L&T Value Fund

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Equity Funds
Monthly Update
September 2015

Contents

1. Market Round Up
2. Products
1. L&T India Large Cap Fund
2. L&T Equity Fund
3. L&T India Special Situations Fund

4. L&T Midcap Fund
5. L&T Infrastructure Fund
6. L&T India Value Fund

7. L&T Business Cycles Fund
3. Equity Investment Process
2

For product labeling please refer to the last slide.

Market Round Up

Global Markets - Performance
Title 1

4

Economy

Country

1 Month (%
change)

3 Month (%
change)

6 Month (%
change)

1 Year (%
change)

YTD (%
change)

EM-Asia
DM-Asia
DM
DM
DM
DM
DM
DM
EM-Asia
EM
DM
DM
EM
DM
DM-Asia
DM
EM-Asia
EM-Asia
DM-Asia
DM
EM-Asia
EM-Asia
EM-Asia
EM

China
Japan
Germany
France
Sweden
New Zealand
Italy
Switzerland
India
Phillippines
USA
Spain
Mexico
Australia
Hong Kong
UK
South Korea
Thailand
Singapore
Canada
Indonesia
Taiwan
Malaysia
Brazil

-12.49%
-8.23%
-9.28%
-8.45%
-7.09%
-4.47%
-6.78%
-6.40%
-6.58%
-5.98%
-6.57%
-8.24%
-2.30%
-8.64%
-12.04%
-6.70%
-4.37%
-4.01%
-8.78%
-4.21%
-6.10%
-5.66%
-6.41%
-8.33%

-30.48%
-8.13%
-10.11%
-7.09%
-8.75%
-3.23%
-6.61%
-4.47%
-5.48%
-6.35%
-8.23%
-8.55%
-2.20%
-9.87%
-20.98%
-10.54%
-8.20%
-7.60%
-13.88%
-7.69%
-13.55%
-15.73%
-7.71%
-11.63%

-3.15%
0.49%
-10.02%
-6.03%
-11.23%
-3.78%
-1.77%
-2.11%
-9.87%
-8.17%
-8.85%
-8.22%
-1.06%
-12.17%
-12.70%
-10.06%
-2.23%
-12.89%
-14.15%
-9.03%
-17.26%
-15.04%
-11.45%
-9.61%

44.60%
22.47%
8.33%
6.21%
8.08%
8.29%
7.29%
1.91%
0.21%
0.68%
-3.34%
-4.38%
-4.18%
-7.45%
-12.41%
-8.38%
-6.14%
-11.48%
-12.19%
-11.31%
-12.21%
-13.37%
-13.58%
-23.92%

-0.89%
8.25%
4.63%
8.90%
2.49%
1.58%
15.41%
-1.77%
-3.76%
-1.82%
-7.27%
-0.20%
1.34%
-3.77%
-8.20%
-4.85%
1.35%
-7.70%
-13.19%
-5.28%
-13.72%
-12.17%
-8.43%
-6.76%

Source: Bloomberg. Data as on 31st August 2015. DM – Developed Markets, EM – Emerging Markets
Returns are denominated in Local Currency

Indian Markets - Performance

5

Category

Index

1 Month (%
change)

3 Month (%
change)

6 Month (%
change)

1 Year (%
change)

YTD (%
change)

Sectoral

Healthcare

5.36%

6.28%

15.91%

35.09%

22.51%

Broad Market

Midcap

-4.78%

0.17%

0.69%

21.66%

5.92%

Sectoral

Consumer Durable

-0.34%

3.58%

4.18%

20.34%

14.21%

Sectoral

Capital Goods

-10.68%

-3.88%

-9.40%

8.29%

4.58%

Sectoral

Auto

-6.50%

-6.37%

-9.63%

3.31%

-4.11%

Sectoral

Bank

-8.66%

-8.71%

-10.16%

9.07%

-8.49%

Broad Market

Smallcap

-7.27%

-2.74%

-4.54%

9.11%

-1.66%

Sectoral

FMCG

-4.25%

-0.76%

-8.00%

6.44%

1.09%

Broad Market

BSE 500

-6.21%

-4.42%

-7.62%

4.36%

-1.73%

Broad Market

BSE 200

-6.14%

-4.65%

-7.87%

4.17%

-1.74%

Sectoral

Teck

-1.97%

-0.42%

-4.59%

8.98%

4.36%

Sectoral

IT

0.80%

2.30%

-5.91%

9.68%

5.21%

Broad Market

BSE 100

-6.15%

-5.02%

-9.22%

1.30%

-2.97%

Broad Market

Nifty

-6.58%

-5.48%

-9.87%

0.21%

-3.76%

Broad Market

Sensex

-6.51%

-5.55%

-10.05%

-1.33%

-4.42%

Sectoral

Power

-11.15%

-11.37%

-20.09%

-10.16%

-12.33%

Sectoral

Oil & Gas

-10.34%

-7.94%

-7.54%

-20.63%

-10.28%

Sectoral

Realty

-9.13%

-18.02%

-31.43%

-27.02%

-18.93%

Sectoral

Metal

-14.10%

-23.46%

-29.70%

-39.23%

-30.75%

Source: Bloomberg. Data as on 31st August 2015. Sectoral performances as represented by BSE indices.

Portfolio Flows - Trend

• FIIs were net sellers in Aug-15, as they sold equities to the tune of $2.6bn
• Domestic mutual funds remained net buyer this month

6

Source: SEBI, NSDL

Products

L&T India Large Cap Fund
(An open-ended equity growth scheme)

For product labeling please refer to the last slide.

L&T India Large Cap Fund



A diversified equity strategy with focus on investing in large cap companies



Invests predominantly in top 100 companies by market capitalization



Strong long-term performance track record



Inception date: 23-Oct-07



Fund Manager: Venugopal Manghat & Abhijeet Dakshikar (for foreign securities)



Benchmark: S&P BSE 100



Fund Size : 368 crores (QAAuM, June 2015)

9

For product labeling please refer to the last slide.

Investment approach and portfolio construction

80-100% of
portfolio

Portfolio of
40-60
stocks

Ultra
large cap

Market Cap >$ 10 bn (approx)
30-35 companies

Large Cap

0-20% of
portfolio

Aspirants

Market cap between $ 2-10 bn
(approx)
100-105 companies
Market cap: $ 1-2 bn
(approx)
85-90 companies

• Invests predominantly in large cap companies
• Focus on fundamentals: Quality and scalability of business, Management and Valuation
• Looking to own companies with strong balance sheets, attractive return ratios and strong
cash flows. Companies that are expected to grow relatively faster than market
• Individual stock weight is a function of fundamentals, valuation, market sentiment and
conviction
• Stable portfolio with relatively limited churn
10

Market capitalization cut offs used to define ultra large cap / large cap / aspirants are internal.

L&T India Large Cap Fund - Portfolio information
Top 10 sector positions
Sector
Banks
Software
Pharmaceuticals
Auto
Construction Project
Finance
Cement
Petroleum Products
Auto Ancillaries
Consumer Non Durables

Top active stock positions
Weight
21.16%
10.26%
9.72%
7.41%
6.61%
6.48%
6.31%
4.91%
4.34%
4.18%

Market capitalization break-up

Company
Shree Cement Ltd.
Hindustan Petroleum Corporation Ltd.
Bharat Electronics Ltd.
Maruti Suzuki India Ltd.
Eicher Motors Ltd.
Amara Raja Batteries Ltd.
Motherson Sumi Systems Ltd.
Sadbhav Engineering Ltd.
Lupin Ltd.
Glenmark Pharmaceuticals Ltd.

Small and Midcap: 12.71%
Debt / Cash: 2.46%

11

Bm

Active

2.93%
3.22%
2.35%
3.76%
2.66%
1.93%
1.71%
1.71%
3.03%
2.08%

0.00%
0.42%
0.00%
1.67%
0.58%
0.00%
0.00%
0.00%
1.39%
0.51%

2.93%
2.80%
2.35%
2.09%
2.08%
1.93%
1.71%
1.71%
1.64%
1.57%

Top 10 holdings
Company

Large cap: 84.83%

Fund

Infosys Limited
HDFC Bank Limited
Larsen & Toubro Limited
Maruti Suzuki India Limited
ICICI Bank Limited
Axis Bank Limited
Hindustan Petroleum Corporation Limited
HDFC
Lupin Limited
Shree Cements Limited

Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks

% of net assets
6.50%
6.17%
3.94%
3.76%
3.68%
3.37%
3.22%
3.19%
3.03%
2.93%

L&T India Large Cap Fund – Attribution Analysis


The scheme is having marginally underweight to neutral position in Banking sector. Scheme is
currently overweight in Federal Bank and Indusind Bank. Among Financials, scheme is having
overweight position in Power Finance Corp and MCX India



The scheme continues to be underweight in IT sector. Infosys ltd performed well for the scheme
this month



The scheme continues to be overweight in Pharmaceuticals sector. Position in Lupin, Divi’s lab
and Glenmark Pharma contributed positively to performance



The scheme continues to be overweight in Cement sector. Companies like Shree Cement and
Ultratech cement are the major bets within the sector for the scheme



The scheme continues to be overweight in Auto Ancillaries sector. Amara Raja Batteries
contributed to performance this month

12

Source: Bloomberg

L&T Equity Fund
(An open-ended equity growth scheme)

For product labeling please refer to the last slide.

L&T Equity Fund



A diversified equity strategy with a flexible ‘go-anywhere’ approach



Ability to harness opportunities across the market spectrum - No market cap, sector or style
bias



Fundamentals driven stock picking approach



Strong long-term performance track record



Suitable as a core holding



Inception date: 16-May-05



Fund Manager: S N Lahiri & Abhijeet Dakshikar (for foreign securities)



Benchmark: S&P BSE 200



Fund Size : 2929 crores (QAAuM, June 2015)
14

For product labeling please refer to the last slide.

Investment approach and portfolio construction

• Aims to capitalize on investment opportunities across the market spectrum
• Focus on fundamentals: Quality and scalability of business, Management and Valuation
• Looking to own companies with strong balance sheets, attractive return ratios and strong
cash flows
• Individual stock weight is a function of fundamentals, valuation, market sentiment and
conviction
• Bottom-up stock picking aided by internal research
15

L&T Equity Fund - Portfolio information
Top 10 sector positions
Sector
Banks
Software
Pharmaceuticals
Construction Project
Auto Ancillaries
Auto
Consumer Non Durables
Cement
Transportation
Finance

Top 10 active stock positions
Weight
22.83%
10.08%
7.39%
7.13%
6.85%
6.04%
5.49%
5.20%
4.92%
3.54%

Market capitalization break-up

Company
Gateway Distriparks Ltd.
Kotak Mahindra Bank Ltd.
Divis Laboratories Ltd.
Techno Electric & Engg Co Ltd.
WABCO India Ltd.
Aditya Birla Nuvo Ltd.
Shree Cement Ltd.
Kajaria Ceramics Ltd.
LIC Housing Finance Ltd.
Hindustan Petroleum Corporation Ltd.

Small and Midcap: 22.64%
Debt / Cash: 1.92%

16

Bm

Active

2.51%
3.91%
2.29%
1.65%
1.61%
1.89%
1.80%
1.44%
1.79%
1.80%

0.00%
1.74%
0.40%
0.00%
0.00%
0.29%
0.25%
0.00%
0.35%
0.37%

2.51%
2.17%
1.89%
1.65%
1.61%
1.60%
1.55%
1.44%
1.44%
1.43%

Top 10 holdings
Company

Large cap: 75.44%

Fund

Infosys Limited
HDFC Bank Limited
Larsen & Toubro Limited
ICICI Bank Limited
Kotak Mahindra Bank Limited
Axis Bank Limited
Tata Consultancy Services Limited
Maruti Suzuki India Limited
Gateway Distriparks Limited
IndusInd Bank Limited

Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks

% of net assets
6.53%
5.81%
4.36%
4.22%
3.91%
3.12%
3.04%
2.65%
2.51%
2.41%

L&T Equity Fund – Attribution Analysis


The scheme continues to be overweight in Banking sector. Bank of Baroda contributed to relative
performance this month



The scheme continues to be overweight on Auto Ancillaries sector. Wabco India and Exide
Industries contributed positively to performance this month



The scheme continues to be underweight in Consumer Staples space. This contributed to relative
performance as the sector declined during the month



The scheme continues to be overweight in Cement stocks, through positions in Shree Cement,
Ramco Cement, Ambuja Cements and Ultratech Cement



The scheme is underweight in Pharmaceuticals sector. Overweight position in Lupin and Divi’s
Lab contributed to performance this month

17

Source: Bloomberg

L&T India Special Situations Fund
(An open-ended equity growth scheme)

For product labeling please refer to the last slide.

L&T India Special Situations Fund



A diversified equity strategy with focus on identifying companies going through “Special
Situations”



No market cap or sector bias. Adds style diversification to investor’s portfolio.



Provides access to those situations in the stock market that have the potential to deliver
superior returns if spotted early, analyzed carefully & held onto for the right amount of time



Strong long-term performance track record



Inception date: 22-May-06



Fund Manager: S N Lahiri & Abhijeet Dakshikar (for foreign securities)



Benchmark: S&P BSE 200



Fund Size : 949 crores (QAAuM, June 2015)

19

For product labeling please refer to the last slide.

Investment approach and portfolio construction

Turnaround

Out of
market
favour

New
Business
Streams

Special Situations are unusual circumstances
that companies sometimes find themselves in –
either in terms of their business or their stock
price or both, these could include:
 Turnarounds,

Special
Situations

 New business streams,
Underappreciated
growth

Corporate
actions

 Underappreciated growth,
 Asset plays,
 Corporate actions,

Asset
plays

 Companies whose stocks have fallen out of
market favour, etc.

• No capitalization or sector bias
• Diversified portfolio built around high conviction stocks in ‘Special Situations’
• Can take significant overweight positions
• Bottom-up stock picking aided by internal research
20

L&T India Special Situations Fund - Portfolio information
Top 10 sector positions
Sector
Banks
Software
Consumer Non Durables
Pharmaceuticals
Finance
Construction Project
Pesticides
Cement
Industrial Products
Petroleum Products

Top 10 active stock positions
Weight
18.10%
14.57%
6.46%
6.40%
6.20%
5.29%
4.98%
4.80%
3.74%
3.14%

Market capitalization break-up

Company
Bayer Cropscience Ltd.
Sundaram Finance Ltd.
Jyothy Laboratories Ltd.
HCL Technologies Ltd.
Federal Bank Ltd.
Kalpataru Power Transmission Ltd.
State Bank Of Bikaner & Jaipur
Mindtree Ltd.
ACC Ltd.
Blue Dart Express Ltd.

Small and Midcap: 41.36%
Debt / Cash: 4.50%

21

Bm

Active

3.45%
3.31%
3.18%
4.30%
2.56%
2.12%
1.95%
2.05%
2.00%
1.66%

0.11%
0.00%
0.00%
1.36%
0.27%
0.00%
0.00%
0.26%
0.33%
0.00%

3.34%
3.31%
3.18%
2.94%
2.29%
2.12%
1.95%
1.79%
1.67%
1.66%

Top 10 holdings
Company

Large cap: 54.14%

Fund

Infosys Limited
HCL Technologies Limited
Larsen & Toubro Limited
Bayer Cropscience Limited
ICICI Bank Limited
Sundaram Finance Limited
Jyothy Laboratories Limited
HDFC Bank Limited
The Federal Bank Limited
Axis Bank Limited

Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks

% of net assets
5.32%
4.30%
4.06%
3.45%
3.36%
3.31%
3.18%
3.15%
2.56%
2.48%

L&T India Special Situations Fund – Attribution Analysis



The scheme is marginally underweight in the Banking sector. Scheme is overweight in Federal
Bank, Axis Bank and Kotak Mahindra Bank. Among Financials, scheme is overweight in Shriram
Transport Finance and MCX India



The scheme continues to be overweight in the Cement sector. JK Cement, ACC Cement and
Shree Cement are the overweight bets in the portfolio



The scheme continues to be underweight in Consumer Staples space. Position in Jyothy Labs
contributed to performance this month



The scheme has overweight position in Pesticides and Agrochemicals sector with exposure to
Bayer Cropscience, UPL and Sharda Cropchem



The scheme is underweight in Pharmaceuticals sector. Exposure to Divi’s Lab and Lupin
performed well for the fund this month

22

Source: Bloomberg

L&T Midcap Fund
(An open-ended equity scheme)

For product labeling please refer to the last slide.

L&T Midcap Fund



A midcap focused strategy aimed at delivering higher alpha in the long run



Opportunity to exploit and benefit from anomalies existing in less researched segment of the
market



Helps in style diversification



Suitable for relatively aggressive investors looking for long-term wealth creation. Minimum
investment horizon of 3-5 years



Inception date: 09-Aug-04



Fund Manager: S N Lahiri



Benchmark: CNX Midcap index



Fund Size : 325 crores (QAAuM, June 2015)

24

For product labeling please refer to the last slide.

Investment approach and portfolio construction

Predominantly invests in companies whose market
capitalization falls between the highest and the
lowest constituent of the CNX Midcap Index

Lowest Constituent
of the CNX Midcap
Index

Highest Constituent
of the CNX Midcap
Index

80% - 100% of the
total net assets

Approx 50-70
Stocks

• Portfolio well diversified across sectors and stocks
• Bottom-up investment approach
• Looks to invest in fundamentally strong companies with good growth prospects
• Focus on valuations – aims to own stocks with high margin of safety to reduce overall portfolio risk
• Aims at broad diversification of portfolio, with a view to manage liquidity at the aggregate portfolio level

25

L&T Midcap Fund - Portfolio information
Top 10 sector positions
Sector
Consumer Non Durables
Auto Ancillaries
Industrial Capital Goods
Textile Products
Transportation
Banks
Finance
Construction Project
Software
Pesticides

Top 10 active stock positions
Weight
9.82%
7.20%
7.02%
6.26%
6.24%
6.17%
6.05%
6.04%
6.03%
5.67%

Market capitalization break-up

Large cap: 18.81%
Small and Midcap: 77.63%
Debt / Cash: 3.55%

26

Company
K P R Mill Ltd.
Sundaram Finance Ltd.
Techno Electric & Engg Co Ltd.
Jyothy Laboratories Ltd.
Federal Bank Ltd.
Pfizer Ltd.
Bayer Cropscience Ltd.
Centum Electronics Ltd
Gateway Distriparks Ltd.
Hitachi Home & Life Solutions Ltd

Fund

Bm

Active

3.2%
3.0%
3.0%
2.5%
2.5%
2.2%
2.0%
1.9%
1.9%
1.9%

0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

3.2%
3.0%
3.0%
2.5%
2.5%
2.2%
2.0%
1.9%
1.9%
1.9%

Top 10 holdings
Company

% of net assets

K.P.R. Mill Limited
Sundaram Finance Limited
Techno Electric & Engineering Company Limited
Britannia Industries Limited
Jyothy Laboratories Limited
The Federal Bank Limited
Emami Limited
Procter & Gamble Hygiene and Health Care
Limited
Pfizer Limited
Ashok Leyland Limited

3.15%
3.03%
3.00%
2.63%
2.53%
2.48%
2.40%

Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks

2.26%
2.24%
2.23%

L&T Midcap Fund – Attribution Analysis


The scheme continues to be overweight in Consumer Durable stocks. Stocks like Tube
Investments performed well this month



The scheme is currently overweight in Banking sector. The scheme is overweight in Federal bank
and Karur Vysya Bank currently



The scheme has overweight position in Industrials Capital Goods sector with major positions in
Alstom India and Centum Electronics



The scheme continues to be overweight in Cement stocks. Birla Corp performed well for the fund



The scheme is currently underweight in Consumer Staples space. Jyothy Laboratories aided
relative performance this month

27

Source: Bloomberg

L&T Infrastructure Fund
(An open-ended equity scheme)

For product labeling please refer to the last slide.

L&T Infrastructure Fund



A thematic fund which predominantly invests in companies which are likely to benefit from
India’s infrastructure growth



Preference for companies with scalable businesses, proven execution track record and
strong balance sheets



Focus on companies that offer best value relative to their long-term growth prospects



No market capitalization or style bias



Inception date: 27-Sep-07



Fund Manager: S N Lahiri



Benchmark: CNX Nifty index



Fund Size : 213 crores (QAAuM, June 2015)

29

For product labeling please refer to the last slide.

Product Positioning



Provides opportunity to benefit from participation in India’s structural infrastructure
growth



Potential to deliver higher returns, although with relatively higher risk



A product with potential to generate significant alpha, especially during economic
recovery / high growth phase



A product that could be used to complement core mutual fund portfolio holdings, with
a minimum investment horizon of 3-5 years

30

Portfolio information

Top 10 holdings

Top 10 sector positions
Sector

Company

Weight

% of net assets

Construction Project

21.62%

Larsen & Toubro Limited

7.12%

Industrial Capital Goods

18.40%

Techno Electric & Engineering Company Ltd

4.45%

Transportation

12.89%

Power Grid Corporation of India Limited

4.20%

Cement

9.72%

Grasim Industries Limited

3.50%

Industrial Products

5.78%

Idea Cellular Limited

3.49%

Power

5.62%

VRL Logistics Limited

3.30%

Telecom - Services

4.72%

Gateway Distriparks Limited

3.08%

Finance

4.09%

Centum Electronics Limited

2.70%

Construction

3.69%

IDFC Limited

2.69%

Non - Ferrous Metals

3.20%

Snowman Logistics Limited

2.68%

31

Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015

L&T India Value Fund
(An open-ended equity growth scheme)

For product labeling please refer to the last slide.

L&T India Value Fund



Diversified equity fund with strong value bias that aims to deliver long term superior riskadjusted returns



Focus on identifying valuation anomalies versus the economic potential of the business over
the medium term



Aims to minimize portfolio risk by investing in quality companies, monitoring corporate
fundamentals closely



No sector / market cap bias



Adds style diversification to portfolio



Fund Manager: Venugopal Manghat & Abhijeet Dakshikar (for foreign securities)



Benchmark: S&P BSE 200



Fund Size : 234 crores (QAAuM, June 2015)

33

For product labeling please refer to the last slide.

What is Value Investing?

A strategy of investing in stocks that trade at less than their intrinsic value
Price to Earnings

Enterprise Value / Sales

Price to Book

ROE

Dividend Yield

ROCE

Enterprise Value / EBITDA

Cash Flows

PEG

FCF / Sales

Business models / Fundamentals, Management, Market Sentiments



The fund looks to invest in fundamentally strong companies that the fund manager believes
are trading at less than their assessed values thus offering higher upside potential



This approach not only helps in identifying undervalued stocks but also factor-in the risk
elements while picking stocks

L&T India Value Fund - Portfolio information
Top 10 sector positions
Sector

Top 10 active stock positions
Weight

Banks
Construction
Auto Ancillaries
Software
Finance
Textile Products
Petroleum Products
Transportation
Textiles - Cotton
Cement

13.28%
7.06%
7.06%
6.74%
5.11%
4.79%
4.70%
4.49%
4.12%
3.73%

Market capitalization break-up

Company

Fund

Bm

Active

Hindustan Petroleum Corporation Ltd.
Himatsingka Seide Ltd.

2.59%
2.17%

0.37%
0.00%

2.22%
2.17%

TVS Srichakra Ltd.
UPL Ltd.
Indo Count Industries Ltd.
ITD Cementation India Ltd.
The Ramco Cements Ltd.
FDC Ltd.
VRL Logistics Ltd.
Ahluwalia Contracts Ltd.

2.05%
2.44%
1.94%
1.81%
1.91%
1.67%
1.67%
1.50%

0.00%
0.40%
0.00%
0.00%
0.11%
0.00%
0.00%
0.00%

2.05%
2.04%
1.94%
1.81%
1.80%
1.67%
1.67%
1.50%

Top 10 holdings
Company

Large cap: 37.48%
Small and Midcap: 53.46%
Debt / Cash: 9.06%

35

Infosys Limited
ICICI Bank Limited
Hindustan Petroleum Corporation Limited
UPL Limited
Axis Bank Limited
Himatsingka Seide Limited
Reliance Industries Limited
TVS Srichakra Limited
State Bank of India
Indo Count Industries Limited

Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks

% of net assets
4.95%
4.47%
2.59%
2.44%
2.37%
2.17%
2.11%
2.05%
1.95%
1.94%

L&T India Value Fund – Attribution Analysis


The scheme is currently underweight in Banking sector. Position in Bank of Baroda contributed to
performance



Overweight position in Auto Ancillaries stocks like Wabco and Gabriel India contributed positively
to performance this month



The scheme has overweight position in Textile sector. Himatsingka Seide and Indo Count
contributed to performance this month



The scheme continues to be overweight in Cement stocks. JK Lakshmi Cement aided relative
performance this month



The scheme has positions in Construction sector through stock like National Buildings
Construction and KNR Constructions

36

Source: Bloomberg

L&T Business Cycles Fund
(An open-ended equity scheme)

For product labeling please refer to the last slide.

L&T Business Cycles Fund



An open - ended equity scheme with business cycle approach to investing



Focus on riding business cycles by strategically changing allocation between various
sectors and stocks at different stages of business cycles in the economy



Portfolio positioning driven by medium term business cycle trends and not short term
market movement



Focus on identifying companies that offer best value relative to their respective longterm growth prospects, returns on capital and management quality



Fund Manager: Venugopal Manghat and Abhijeet Dakshikar (foreign securities)



Benchmark: S&P BSE 200



Fund Size : 1225 crores (QAAuM, June 2015)

38

For product labeling please refer to the last slide.

Business Cycle approach
 Business cycle patterns have historically tended to repeat themselves over time
 Changes in some of the key indicators provide relatively reliable guide in identifying different phases of
an economic cycle

 Cyclical factors linked with the state of the economy largely drive the performance of equity sectors over
the intermediate term

Economic Activity

Phase 1
Trough to
recovery

Phase 2
Recovery to
expansion

Phase 3
Expansion
to Peak

Phase 4
Peak to
Contraction

Higher inflexion point

Lower inflexion point

Timeline

Business cycle approach focuses on riding business cycles by
strategically changing allocation between various sectors and
stocks at different stages of business cycle in the economy
39

Product positioning



A product that is suitable for investors looking to benefit from strategic positioning of
portfolio based on stage of business cycle



Potential to deliver higher alpha over long term.



A product which could potentially outperform in both rising as well as falling market



Suitable for investors looking to benefit from economic recovery over the next few
years



40

Adds style diversification to investor’s portfolio

L&T Business Cycles Fund - Portfolio information
Top 10 sector positions
Sector
Banks
Construction Project
Construction
Finance
Auto
Industrial Capital Goods
Industrial Products
Transportation
Cement
Consumer Durables

Top 10 active stock positions
Weight
23.89%
8.18%
7.78%
7.68%
7.52%
7.45%
6.66%
6.50%
5.49%
4.27%

Market capitalization break-up

Company
Ashok Leyland Ltd.
Maruti Suzuki India Ltd.
Beml Ltd.
KNR Constructions Ltd.
Hindustan Petroleum Corporation Ltd.
Sadbhav Engineering Ltd.
National Buildings Construction
Corporation Ltd.
Ashoka Buildcon Ltd
Gateway Distriparks Ltd.
ITD Cementation India Ltd.

Fund

Bm

Active

2.27%
3.27%
1.78%
1.77%
2.11%
1.73%

0.34%
1.45%
0.00%
0.00%
0.37%
0.00%

1.93%
1.82%
1.78%
1.77%
1.74%
1.73%

1.61%
1.60%
1.58%
1.56%

0.00%
0.00%
0.00%
0.00%

1.61%
1.60%
1.58%
1.56%

Top 10 holdings
Company

Large cap: 52.26%
Small and Midcap: 43.02%
Debt / Cash: 4.72%

41

HDFC Bank Limited
ICICI Bank Limited
Housing Development Finance Corporation Ltd
Axis Bank Limited
Maruti Suzuki India Limited
Larsen & Toubro Limited
IndusInd Bank Limited
Ashok Leyland Limited
Hindustan Petroleum Corporation Limited
State Bank of India

Source: Bloomberg, ICRA MFIE, Internal. All data as at 31.8.2015. Market capitalization cut offs used to define Large /
Mid / Small cap stocks are internal. Top 100 stocks as sorted on market capitalization basis, are defined as largecap,
next 100 stocks as midcap and beyond top 200 as smallcap stocks

% of net assets
5.49%
4.81%
3.57%
3.30%
3.27%
2.64%
2.38%
2.27%
2.11%
1.97%

L&T Business Cycles Fund – Attribution Analysis


The scheme is currently overweight in Banking sector. Positions in Bank of Baroda contributed
positively to performance



The scheme continues to have overweight position in Industrials Capital Goods sector. BEML and
Crompton Greaves are major bets within the sector



The scheme continues to be overweight on Industrial Products sector. Cummins India contributed
to performance this month



The scheme is overweight in Consumer Durable stocks. IFB Industries contributed to relative
performance during the month



The scheme is overweight on Construction sector. Exposure to stocks like ITD Cementation
helped in relative outperformance this month

42

Source: Bloomberg

Equity Investment Process

Equity Investment Process – G.E.M.

Evaluation
of
companies

Generation
of Ideas

Manufacturing
and monitoring
of Portfolios

Valuations

Identify potential ideas
• External Research:
• Broker research
• Industry research
• In house fundamental
research:
• Around 350 stocks
under coverage
• Filters / screens
• Business cycles
• Meet industry
experts,
competitors,
suppliers, regulators

44






When buying a business, know the business
Quality
• Profitability and attractiveness of business
• Competitive positioning
• Stage in business cycle
People
• Management track record and management incentives
• Corporate governance
Valuations
• P/E, EV / EBITDA
• good businesses at reasonable valuations or companies
on cheap valuations where fundamentals are improving








Implementation
Discussion in
Investment Committee
Investment mandate –
scheme objectives,
stock and sector
diversification
Regulatory limits
Risk philosophy –
concentration, liquidity,
market cap size
Tracking error

Disclaimer

The views expressed herein are those of the fund managers and should not be construed as an advice. This
presentation is for general information only and does not have regard to specific investment objectives, financial
situation and the particular needs of any specific person who may receive this information. Investments in
mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and
financial advisors before investing. Recipient of this presentation should understand that statements made here
in regarding future prospects may not be realized. He / She should also understand that any reference to the
stocks / securities/ sectors/ indices in the document is only for illustration purpose and should not be construed
as advice to buy those securities. The portfolio information is as of August 31, 2015 and is subject to change at
the discretion of the fund manager(s).Neither this presentation nor the units of L&T Mutual Fund have been
registered in any jurisdiction except India. The distribution of this presentation in certain jurisdictions may be
restricted or totally prohibited and accordingly, persons who come into possession of this presentation are
required to inform themselves about, and to observe, any such restrictions.
Risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents
carefully.
CL02113

45

Product Labeling

46

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