                                                                          300
     4,000                                                   3,769
                                              3,464
                                                                             1,893
                                                                                                                                      11%
                                                                                                                      10%
     3,000
                                                                                          1,500          10%                                                                             386          200
                                                             1,541

     2,000
                1,296          1,318                                                                                                                                    230
                                                                                          1,000           5%                                                                                          100
     1,000                                                                                                                                              153
                                                                                                                      126              126
                                876            903
                 835

        0                                                                                 500             0%                                                                                          0
                FY14           FY15           FY16           FY17            FY18                                    FY14             FY15             FY16             FY17            FY18

                             Order Book (LHS)               Revenue (RHS)                                                               EBIDTA (RHS)                ROCE (LHS)

Source: IAMI, Bloomberg. EBITDA: Earnings before interest, taxes, depreciation, and amortization. ROCE: Return on Capital Employed.
Disclaimer: Past performance may or may not be sustained in future. The above analysis is based on internal research done by IAMI. The stock referred above should not be construed as recommendations from
Invesco Asset Management (India) Pvt. Ltd. (“the Portfolio Manager”). The Portfolio Manager may or may not hold position in this stock.

21
Operating Leverage
L & T Finance Holdings Ltd.

Lower operating expenses leading to operating leverage                                                  Improvement in Return on equity along with
                                                                                                        improvement in provision ratio
 1.4%                                                                                5.40%   5.5%         23%                                                                                      100%

                                                  5.20%              5.20%                                                                                                                21.2%
                                  5.10%                    5.12%                                          21%                                                                                      90%
         1.30%                                                                                                                                                                    20.1%
                                                                             5.00%
 1.2%                                     4.90%                                              5.0%
                 1.20% 4.80%                                                         1.20%                19%                                                                                      80%

                                                                                                                                          17.3%                   17.1% 17.1%
                          1.10%                                      1.10% 1.10%                          17%                                                                                      70%
                                                                                                                                                          16.2%
                                                                                                                                                  15.8%
 1.0%            4.40%                                                                       4.5%                                 15.5%                                                   62.0%
                                                  1.00% 1.00%                                                                                                                     58.0%
                                                                                                          15%             14.5%                                                                    60%
                                                                                                                 14.0%
         4.10%                                                                                                                                                            52.0%
                                  0.90% 0.90%
                                                                                                          13%                                                     47.7%                            50%
 0.8%                                                                                        4.0%
                                                                                                                                          41.3% 42.4% 41.7%

                                                                                                          11%                                                                                      40%
                                                                                                                          34.1% 34.1%
                                                                                                                 31.6%
 0.6%                                                                                        3.5%          9%                                                                                      30%
           1Q      2Q      3Q      4Q       1Q      2Q          3Q    4Q        1Q      2Q                         1Q       2Q      3Q      4Q     1Q      2Q      3Q       4Q      1Q      2Q
                        FY17                             FY18                    FY19                                          FY17                           FY18                     FY19

             Operating expenses (LHS)              Pre-provision profit (RHS)                                           Return on Equity (LHS)          Coverage Ratio (RHS)

Source: IAMI, Bloomberg.
Disclaimer: Past performance may or may not be sustained in future. The above analysis is based on internal research done by IAMI. The stock referred above should not be construed as recommendations from
Invesco Asset Management (India) Pvt. Ltd. (“the Portfolio Manager”). The Portfolio Manager may or may not hold position in this stock.

22
Operating Leverage
Apollo Hospitals Enterprise Ltd.

Operating Leverage: Improvement in occupancy to drive                                                   Growth in EBIT, fall in interest leading to financial
improvement in EBIT margin                                                                              leverage
75%                                                                                          24%          3,300                                                                                   30%
                  72%
         71%              71%
                                                                                                                                                       3,068
                                                                                             23%          3,100                                                                                   25%
70%                                                                                 68%
         23.0%      67%                                                                                                                                             20.47%         20.83%
                                         66%                                                                                                         19.91%
    22.4%     22.5%                                                                          22%          2,900                         2,816
                             64% 64%                                                                                                                                                              20%
65%                22.0% 63%         63%
                                                                                             21%          2,700                                                       2,612
                                                                                                                         2,574        12.88%                                                      15%
60%                                                                                          20%
                                           20.3%                                                          2,500
                                                                                                                                                                                                  10%
                                                                                             19%          2,300                                                                      2,254
55%
                                                                                                                                                                                                  5%
                                                                           18.5% 18%                      2,100
50%                                                 18.2%             18.1%
                                                                 17.9%
                                                            17.5%                17%                                                                                                              0%
                                                                                                          1,900
45%                                                                                                                    -6.82%
                                                                                             16%                                                                                                  -5%
                                                                                                          1,700

40%                                                                                          15%
                                                                                                          1,500                                                                                   -10%
           FY12

                   FY13

                           FY14

                                   FY15

                                             FY16

                                                     FY17

                                                             FY18

                                                                    FY19E

                                                                            FY20E

                                                                                     FY21E

                                                                                                                         FY17           FY18          FY19E          FY20E          FY21E
                                                                                                                      Growth in EBIT -YOY (LHS)                    Conslidate Interest (RHS)
           Occupancy (%)                  EBIT - Standalone

Source: IAMI, Bloomberg. EBIT: Earnings before interest and tax
Disclaimer: Past performance may or may not be sustained in future. The above analysis is based on internal research done by IAMI. The stock referred above should not be construed as recommendations from
Invesco Asset Management (India) Pvt. Ltd. (“the Portfolio Manager”). The Portfolio Manager may or may not hold position in this stock.

23
Why Us

24
Process Driven Stock Selection Approach

                            Stock
                                                                                                                           Portfolio Construction
                        Categorization                                  Investment Strategy
                                                                                                                                   Levers
                         Framework#

      5 Benchmark
         Indices*
            +                                          Categorized                                        Portfolio                           Portfolio
     Select Bottom-                                      Stocks                                           Universe
        up ideas

     No. of Stocks:                                  No. of Stocks:                                   No. of Stocks:                       No. of Stocks:
          301                                             115                                               69                                 15–25

            Recovery                                                       Attractive
                                                                                                                                        Portfolio
            Potential                                                      Valuations

Data as on December 31, 2018
#For details on Stock Categorization Framework please refer next slide.
*5 Benchmark Indices: S&P BSE 200 Index, Nifty Midcap 100 Index, Nifty Infrastructure Index, Nifty Bank Index and S&P BSE PSU Index

25
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 /     Margin & ROE
 Warrior                                                     Better than industry                                                        Growth
                        companies                                                     or right place, right time   expansion
                                                                                      Entrepreneur vision,
 Star                   Young companies                      High growth                                           Operating Leverage
                                                                                      scalability
                        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,
 Shotgun                Opportunistic investment             Positive surprise        restructuring, earnings      Event visibility      Event
                                                                                      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

26
Portfolio Manager

             Mr. Amit Nigam
             Portfolio Manager – Portfolio Management Services

Amit has over 17 years’ experience in the Indian equity market. In his last assignment,
Amit was working with Essel Mutual Fund as Head of Equities where he was responsible
for the equity management function at the firm. In the past, he has also worked with
companies like BNP Paribas Investment Partners, BNP Paribas Mutual Fund, SBI Funds
Management & Reliance Industries Ltd. Amit holds a Mechanical Engineering Degree from
Indian Institute of Technology Roorkee and a PGDBM from Indian Institute of
Management,Indore.

27
About Invesco

Invesco Limited
 US$ 980.9 billion in assets under management around the globe.
 Specialized investment teams managing investments across a wide range of asset classes and investment styles.
 On-the-ground presence in more than 20 countries, serving clients in more than 120 countries with more than 7,000
  employees worldwide.
 Publicly traded on NYSE; S&P 500 constituent.

Invesco Asset Management (India) Private Ltd.
 Expertise across equity, fixed income and gold investments with assets under management & advisory mandates of
  INR 36,088.99 crores.
 More than 29 investment strategies across fixed income, equity and gold
 Proprietary stock selection process for Equity & Credit Appraisal process for Debt.
 Experienced Investment Management Team of 21 members with combined experience of over 260 years.
 Broad, deep and stable research platform.
 Defined and robust Risk Management Processes

 Data of Invesco Limited: Invesco Ltd. Client-related data, investment professional, employee data and AUM are as of September 30, 2018, 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 December 2018. Decimals have
 been rounded off.

28
Disclaimer

Disclaimer: This presentation does not solicit any action based on the material contained herein. Invesco Asset Management (India) Private Ltd. (“the Portfolio
Manager / the Company”) will not treat recipients as clients by virtue of their receiving this presentation. It does not constitute a personal recommendation or take into
account the particular investment objectives, financial situation / circumstances and the particular needs of any specific person who may receive this presentation. The
Co's/sectors referred in this presentation are only for the purpose of explaining the concept of Portfolio and should not be construed as recommendations from Portfolio
Manager. The Portfolio may or may not have any present or future positions in these stock. The Portfolio(s) discussed in the presentation may not be suitable for all
the investors. The recipient of this material alone shall be fully responsible / liable for any decision taken on the basis of this material. The appropriateness of a
particular investment or strategy will depend on an investor’s individual circumstances and objectives. The distribution of this presentation in certain jurisdictions may
be restricted or totally prohibited to registration requirements and accordingly, persons who come into possession of this presentation are required to inform
themselves about and to observe any such restrictions and/ or legal compliance requirements. Persons who may receive this presentation should consider and
independently evaluate whether it is suitable for his / her / their particular circumstances and are requested to seek professional / financial advice. Past performance is
not a guide for future performance. Future returns are not guaranteed and a loss of principal may occur. The Company and its affiliates accept no liabilities for any kind
of loss arising out of the use of this presentation. With respect to all information found in this presentation the Company has obtained data from sources it considers
reliable however, the Company and its directors, officers, agents, or employees and its affiliates make no warranty, express or implied, including the warranties of
merchantability and fitness for a particular purpose, or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information
contained therein and the Company shall not be liable for any indirect, incidental or consequential damages sustained or incurred in connection with 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.
Risk Factors: All securities investments are subject to market risks and there can be no assurance that the objectives of the portfolio(s) will be achieved. Each
portfolio will be exposed to various risks depending on the investment objective, investment strategy and the asset allocation. The performance of the portfolio may be
affected by changes in factors affecting the securities markets such as volume and volatility in the capital markets, interest rates, currency exchange rates, changes in
law/policies of the Government, taxation laws, political, economic or other developments, general decline in the Indian markets, which may have an adverse impact on
individual securities, a specific sector or all sectors. Further, the investments by the portfolio shall involve investment risks such as trading volumes, settlement risk,
liquidity risk, default risk including the possible loss of capital. The portfolio with investment objective to invest in a specific sector / industry would be exposed to risk
associated with such sector / industry and its performance will be dependent on performance of such sector / industry. The Portfolio Manager in accordance with the
features of respective Portfolio may use derivatives which require an understanding not only of the underlying instrument but of the derivative itself. Derivative products
are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the
ability of the Portfolio Manager to identify such opportunities. The decisions of Portfolio Manager may not always be profitable. The portfolio, returns and expenses
charged including Portfolio Management fees for each Client may differ from that of the other Client. Investors of the Portfolio Management Services are not being
offered any guaranteed / assured returns. The Portfolio Manager may invest in shares, debt, units of mutual funds, deposits or other financial instruments of associate/
group Co's. The name of the portfolio(s) does not in any manner indicate either the quality of the product or their future prospects and returns. Investors are advised to
read the risk factors given in the Portfolio Management Services Agreement and Disclosure Document before making investments.

29
Get in Touch

Corporate Office:
Invesco Asset Management (India) Private Limited
2101-A, A Wing, 21st Floor, Marathon Futurex,
N. M. Joshi Marg, Lower Parel, Mumbai – 400013
T: +91-22-6731000 F: +91-22-23019422

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To invest:
Call 1800-209-0007 ∆ sms ‘Invest’ to 56677
Invest Online www.invescomutualfund.com
Thank you
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