Shilpa KumarMD & CEO
ICICI Securities Ltd.
Overall the Indian markets have been fairly resilient given the challenging environment on the growth front faced by major global economies. Specifically FY18 was a transitional year for Indian markets amidst a successful economic transformation post demonetisation and GST. The year ended with encouraging corporate quarterly earnings with the Sensex Profit after Tax (PAT) (ex-banks) up a healthy ~15% YoY. This marks Q4FY18 as the first quarter staging double digit bottom line growth since previous five quarters. It is largely attributable to a robust consumer demand depicted by ~24% YoY growth in automobile sales volume, double digit volume growth in the FMCG pack and ~15% YoY growth in cement sales volume.
The recent concerns about depreciating rupee and current account deficit (CAD) (at record high levels) has caused some anxiety among investors. The turbulence in the rupee due to sharp hike in crude oil prices is likely to trigger a temporary shifting of liquidity in the global landscape. This in turn, is also expected to cause volatility across asset classes.
Going into FY19, we expect the global liquidity allocation to focus back on the core fundamentals of respective economies and assets classes across the globe. In that respect, India is expected to stand taller as prominent concerns on inflation, CAD and weaker currency will be on the mend.
Our house view on equity remains positive as equity benchmarks gained in April, snapping their two month losing streak, amid expectations of earnings pickup and positive global equities. We believe the broader consolidation would make the market healthy by cooling off the overbought situation. As for the recent rise in yields due to surge in crude oil prices and higher state government borrowing has dented investor sentiment.
ICICIdirect Money Manager June 20181
However, gross YTMs of most accrual funds or credit funds have risen making them an ideal investment option.
The earnings seasons i.e. Q4FY18 was marred by losses at large public and private sector banks, owing to increased provisioning following a RBI directive. However, with much of the pain already recorded and IBC resolutions underway, we expect incremental slippages to be contained aiding moderate provisions. This, coupled with improving credit growth, will enable profitability to improve in PSU and corporate banks over FY19-20E. Therefore, going forward, with rebound in banking space amidst forecast of normal monsoon 2018 and firm rural demand, we expect corporate earnings to stage an impressive recovery, growing in excess of 20% CAGR over FY18-20E.
On the brighter side, India's GDP (gross domestic product) touched a better-than-expected 7.7 per cent in the last quarter, outperforming China (6.8 per cent in the corresponding quarter) by nearly a percentage point and retaining India's rank as the world's fastest-growing economy. Addressing the inflation concerns, RBI in its latest monetary policy meet had increased the key benchmark rates by 25 bps, first rate hike in last 4 years. The primary aim of the same is to control inflation with forward stance held as Neutral. RBI has also maintained its domestic GDP growth projection for FY19E at 7.4% vs. 6.7% in FY18. GDP growth is projected in the range of 7.5-7.6% in H1 and 7.3-7.4% in H2, with risks evenly balanced.
Improving sentiments, stable political environment and pickup in economic activity would continue to attract investor towards equities, resulting in shift in preference towards financial savings from physical savings. Moreover, other asset classes including gold and real estate have shown signs of tiring up. Even though markets have run up in the recent past, investors should continue to increase exposure towards equities to create a balanced portfolio in the long run. In an environment like this the importance of systematic investments plans (SIPs) just cannot be ignored. While SIPs are traditionally used to invest in mutual funds for those of you who prefer the direct route to equity investments you can also start SEPs in stocks as well.
Through our website and this magazine we want to www.icicidirect.commake an earnest attempt to partner with you in setting and achieving your financial goals. Do walk into any of your Neighbourhood Financial Superstore and talk to us.
Your magazine is now also available on www.magzter.com, a digital newsstand.
ICICIdirect Money Manager June 2018
Editor & Publisher : Abhishake Mathur, CFA
Editorial Board : Sameer Chavan, CWM®, Pankaj Pandey
CMEditorial Team : Nithyakumar VP CFP , Sachin Jain, Research Team
Coordinating Editor : Namrata Lonkar
2
The end of earning season is a good time to review individual's investment portfolio,
track projected returns and modify investment allocation if necessary. The annual
report along with the quarterly results gives details of market's performance, the
profits, cash flows, inventories and other key indicators. Analysis of quarterly
reports is examined by experts and coherent messages of the outcome are
conveyed to all the investors. This information helps the investor to take informed
decisions with regard to their investments in those companies.
In this edition of Money Manager we bring you a detailed analysis of the Fourth
Quarter results. On the sectoral front, in Q4FY18, overall auto volumes increased
23.9% YoY mainly due to low base & strong growth momentum across segments.
While the topline growth for the quarter was led by the commodity space and
consumer driven auto space, bottomline growth, on the other hand, witnessed a
divergence. Additionally, sectors like auto, capital goods, cement, FMCG, real estate,
media, metals and pharma reported positive performance; whereas, banking, oil
and gas, building material & telecom failed to show robust growth.
These quarterly reviews would give you a bird's eye view of the financial situation of
various sectors in our economy. ICICIdirect research has dissected the numbers and
come out with estimates for the ongoing financial year, which I am sure you will find
very useful.
We believe, this information helps the investor to take informed decisions with
regard to their investments in analyzed companies or sectors. We also bring to you
an interview with Jinesh Gopani, Head- Equities, Axis Mutual Fund. His insights into
Q4FY18 results, among others, are definitely worth a read.
The edition also offer comprehensive information and analysis on infrastructure
funds, which present good investment opportunity with high growth potential. We
welcome your comments and queries on personal finance or any other money-
related matter….please write to us at [email protected] . Read
on, stay updated.
ICICIdirect Money Manager June 20183
MD Desk ............................................................................................. 1
Editorial ............................................................................................... 2
Contents .............................................................................................. 3
News ................................................................................................... 4
Stock ideas: Bandhan Bank & Ashok Leyland ........................ 5
Flavour of the Month: Q4FY18 results special: Know who performed how
Quarterly financial results are a periodical review of the performance
of India Inc. The research team at ICICIdirect has analyzed the fourth
quarter results put out by different companies. Here we provide you
a report card of various sectors and what promise they hold for
investors in the near future. .................................................. 15
Tête-à-tête: In talk industry experts about current economic scenario
In an exclusive interview with Jinesh Gopani, Head- Equities, Axis
Mutual Fund and Nimesh Chandan, portfolio manager at Canara
Robeco Asset Management ................................................... 32
Ask Our Planner
Our financial expert answers your personal finance queries … 39
Mutual Fund Analysis
Which are the top performing mutual funds in current market
scenario? Check these top infrastructure funds recommended by our
research team. .......................................................................... 42
This month on iCommunity
Take a look at the latest activities on our unique information platform-
iCommunity (for June 2018)..................................................... 55
Equity Model Portfolio ............................................................................ 56
Quiz Time ................................................................................................. 60
Prime Numbers ....................................................................................... 61
ICICIdirect Money Manager June 20184
The information technology (IT) sector has put brakes on new investment to
conserve cash but has done so even as share buybacks and dividends have
become their preferred route to keep the stock markets happy. As a result, the
country's top IT companies have reported a decline in their assets for the first time
in many years. The combined assets of the top five -Tata Consultancy Services
(TCS), Infosys Technologies, Wipro, HCL Technologies and Tech Mahindra were
down one per cent to Rs 2,774 billion at the end of 2017-18, from Rs 2,801 bn a year
before.
Courtesy: Business Standard
Information technology companies slam brakes on fresh investment
Oil companies plan to add 25,000 petrol pumps
NEW DELHI: State oil companies plan to add an unprecedented 25,000 petrol pumps in one shot, nearly half as much as operational today, across the country after the government signaled them to do so, according to people familiar with the matter. The oil ministry has also scrapped an official policy on petrol pump dealers' appointment, giving fuel retailers such as Indian Oil, Hindustan Petroleum and Bharat Petroleum the freedom to design their own rules for setting up filling stations, according.
Courtesy: Economic Times
The 5G committee of the telecom ministry has said that around 6000 Mhz of spectrum can be made available without delay for the next generation mobile service. If accepted, the panel's recommendation, which has been submitted to the government, can lead to India's largest ever spectrum allocation for a service. An expert member of the panel, Arogyaswami Paulraj told PTI in an interview that initially the service will enhance mobile data speed in India by up to 50 per cent compared to current levels. Paulraj is Professor Emeritus, Stanford University, and a pioneer of MIMO wireless communications, a technology break through that enables improved wireless performance. MIMO is now incorporated into all new wireless systems, as per Stanford site.
Courtesy: Financial Express
5G panel identifies 6000 Mhz spectrum as available for next gen service
The Centre has unveiled a revamped version of its 'Incredible India' website with an aim to pitch the country as a 'must-visit' destination. The website, which has been developed by Tech Mahindra, is mobile-ready and will provide more interactive and personalised experience for the travellers. "With the help of Adobe solution suite, the Ministry of Tourism will now be able to engage effectively with visitors across web and social channels and measure engagement to deliver real time personalised experiences for each visitor," an official statement said.
Courtesy: The Hindu
'Incredible India' website revamped
STOCK IDEAS
ICICIdirect Money Manager June 20185
Ashok Leyland - Strong growth momentum to continue…
Company Background
Ashok Leyland (ALL) is one of the few pure play major c o m m e r c i a l v e h i c l e manufacturers in India. ALL is the second largest player a c r o s s v a r i o u s M & H C V segments with an overall market share of ~34%. At present, trucks accounts for >70% of its revenue, the company over the years has d i v e r s i f i e d i n t o o t h e r segments namely buses, LCV, exports, defense & spares.
Investment Rationale
Favourable macro factors + company initiative = double digit growth
ALL saw a robust FY18 performance with volumes growing ~21% (M&HCV-16% & L C V- 3 7 % ) , r e v e n u e s growing 30% & broadly maintaining market share (~40 bps increase). Going ahead, the management expects M&HCV total industry volumes (TIV) to grow 10-12% in FY19E on the back of macro factors like 1) quantum j u m p i n i n f r a s t r u c t u r e spending & 2) GST led faster
turnaround time and more hub-spoke adoption leading to h i g h e r f l e e t o p e r a t o r profitability & shift to higher tonnage trucks. In FY20E, double digit growth will be achieved on the back of pre-b u y i n g a h e a d o f B S - 6 implementation in 2020 (where price of vehicles will increase in range of 6-8%). Post FY20E, growth in the M&HCV industry will sustain on the back of scrappage policy wherein the m a n a g e m e n t e x p e c t s ~2,00,000-2,50,000 vehicles (~70% of TIV) to be replaced, if t h e c u r r e n t p r o p o s a l ( sc rappage o f >20 -yea r vehicle) is adopted. The benefit of favourable macro factors will be accentuated by new launches like 41 tonne MAV (4123), 25 tonne tipper (2532) & introduction of LCV products post FY20E to fill the white space. We expect total M&HCV & LCV volumes of ALL to grow ~12.5% & 21% in FY18-20E.
Focus on non-cyclical business to yield positive outcome
The current business mix of
ALL is at: truck-72%, bus-7%,
ICICIdirect Money Manager June 2018
STOCK IDEAS
6
expor t-9%, LCV-7% and
defence-3%. The defence
business has grown ~35%
while exports have grown 38%
in FY18. ALL is looking to de-
volatilise its business in the
next three to five years, by
g r o w i n g h i g h e r m a r g i n
aftermarket (from 10% to 30%
of sales). The aftersales will be
aided by an increasing dealer
network (M&HCV- FY14-649 to
FY18-2894; LCV-FY14-300 to
FY18-465). In the defence
business, the company has
won 23 of 27 tenders in the last
two years. These tenders have
a revenue potential of 5000 `
crore in the next few years.
Overall, we expect EBITDA
margins of 11.3%, 11.5% for
FY19E, FY20E, respectively.
Ahead of the curve
The management initiatives to
cu t cos t s , r educe deb t ,
improve working capital cycle,
divest non-core assets and fill
product gaps have yielded
results in terms of meaningful
m a r k e t s h a r e g a i n a n d
consistently strong financial
performance. Our earnings are
expected to grow at a CAGR of
32% in FY18-20E. We value the
stock on an SOTP basis, to
arrive at a target price of 180. `
We have a BUY rating on the
stock
ICICIdirect Money Manager June 2018
STOCK IDEAS
7
Key Financials
Valuations Summary
` crore FY17 FY18 FY19E FY20E
Net Sales 20019 26248 32886 39047
EBITDA 2203 2739 3715 4477
Net Profit 1223 1563 2245 2715
EPS 4.3 5.3 7.7 9.3
FY17 FY18 FY19E FY20E
P/E 27.1 27.2 19.0 15.7
Target P/E 41.8 33.7 23.4 19.4
EV / EBITDA 18.8 13.8 10.1 8.0
P/BV 6.8 6.0 4.9 4.1
RoNW 25.0 21.9 26.0 25.9
RoCE 23.9 28.5 34.9 35.4
Stock Data
Stock Data ` crore
Market Capitalization (` Crore) 41,551.6
Total Debt (FY18) (` Crore) 417.1
Cash and Cash Equivalent (FY18) (` Crore) 1,033.7
Enterprise Value (` Crore) 40,935.0
52 week H/L (`) 168/90
Equity Capital 292.7
Face Value ` 1
ICICIdirect Money Manager June 2018
STOCK IDEAS
8
Key risks include:
Slowdown in the overall demand
environment might impact its
performance
Though, we be l ieve the
domestic M&HCV industry has
multiple catalyst in terms of
growth over the next couple of
years , any s lowdown in
demand due to regulatory
change or postponement of
demand (purchases) by the
fleet operators (due to rise in
interest & fuel cost in the near
term) might impact ALL's
r e v e n u e g r o w t h g o i n g
forward.
Higher raw material cost + Intense
competition = could impact its
margin
We believe if ALL is unable to
pass on the rise in input cost to
its consumers its margins
m i g h t g e t i m p a c t e d .
Addit ional ly, the intense
competition in the market,
might result into discounts &
offers which could impact its
overall market share and
margin.
ICICIdirect Money Manager June 2018
STOCK IDEAS
9
ANALYST CERTIFICATION We /I, Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accuratelyreflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock
brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration
Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India's largest private sector bank and has its
various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund
management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in
India. We and our associates might have investment banking and other business relationship with a significant percentage of companies
covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their
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The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report
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ICICIdirect Money Manager June 2018
STOCK IDEAS
Bandhan Bank - Best yields with lower cost of funds; unique model
Company Background
Bandhan started as Bandhan
Konnagar in 2001 as a non-
governmental organisation
(NGO) providing microfinance
serv ices to soc ia l ly and
economically disadvantaged
women in rural West Bengal.
Bandhan Financial Services
(BFSL) started its microfinance
business in 2006. The NGO
transferred its microfinance
business to BFSL in 2009. On
April 9, 2014, RBI granted an in-
principle approval to BFSL to
set up a scheduled commercial
bank in the private sector.
Upon receipt of the in-principle
approval, BFSL and Bandhan
Bank entered into a business
transfer agreement to transfer
a l l o f B F S L ' s e x i s t i n g
m i c r o f i n a n c e b u s i n e s s ,
including all assets, liabilities,
accumulated profits and entire
infrastructure, along with a
wide consumer base to the
bank . By the t ime BFSL
transferred its microfinance
business to the bank, it was
India's largest microfinance
company with AUM of ~ 8309 `
crore and ~70 lakh customers.
With historical strength in the
m i c r o f i n a n c e s e g m e n t ,
Bandhan Bank, which began
operations on August 23, 2015,
is now a commercial bank
focused on serving under-
banked and under-penetrated
markets in India.
Bandhan Bank is a unique
bus iness mode l o f h igh
yielding micro finance loan
portfolio (94% priority sector
fu l f i lment ) and low cost
deposit franchise with 34.3%
CASA offered in the ambit of a
commercial bank. It was the
only MFI to receive a universal
banking licence from the RBI in
2014. Bandhan Bank, with 13-
14% market share, operates
936 branches and 2 ,764
dedicated doorstep services
centres servicing ~1.3 crore
customers in 33 states. East
and northeast (West Bengal,
B i h a r , A s s a m ) a r e i t s
stronghold. FY18 AUM was at `
10
ICICIdirect Money Manager June 2018
STOCK IDEAS
11
32340 crore a PAT at 1346 `
crore.
Investment Rationale
Consistent track record of quality
growth, banking adds positive leg
Bandhan MFI was one of the
few institutions to sail through
t h e A P c r i s i s ( 2 0 1 1 ) ,
demonetisation (2016), farm
loan waivers, etc. I t has
demonstrated stellar growth at
~90% CAGR in those 10 years.
Even in the last five years,
advances grew at 51% CAGR.
In bank, AUM has grown from `
15,578.4 crore as of FY16 to `
32,340 crore as of FY18 while
customer base has increased
to ~1.3 crore. Micro credit
forms 86% of loan book while
retail, SME together are still
small. Asset quality is strong at
1.2% GNPA ratio. We expect
38% CAGR in loans to 61546 `
crore by FY20E.
Strong deposit franchisee in short
span, high CASA offers low CoF
Bandhan Bank has focused on
building a strong deposit base
and has grown from zero as of
August 23, 2015, to 33,869 `
crore in FY18. Current and
savings account deposi t
(CASA) was at 11,617 crore, `
constituting 34.3% of deposits.
CASA provides stable low-cost
funding with CoF now at 6.7%.
We expect deposits growth at
~31% with CASA ratio ~36%.
Only 6% of deposits come
from MFI clients. Majority of
deposits come from bank
branch customers while 80%
of the same is retail.
Strong NIMs, low cost-to-income
lead to above par return ratios, BUY
Net interest margin (NIM) was
at 9.8% for FY18. With low cost
funds, we expect NIM to
sustain at ~9% even as the
bank starts building non-micro
loans. Along with higher NIM,
low operating cost at ~35% C/I
r a t i o r e m a i n s i t s k e y
differentiator, high RoA driver.
Its opex to AUM ratio was at
4% for FY18. We expect high
RoA of 3.5-4%, RoE >20% to
sustain. With almost double
NIM, RoA vs. HDFC Bank &
lower C/I ratio, with no legacy
corporate portfolio pains, we
believe Bandhan Bank will
command higher premium to
HDFC Bank. At CMP of 490, `
the stock is available at 4.4x
FY20E ABV of 111. On P/E `
ICICIdirect Money Manager June 2018
STOCK IDEAS
12
Valuations Summary
Key Financials
Stock Data
` Crore FY17 FY18E FY19E FY20E
NII 2,403 3,032 4,348 5,790
PPP 1,793 2,430 3,567 4,656
PAT 1,112 1,346 2,018 2,612
FY17 FY18E FY19E FY20E
P/E 48.3 43.4 29.0 22.4
Target P/E 59.1 53.2 35.5 27.4
P/ABV 12.2 6.3 5.3 4.4
Target P/ABV 15.0 7.8 6.6 5.4
P/BV 12.1 6.2 5.2 4.3
RoE (%) 28.6 19.5 19.6 21.1
RoA (%) 4.4 3.6 4.0 4.0
Market Capitalization (` Crore) 58,232
Networth 9,382
52 week H/L (`) 540 / 455
Equity Capital 1,193
Face Value 10.0
DII Holding (%) 1.9
FII Holding (%) 10.1
basis, it is available at 22.4x
FY20E earnings of 22 EPS. `
Valuing the bank at 5.4x FY20E
ABV, we arrive at a target price
of 600. We initiate coverage `
with a BUY recommendation.
ICICIdirect Money Manager June 2018
STOCK IDEAS
13
Key risks include:
Concentration risk as substantial operations in eastern India
A substantial proportion of Bandhan's branches & DSCs along with a significant portion of its deposits and advances are in East and Northeast India and, in particular, the states of West Bengal, Bihar and Assam. As on December 17, ~81% of loans, 69% o f DSCs and 65% o f branches are from these regions. Due to such concentration, the success and profitability of the overa l l operat ions may be disproportionately exposed to regional factors that include, a m o n g o t h e r s , i n c r e a s e d competition as more players enter these geographies, general economic conditions and other developments including political unrest, floods and other natural calamities.
Continuity of management team and skilled personnel
The company's performance is h i g h l y d e p e n d e n t o n t h e c o n t i n u e d s e r v i c e s o f i t s management team. In particular, this includes the efforts of its Managing Director & CEO along
with other experienced members of its Board of Directors & senior management. In accordance with requirements prescribed by RBI, the retirement age is 70 years for the managing director, CEO and whole-time directors of the Bank. Bandhan's Managing Director is 57 years old. Any loss of a key personnel or inability to replace key personnel may restrict its ability to grow and manage the overall running of operations.
Reduction in promoter stake to 40% as per RBI norms
As per RBI's new bank licensing guidel ines, Bandhan Bank's promoter – Bandhan Financial Holdings Ltd is required to reduce its shareholding in the bank to 40% within the first three years of commencement of operations, ending in August 2018. As of March 2018, the promoter holding was at ~82.3%. The management has indicated at continuous engagement with the RBI for an ex tens ion o f the t ime l ine . Rejection of an extension on part of the central bank could entail huge equity supply and thereby s u b s t a n t i a l d i l u t i o n i n performance parameters.
ICICIdirect Money Manager June 2018
STOCK IDEAS
ANALYST CERTIFICATION We /I, Kajal Gandhi, CA, Vasant Lohiya, CA and Vishal Narnolia, MBA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock
brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration
Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India's largest private sector bank and has its
various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund
management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.
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14
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201815
Q4FY18 results special: Know who performed how
Quarterly financial results are a periodical review of the performance of India Inc. Carrying forward the positive current from the last quarter, the performance of Sensex companies was robust in Q4FY18. With forecast of normal monsoon 2018 and firm rural demand amid a pick-up in industrial activity, we expect Sensex to stage an impressive earnings recovery, growing in excess of 20% CAGR over FY18-20E. The research team at ICICIdirect has analyzed the fourth quarter results put out by different companies. While sectors like auto, capital goods, cement, FMCG, real estate, media, metals and pharma reported positive performance; banking, oil and gas, building material & telecom failed to show robust growth. Here we provide you a report card of various sectors and what promise they hold for investors in the near future. ….
Large caps lead earnings recovery…
Ÿ Sensex companies (ex-
banking space) continued
their positive momentum
with Q4FY18 the first quarter
that was marked by double
digit bottomline growth. It is largely attributable to robust
c o n s u m e r d e m a n d a n d
s u c c e s s f u l e c o n o m i c
t r a n s f o r m a t i o n p o s t
demonetisation and GST. For
Sensex compan ies (ex-
banks), net sales in Q4FY18
are up healthy 15.7% YoY to
Rs. 538,048 crore. Companies
continued to witness falling
gross margins (down 186 bps)
on account of a r ise in
commodity prices, which was
more than compensated by
operating leverage benefits
(up 250 bps) on account of
sweat ing of assets with
consequent inc rease in
EBITDA margins by 28 bps to
19.1% in Q4FY18.. On a full
year basis, in FY18, sales
increased 10.9% YoY resulting
in bottomline growth of 10%
YoY.
Ÿ At a broader level (listed
un iverse ) , the ea rn ings seasons was marred by losses at large public and private sec to r banks , ow ing to i n c r e a s e d p r o v i s i o n i n g following a RBI directive. However, with much of the pain already recorded and IBC (Insolvency and Bankruptcy
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201816
Code) resolutions underway, w e e x p e c t i n c r e m e n t a l slippages to be contained aiding moderate provisions. This, coupled with improving credit growth, will enable profitability to improve in PSU and corporate banks over FY19-20E.
Ÿ On the sectoral front, in
Q4FY18, overall auto volumes
increased 23.9% YoY mainly
due to low base & strong
growth momentum across
segments. In the FMCG space,
double digit volume growth is
encouraging. This, coupled
with ~15% volume growth in
the cement space, depicts
robust demand prospects
domestically. In the capital
goods space, robust execution
led to healthy double digit
growth in sales amid robust
build-up of order book. Going
forward, with forecast of normal
monsoon 2018 and firm rural
demand amid a pick-up in
industrial activity (increased
sales of M&HCV, cranes), we
expect Sensex to stage an
impressive earnings recovery,
growing in excess of 20%
CAGR over FY18-20E
Source: ICICIdirect Research
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201817
On a YoY basis, in Q4FY18, ex
banks, the Sensex topline
increased convincingly at
double digits at 15.7% YoY
(highest in recent past) .
EB ITDA growth , fo r the
quarter, came in at 17.3% YoY
thereby exceeding topline
growth primarily tracking 30
bps expansion in EBITDA
margins to 19.1%. The margin
improvement was factoring in
lower overhead costs mainly
other expenses (250 bps),
which was partly compensated
by an increase in raw material
costs (190 bps) on account of
an increase in commodity
prices and higher employee
costs (up 30 bps YoY). PAT in
Q4FY18 was up a healthy
15.0% YoY
Industry wise profit
movement and revenue
Topline growth for the quarter was led by the commodity space viz. oil & gas (up 32.2% YoY) and consumer driven auto space (up 19.0% YoY). Pharma & telecom continued their underperformance with topline growth of -2.0% & -10.5%, respectively. FMCG performance looks muted (up
1.8% YoY) despite robust growth at HUL (up 11.1% YoY) primarily tracking de-growth at ITC (down - 4.6% YoY). Tier-I IT companies witnessed average g rowth o f 1 .2% QoQ in constant currency terms in Q4FY18. Cross currency provided strength of ~120-190 bps to dollar revenue growth to 2.9% sequentially
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201818
Industry wise aggregate revenue (Sensex companies) (Rs. crore)
Bottomline growth, on the
other hand, witnessed a
divergence. Growth was led by
m e t a l s ( u p 1 2 9 % Yo Y )
primarily tracking loss to profit
at Tata Steel, followed by the
oil & gas space (up 24.1% YoY,
upbeat crude price). IT &
telecom reported de-growth at
t h e PAT l e v e l . Te l e c o m
operators continued to bleed
in Q4 on account of continued
price erosion (fresh round of
price cut by Jio in January
2018) and international IUC cut
impact.
Industry wise aggregate net profit (Sensex companies) (Rs. crore)
Sector specific takeaways from
quarter
Auto & auto ancillaryOverall auto volumes increased
23.9% YoY in Q4FY18 mainly
due to low base of last year
(impacted by demonetisation) &
strong growth momentum
across segments. In terms of
segments, 2-W reported healthy
growth of 25.2% YoY, driven by
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201819
both motorcycle & scooters (up
27.1% YoY & 24.1% YoY
respectively) supported by a
revival in rural sentiment in key
underpenetrated states. The 3-
W saw strong demand revival
as volumes grew 84.2% YoY,
led equal ly by domest ic
(attributable to favourable
industry development) & export
market. On the flip side, PV
segment remained subdued, up
6.7% YoY. Thus, overall revenue
of I-direct auto universe [ex Tata
Motors (TML)] grew 25.3% YoY,
with OEM & ancillary revenue
growth was at ~23.7% YoY &
~27.7% YoY, respectively The EBITDA margin of our
universe (ex-TML) increased,
as OEM margin expanded
w h i l e a n c i l l a r y m a r g i n
contracted. We believe higher
volumes resulted into positive
operating leverage for OEMs.
This was partly offset by higher
input cost resulting into margin
expansion. Among our coverage OEM
universe, the results of Ashok
Leyland & Hero were in line
with our estimates on the
o p e r a t i o n a l f r o n t . M S I L
reported higher other expense
mainly due to a rise in freight
cost, expenses related to
participation in Auto Expo &
Swift model launch thereby
i m p a c t i n g i t s o p e r a t i n g
margin. Eicher Motors took an
impairment loss of Rs. 187
crore towards winding down of
operations of Eicher Polaris.
TML disappointed with its
results. The management
lowered JLR EBIT margin
guidance to 4-7% over FY19-
21E On the ancillary front, Apollo
Tyres & JK Tyre reported
healthy volume driven revenue
growth in their domestic
business & margin expansion
o n a Yo Y & Q o Q b a s i s .
However, Balkrishna Industries
reported strong volume driven
revenue growth. Its margins
were impacted due to higher
crude derivative price.
Among battery players, Exide
reported a strong operational
performance. However, Amara
Raja disappointed with its
results on all parameters. The
integration of PKC group
(revenue of Rs. 2,174 crore)
l i f ted Motherson Sumi ' s
revenue - up 35.8% YoY
(adjusted growth is at 17.3%
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201820
YoY). However, a higher start-
up cost impacted its margins.
Bosch also reported a decent
performance led by healthy
growth in its automotive
segment
Banking Q4FY18 has been one of the
worst quarters for the banking
industry in terms of asset
quality led by frauds, new NPA
framework introduced by RBI
(discarding past restructuring
formats), NPA divergences &
absence of any resolution in
large NCLT cases referred
earlier Absolute GNPA (Gross Non-
Performing Advances) of PSU
banks increased 31% YoY
(15% QoQ) to Rs. 896601 crore
while that of private banks
increased 39% YoY to Rs.
127985 crore. GNPA ratio of
the industry is ~11.8% as on
FY18 Corporate based private banks
l ike Axis Bank witnessed
heightened NPA pressure
along with most PSU banks
Rise in slippages led to large
interest reversals, which
impacted NII growth of the
sector, at 1.3% YoY. For PSU
banks, NII declined 4.4% YoY.
This was despite healthy credit
growth of ~10% YoY Provis ions in Q4 a lmost
doubled QoQ to Rs. 148276
crore. This was led by PSU
banks. Accordingly, the sector
reported highest quarterly loss
of Rs. 55648 crore with PSU
bank loss at Rs. 62681 crore.
Private Banks continued to
report a relatively healthy set of
numbers owing to their retail
orientation. They continue to
grab market share from PSU
banks. They managed to report
PAT of Rs. 7033 crore in Q4
Capital goods On an overall basis, revenue
for capital goods companies
grew 10.8% YoY in Q4YF18
backed by robust execution
t r e n d s a c r o s s a l l E P C
companies. EBITDA margins
were flattish YoY. Interest cost
also witnessed a sharp decline
of 18% YoY due to working
capital improvement and debt
repayment during the quarter On the order inflow front, L&T
announced order wins in to the
tune of Rs. 49,600 crore with
strong order wins in the
domestic market. Strong
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201821
tendering in the domestic
market helped L&T report 7%
YoY growth in order inflows for
FY18 . Go ing ahead , the
company has guided for a 10-
12% order inflow growth for
FY19E In the midcap space, KEC was
key performer as order inflows
for FY18 were at ~Rs. 15098
crore mark coupled with
strong revenue growth of
28.6% YoY along with an
improvement in the working
capital cycle Bearing companies like SKF,
Timken and NRB reported
healthy performance with
topline growth of 10-25%
coupled with EBITDA growth of
20-55%. Strong performance
was mostly on account of
robust offtake from the auto
segment and recovery in
industrial segment of the
business
Cement: Healthy volume
growth, high energy costs
dent margins
Cement companies under our
coverage reported healthy
volume growth of 15.5% YoY
m a i n l y l e d b y h i g h e r
government spending and
be t te r sand ava i l ab i l i t y.
Excluding UltraTech (that had
merged Jaypee) vo lume
growth was up 8.5% YoY. In
terms of regional performance,
r e g i o n s l i k e R a j a s t h a n ,
Himachal Pradesh and Gujarat
were impacted by sand & water
availability and RERA impact
while rest of the regions
witnessed healthy demand
f rom in f ras t ruc tu re and
individual house builders.
Realisation for the quarter was
up 4.8% YoY led by healthy
demand. Consequently, total
revenue of the sector increased
21.1% YoY toRs. 24,613 crore.
In terms of margins, higher
power cost (led by a sharp rise
in pet coke prices) and freight
cost (due to increase in diesel
prices, change in sales pattern
and s t r i c t adherence to
overloading in northern region)
have led to a fall in margins
(down from 17.5% in Q4FY17 to
17.3% in Q4FY18) Cement realisation in our
coverage universe increased
4.8% YoY during the quarter
mainly due to change in sales
mix (from ex-factory to FOR),
low base and better pricing in
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201822
the western & central region EBITDA/t in our coverage
universe increased 3.6% YoY
to Rs. 823/t mainly due to low
base. Among the coverage
universe, JK Lakshmi and
He i lde lberg repor ted an
increase of 45.2% YoY and
55.5% YoY mainly led by
operating leverage benefit and
low base in last year
Cement volumes & capacity utilization trends
Source: ICICIdirect research
Consumer Durables
I-direct CD universe (excluding
Lloyd's business in Havells)
recorded sales growth of
~13% YoY (12% QoQ) during
Q4 led by strong sales growth
of ~15% in the paint category
(volume were up ~12% YoY).
Under the piping segment,
Supreme Industries and Astral
Poly recorded sales growth of
~15% and ~11%, largely
driven by non-core business
( industr ia l and adhes ive
segments, respectively)
However, lower-than-expected
volume growth of the piping
segment was mainly due to a
slow pick-up in demand from
agriculture and real estate
segment in Q4FY18. On the
other hand, untimely rains in
most parts of the country
coupled with pre-buying activity
in Q3FY18 (owing to a change in
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201823
energy ratings) translated into
lower volume offtake in Q4FY18
for Voltas, Symphony and
Lloyds, respectively. As a result,
Symphony sales declined
~14% YoY wh i le Vo l tas
recorded flattish sales during
Q4FY18
On the margin front, I-direct CD
universe recorded flattish
margin on a YoY basis at 15.5%
as inflationary pressure on raw
material (higher prices of crude
derivatives, copper YoY) had
kept gross margins under
check.
FMCG
FMCG companies witnessed
strong growth in the March
quarter led by robust volume
g r o w t h c o u p l e d w i t h a
stabilising trade channel.
Aggressive advertisement and
promotions also aided growth.
O u r c o v e r a g e u n i v e r s e
reported 4.8% growth on a
comparable basis (net of
excise in base quarter). After
several quarters of stress in the
aftermath of demonetisation
and ro l lou t o f GST, the
consumer goods sector seems
to be back on the growth track
led by a pick-up in rural
consumption
We expect consumer demand
to remain resilient in urban
India as well. We believe
companies would continue to
witness strong volume growth
w i t h t h e g o v e r n m e n t ' s
increasing thrust on improving
rura l income leve ls and
expected normal monsoon in
2 0 1 8 . I n o u r c o v e r a g e
universe, HUL, Nestlé, Varun
B e v e r a g e s a n d J y o t h y
Laboratories witnessed 10.8%,
1 0 . 6 % , 2 4 . 5 % & 1 6 . 7 %
comparable sales growth,
respectively, led by robust
volume growth
Majority of the companies reported strong double digit growth in EBITDA led by a favourable base, soft raw m a t e r i a l p r i c e s a n d p r e m i u m i s a t i o n . M o s t companies in our universe r e p o r t e d g r o s s m a r g i n expansion. Our coverage universe has seen a 240 bps e x p a n s i o n i n o p e r a t i n g margins. Though inflation is expected to go up on the back of rising crude oil and higher
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201824
minimum support prices (MSP) announced by the Centre, companies would be able to mitigate the pressure through calibrated price increases
Led by higher EBITDA, net p r o f i t f o r o u r c o v e r a g e universe companies has seen healthy growth of 14.8%. FMCG behemoths HUL and ITC have seen net profit growth of
17.9% & 9.9%, respectively. In order to strengthen growth, companies are focusing on new products launches. We believe FY19E would further witness new product launches i n v a r i o u s s e g m e n t s . Simultaneously, advertisement spend in FY19E may go up with companies investing in new launches
Source: ICICdirect Research
Information Technology
Tier-I IT companies witnessed
average growth of 1.2% QoQ
in constant currency terms in
Q4FY18 while cross currency
provided strength of ~120-190
bps to dollar revenue growth to
2.9% QoQ
Analysing the growth drivers
for Tier-I IT companies in this
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201825
quarter, Europe continued to
lead growth in the last three to
four quarters outpacing the
US, the largest contributor
among geographies. Among
verticals, growth in banking &
financial services (BFSI) is yet
to see a pick-up while energy
and manufacturing saw good
growth in the quarter. With
movement of the IT landscape
m o r e t o w a r d s d i g i t a l &
emerging technologies, digital
forms ~22-30% of overall
revenues with healthy double
digit growth and continues to
inch up
Citing revenue outlook for
FY19E, Infosys and HCL Tech
guided for revenue guidance of
6-8% and 9.5-11.5% in CC
terms with organic growth
(~5% in FY19E) muted in HCL.
G o i n g b y m a n a g e m e n t
c o m m e n t a r y, F Y 1 9 E i s
expected to better compared to
FY18 owing to an improvement
in BFSI segment and scaling up
of digital revenues
On the operating margin front, it
was a mixed bag performance
in Tier- I IT companies. Infosys'
EBIT margins expanded 40 bps
to 24.7% while Wipro IT
services margins declined 40
bps QoQ to 14.4% on account
of one-off. In terms of EBIT
margin trajectory, for FY19E,
TCS (26-28%) and HCL Tech
(19.5-20.5%) retained their
margin guidance while there
was disappointment as Infosys
lowered its EBIT margin range
to 22- 24% for FY19E
Infrastructure
Our construction universe
companies continue to benefit
from a strong set of opportunities
across verticals. Consequently,
t h e o r d e r b o o k o f o u r
cons t ruc t ion compan ies
remained buoyant with strong
order inflows during the year.
However, on the financial front,
universe reported mixed set of
results. While NCC's topline grew
11.9% YoY to Rs. 2394.8 crore,
NBCC's topline fell 6.9% to Rs.
2184.2 crore. Consequently, the
topline of our construction
universe grew moderately by
3.2% YoY to Rs. 6227.2 crore.
On the operational front, there
was a 60 bps YoY expansion in
EBITDA margin to 10.4% on
account of exceptionally high
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201826
margins for NCC. Despite
m a r g i n e x p a n s i o n , t h e
bottomline of our construction
universe fell 10.3% YoY to
Rs.273.7 crore owing to 56.1%
YoY PAT de-growth of Simplex
Infra
Our road universe players
have benefited from strong
awarding from NHAI & MoRTH.
Also, execution has picked up
pace. Consequent ly, the
topline of our road universe
grew 9.0% YoY to Rs. 3947.9
crore. Also, toll collections on a
like-to-like basis grew 16.0%
YoY to Rs. 614.9 crore in
Q4FY18. Furthermore, EBITDA
margins contracted 280 bps
YoY to 26.0%. However, the
b o t t o m l i n e o f o u r r o a d
universe reported significant
growth of 40.6% to Rs. 526.6
crore due to 231% YoY growth
in the PAT of PNC Infratech
Building materials
Our building material coverage
un iverse posted a weak
performance. The growth was
largely impacted by a delay in
implementation of e-way bill,
wh ich s lowed down the
a n t i c i p a t e d s h i f t f r o m
unorganised to organised
segment. However, with the
interstate e-way bill in place
and passage of intrastate e-
way bill by July, 2018, we
expect this anticipated shift to
hasten and benefit organised
players. Overall, e-way bill
implementation would be a
key growth moni torab le
ahead. While revenues grew
1.9% Rs. 2258.0 crore, EBITDA
margins contracted 160 bps
YoY to 13.6% amid rising input
costs while PAT de-grew
18.4% YoY to Rs. 157.8 crore
In Q4FY18, our tiles universe
reported moderate volume
growth of 3.7% YoY to 36.2
M S M . H o w e v e r, o n t h e
financial front, results were
disappointing. Revenues de-
grew 0.2% YoY to Rs. 1276.7
crore as realisations softened.
Further, with pressure of rising
fuel prices, EBITDA margins
contracted 100 bps YoY to
13.1%. Hence, PAT declined
significantly by 6.5% YoY. On
t h e p o s i t i v e s i d e ,
managements indicated that
realisations have bottomed out
in Q4FY18
In Q4FY18, our plywood
universe reported a mixed
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201827
performance. While volume
performance was decent with
Century P ly & Greenp ly
reporting 8.7% and 5.3%
volume growth, respectively, a
significant drop in realisations
impacted topline. Consequently,
the topline of our plywood
universe grew moderately by
4.9% YoY to Rs. 981.3 crore. On
the operational front, EBITDA
margins declined 230 bps YoY to
14.3% amid stiff competition
a n d r i s i n g i n p u t c o s t s .
Consequently, the bottomline
de-grew significantly by 30.1%
YoY to Rs. 68.4 crore
Real estate
Q4FY18A witnessed a gradual
improvement in the real estate
sector. Furthermore, new
launches are expected to pick
up from FY19E onwards. Our
real estate coverage universe
repor ted s t rong vo lume
performance with volume
growth of 15.6% QoQ to 15.9
lakh sq ft (lsf). Sobha's volumes
grew 8.8% QoQ to 10.16 lsf
while Mahindra Lifespace's
sales volumes grew 44.0%
QoQ to 3.6 lsf. However,
Oberoi's volumes de-grew
13.6% QoQ at 1.3 lakh sq ft,
given the absence of new
launches
Metals
For Q4FY18, the metals &
mining sector reported a
healthy performance primarily
driven by higher realisations.
The topline of the coverage
un iverse (ex- Coa l Ind ia )
increased 16% YoY and 13%
QoQ, while the aggregate
sector EBITDA registered
growth of 19% YoY and 21%
QoQ. The corresponding
EBITDA margins was at 25.6%,
up 55 bps YoY and 185 bps
QoQ
The ferrous space reported
outperformance on the back of
healthy realisations. Tata Steel
reported a healthy Q4FY18
performance. The Indian
operations posted sales volume
of 3.03 million tonnes (MT)
while European operations
reported steel sales of 2.55 MT.
Domestic operations' (TSI)
EBITDA/tonne increased QoQ
to Rs. 15872/tonne. European
operations reported a healthy
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201828
EBITDA/tonne of US$70/tonne
On the back of healthy prices of
non-ferrous metals and crude,
Vedanta reported a steady
performance for Q4FY18
wherein the top line increased
22.7% YoY and 13.4% QoQ to
R s . 2 7 6 3 0 c r o r e . T h e
corresponding EBITDA margin
was at 28.4%
Graphite electrode majors
reported another upbeat
performance for Q4FY18
driven by higher realisations.
Graphite India reported sales
of Rs. 1212.2 crore. The
EBITDA came in at Rs. 668.6
crore (implying EBITDA margin
of 55.2%). HEG also reported a
robust performance. Net sales
were at Rs. 1295.5 crore (up
401% YoY) wi th EBITDA
margin of 73.6%
Oil & gas
The oil & gas sector reported a
steady performance in Q4FY18.
The resul ts of upstream
companies were largely in line
with our estimates on the oil &
gas production and revenues
front, benefiting from higher
crude oil prices. While revenues
increased ~4% QoQ, EBITDA
declined ~9% QoQ and came in
below our estimates. The miss
on the operational front was
mainly on account of inflated
costs related to workover
operations, water injection,
repairs & maintenance and
decommissioning. Going
forward, uncertainty looms
large with regard to subsidy
sharing and windfall taxes for
upstream oil companies
Oil marketing companies
reported a mixed performance
on the operational front with
core GRMs coming in below
our estimates. On the marketing
front, product sales growth
remained healthy at ~7% YoY
and flat QoQ, temporarily
overcoming the threats from
increased competition from
private players
Pharmaceuticals
Aided by a low base of Q4FY17,
the I-direct healthcare universe
reported strong double digit
profitability growth. Revenues
also grew in high single digits.
On the geographical front, the
challenging environment in US
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201829
generic space continued to
impact overall US growth.
However, excluding US, Brazil
(country specific issues) most
o ther geograph ies have
reported strong growth on the
back of new launches and
favourable currency movement.
Domestic formulations also
grew in double digits, in line with
our estimates. Overall, I-direct
universe revenues were at Rs.
40,196 crore, up 7.4% YoY
Despite overall decent growth,
seven out of 19 companies
under coverage registered
negative or muted revenue
growth in Q4FY18 due to
continued pricing pressure in
the US.
Power
Regulated utilities reported a
muted performance in terms of
revenue and profitability. NTPC
r e p o r t e d ~ 4 4 2 3 M W o f
capacity addition in FY18 while
the target for FY19E seems
encouraging in terms of
capacity addition. On the
Q4FY18 performance, the
generation growth at 7.5% YoY
(PLFs of coal based stations
improved 210 bps to 79%) was
in line but EBIDTA was below
estimates on account of higher
other expenses leading to
flattish profitability
Power Grid also reported asset
capitalisation in FY18 that was
below expectations at Rs.
28,000 crore given some delay
in receipt of approvals which
impacted cap i ta l i sa t ion .
Revenues and PAT grew below
estimates on account of lower
transmission revenues and
higher-than-expected other
expenses
Retail
A strong wedding season and
l o w b a s e e f f e c t o f
demonetisation resulted in
decent topline growth for the
retail sector in Q4FY18. On the
prof i tabi l i ty f ront , lower
discounting days (preponing of
end of season sale in Q3FY18)
and efforts towards cost
optimisation, boosted the
EBITDA margins for the quarter.
Hence, revenues for our retail
coverage universe grew 10%
while EBITDA grew robustly by
54% YoY in Q4FY18
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201830
Textiles
Softening of cotton prices by
~7% YoY to Rs. 113/kg, led to
improvement in margins for
textile players in Q4FY18.
EBITDA margins for Vardhman
Textiles recovered to 17.2% in
Q4FY18 (Q3FY8: 13 .7%,
Q2FY18: 13.0% and Q1FY18:
14.1%). EBITDA margins for
Page, Siyaram and Rupa,
expanded 450 bps, 270 bps
and 550 bps, YoY, respectively
On the balance sheet front,
except for Page, stretching of
working capital days was
a p p a r e n t i n Q 4 F Y 1 8 o n
account of issues related to
G S T i m p l e m e n t a t i o n .
Extension of credit period to
the dealers and distributors led
to higher receivable days. We
believe a gradual stabilisation
of trade channels will ease
working capital requirements
and generate healthy cash flow
from operations in FY19E
Logistics
Q4 continued to report a
strong quarter for surface
logistics players. The TCI pack,
wh ich inc ludes Transpor t
Corporation of India (TCI) and TCI
Express (TCIEL), led the growth
in the I-direct surface logistics
universe.
Overall I-direct logistics universe
grew 12% YoY (up 6% QoQ) to
Rs. 3750 crore. TCI, TCIEL and
BlueDart aided the profitability
growth of the universe, which
led EBITDA, PAT for the universe
to grow 12% and -10% to Rs. 601
c ro re and Rs . 422 c ro re ,
respectively
Media
The media sector performance
in Q4 was marked by strong
show by mul t ip lexes and
broadcasting while segment like
print had a weak outing as it
continues to struggle in localised
ad growth.
Telecom operators
Telecom operators continue to
bleed in Q4 on account of
continued price erosion (fresh
round of price cut by Jio in
January 2018) and international
IUC cut impact. This led to
continued downward trend in
FLAVOUR OF THE MONTH
ICICIdirect Money Manager June 201831
ARPU that had an impact on
EBITDA and profitability.
In the tower space, Infratel
witnessed the impact of gross
exi ts of 9813 tenancies,
reflecting the pressure of
consolidation and exits of
marginal players. We also note
that there remains further risk of
tenancy exits as Vodafone-Idea
merger gets completed. Sterlite
Tech continued to report strong
number, reporting ~19.7% YoY
growth in top l ine wh i le
operating margins came in at
26% (200 bps better than our
expectations) because of
revenue mix skewed towards
product business. Sterlite
remains a key beneficiary of
4G/5G infrastructure backhaul
led by optical fiber demand
globally and in India.
Tête-à-tête
ICICIdirect Money Manager June 2018
We believe India's fundamentals remain solid
32
Jinesh Gopani Nimesh Chandan
India has been a stand-out investment opportunity for domestic and global
investors ever since 2013 when global events led to a significant deterioration on
the country's fiscal position. Since then a series of policy measures have made the
economy better position to manage global stresses, says Jinesh Gopani, Head-
Equities, Axis Mutual Fund. Domestically, the risks are rising inflation due to
higher energy and food prices and deterioration in current account deficit, adds
Nimesh Chandan, fund manager, Canara Robeco Asset Management.
which to some extent have
been balanced out by domestic
investors. Midcap and small cap
stocks which saw a sustained
rally in the preceding years are
currently seeing a repricing of
earnings potential. What is
interesting to note is quality
companies (regardless of size)
that we have been tracking and
have significant investments in
Q. What is your take on current
market situation? Do you see the
markets to remain within existing
range or do you see a break-out in
either direction?
A. Jinesh Gopani - We continue to
believe markets will remain
volatile for the remainder of the
y e a r. F P I ` s h a v e b e e n
consistent sellers in the market
ICICIdirect Money Manager June 201833
Tête-à-tête
have seen limited falls or have
been stand out performers
during this volatile period.
C o m p a n i e s t h a t h a v e
consistently reported healthy
growth and have matched
investor expectations have
been perceived as 'companies
to incrementally invest' in
d u r i n g v o l a t i l e m a r k e t
conditions such as one that we
currently see ourselves in.
Nimesh Chandan - Currently
the market is expected to be
range bound. After a strong
rally last year, the markets can
take a breather for some time.
Rising interest rates globally,
depreciation in EM currencies
and trade wars are likely to
keep global equity markets
under pressure. Domestically,
we expect pressure from rising
inflation mainly due to rise in
energy and food pr ices.
Elections, both state and
central are likely to add to
volatility at the end of the year.
On the good news, we see
improvement in earnings
growth in FY19 and FY20.
Major reforms undertaken by
the Modi government are likely
to start showing results. We
believe this volatility will
provide an opportunity to add
quality companies to the
p o r t f o l i o a t r e a s o n a b l e
valuations.
Q. What are the key risks to Indian
markets that one should be
watchful about?
A. Jinesh Gopani - Globally,
markets have seen the return
of volatility after a sustained
period of a low volatil ity
e n v i r o n m e n t . T h i s h a s
reflected in the Indian markets
as well. Currently markets have
been focusing on short term
news flow on a wide variety of
aspects ranging from geo
political tensions, oil prices, US
interest rates, and more locally
domestic polit ical moves
amongst others.
Crude prices have hit a new 5
year' high of US$80. USD-INR
depreciated to Rs 67.5/US$ in
May from Rs66.5/US$ in April.
T h i s c o u p l e d w i t h a
deteriorating rupee has seen
domestic oil prices move to
their all-time highest levels.
Rising oil prices have once
again raised fears of inflation
ICICIdirect Money Manager June 201834
Tête-à-tête
and fiscal slippage. If oil related
excise duties are reduced, the
deficit might widen.
FPI's have been sellers in the
market for the better half of the
current calendar year in line
with the overall global shift
away from risk assets in a flight
to safety. However, domestic
institutional investors and
retail participation in equity
markets have minimized to
some extent the intensity of
the fall. Should this support
deteriorate, we should see
significant volatility in the
markets.
With that being said, India has
been a stand-out investment
opportunity for domestic and
global investors ever since
2013 when global events led to
a significant deterioration on
the country`s fiscal position.
Since then a series of policy
measures have made the
economy better position to
manage global stresses. We
believe India`s fundamentals
remain solid. The economy
continues to remain highly
dependent on domest ic
consumption and hence will
remain insulated from external
shocks.
Nimesh Chandan - The risks to the
market from the international
front are rising interest rates,
depreciation in Emerging
market currencies and trade
wars. Domestically, the risks
are rising inflation due to
higher energy and food prices
and deterioration in Current
account deficit.
Q. How has the Q4FY18 earnings
season panned out in your opinion?
A . Jinesh Gopani - Midcap
companies in general have
underper fo rmed marke t
expectations this quarter. This is
reflective of their performance
over the last month. However,
company results for Q4 FY18
have seen improvement across
sectors that we cover. The IT
sector results point to selective
opportunities within the space
on the back of an improved
global outlook. Consumer
focused companies within
banking (Reta i l Banks &
NBFC`s), consumer staples and
discretionary companies have
continued to match investor
expectations. Consensus NIFTY
ICICIdirect Money Manager June 201835
Tête-à-tête
earnings also did not see
significant negative surprises
unlike earlier years, highlighting
that there is confidence in a
likely step-up in growth going
forward.
Nimesh Chandan - The Q4FY18
r e s u l t s w e r e b e l o w
expectations mainly due to
the drag on profits from the
banking sector. Corporate
banks reported a significant
jump in the slippages and
provisions which were at an
all-time high this quarter.
Companies in the consumer
sectors performed better
than expectations. Metals
and Oil and Gas continued to
deliver good results.
Q. What are your expectations in
terms of earnings growth for FY19?
A. Jinesh Gopani - We continue to
believe in the India growth
story and see green shoots in
corporate earnings. We believe
that the corporate sector is at
the cusp of a signif icant
earnings recovery in the
coming quarters. The long
term opportunities and secular
growth prospects are clearly
visible in many of the themes
that we are currently looking at.
We expect profit growth our
investment universe to grow
18-20% on average in the next
4 quarters.
Nimesh Chandan - We expect
earnings of the Nifty-50 Index to
grow at 20% CAGR for the next
two years. This is likely to be led
by recovery in contribution from
the banking sector due to sharp
decline in loan-loss provisions. We
also expect general demand
recovery in domestic consumption
sectors such as automobiles and
staples. A weaker Indian Rupee is
likely to support realizations and
profitability in global commodity
and services sectors.
Q. What are the key sectors or
themes that you are looking at this
time?
A. Jinesh Gopani - We remain
bullish on the rural theme and
the consumpt ion space .
Improving trend in real rural
wage growth i s d i rec t ly
encouraging for the rural
consumption outlook and
indirectly for the aggregate
demand and for the investment
cycle. We currently find select
ICICIdirect Money Manager June 201836
Tête-à-tête
opportunities in the rural
housing, and finance cyclical
businesses spaces which are
likely to be direct beneficiaries.
We have been positive on B2C
as compared to B2B for the last
several quarters due to their
under l y ing fundamenta l
strengths and signif icant
market opportunities. The
consumption space continues
to remain attractive and the
recent fall has been a good
buying opportunity in select
mid and large cap names. The
consumption space offers
opportunities in companies
with high quality businesses,
stable cash flows and steady
growth metrics.
Nimesh Chandan - We are
posit ive on consumption
growth , espec ia l ly rura l
c o n s u m p t i o n . W i t h t h e
forecast of normal monsoon
and rising farm incomes, we
expect rural spending to pick
up. Consumer companies are
a l s o b e n e f i c i a r i e s o f
implementation of GST as it
leads to market moving from
unorganized to organized
players. With the rise in interest
rates too, the consumer
companies that are cash rich
will be better placed than
leveraged sectors.
We are currently underweight
on Utilities, Metals, Telecom
and Oil and Gas.
Q. Tell us something about your
stock-selection strategy. What kind
of stocks do you prefer and what do
you avoid?
A. Jinesh Gopani - We primarily
f o l l o w b o t t o m - u p s t o c k
selection approach with a
minimum 2-3-year view on
stocks. Bias towards high
quality and growth with strong
fundamentals are the key look
outs us to select companies for
any of our portfolios. Having
s a i d t h a t , c o m p e t i t i v e
advantage, pricing power and
right to win are underlying
elements which one needs to
assess crucially, since ROE,
market share, leadership are
derivatives of this.
To elaborate more, growth
aspect can be a quantitative
measure, wherein industry
growth, market penetration
and company specific growth
(both sales and profit), is
ICICIdirect Money Manager June 201837
Tête-à-tête
measured over cycles. Our
perception on these pointers is
crit ical in our evaluation
process.
While quality is assessed from
both quantitative and qualitative
p e r s p e c t i v e . U n d e r t h e
quantitative aspects, we consider
Return on Equity (RoE), cash flow
quality, asset turnover, capital
allocation, etc. In qualitative
aspects corporate governance,
pedigree and stabil ity of
management and value creation
for its stakeholders form the key
measures.
This framework is irrespective
of the size of the company.
Nimesh Chandan - We focus on the
fundamentals of companies. We
believe it is the quality of the
company's business and
management that creates or
destroys wealth for the investors
over the long term rather than
technical or quantitative aspects
of the market. Hence our
investment philosophy that “It is
companies and not stocks that
create wealth”
The objective for the investment
team is “to invest in robust
growth-oriented businesses
with competent management at
reasonable valuations”. We
have a three stage investment
research process which covers
both top-down and bottom-up
stock selection approach.
Through this process we try to
assess the quality of business
and management of the
company and prepare a range
of valuation that it should ideally
trade on.
We prefer companies that are
on a susta inable growth
tra jectory, where capi ta l
intensity is low, deliver good
return on equity and have a
strong competitive positioning
Q. What is your advice for investors
at this point in terms of their overall
portfolio and asset allocation?
A. Jinesh Gopani - Volatility is a
friend of the long term investor.
While equity markets are
volatile in the short run, they
tend to fo l low earn ings
performance in the long run.
T h e I n d i a n e c o n o m y a s
highlighted above is the fastest
growing large economy in the
world. With revival in the
Indian corporate sector, the
ICICIdirect Money Manager June 201838
Tête-à-tête
long term potential of equities
continues to look attractive.
Systematic investments offer a
prudent yet simple mechanism
for investors to r ide the
volatility. SIP`s help ride the
downturns without investors
facing the risks associated with
timing the markets.
Asset allocation is essential for
portfolio construction keeping
in mind the investor risk
appetite and goals. Regardless
of market fluctuations investors
must stick to their targeted
asset allocations to generate
long term performance in line
with investor expectations.
N i m e s h C h a n d a n - A s s e t allocation will depend on the client's risk return profile. Within equities, we expect this year to be a volatile year due to in te rna t iona l as we l l as d o m e s t i c i s s u e s . W i t h acceleration in GDP growth and improvement in earnings growth for the next three years, we expect the market to provide healthy returns over the next three years. Hence a correction in the market can be taken as an opportunity to i n c r e a s e i n v e s t m e n t i n Equities. Investors can also choose the SIP route to increase equity allocation at this point.
ASK OUR PLANNER
ICICIdirect Money Manager June 201839
Q. What would be the amount
if I want to surrender my
policy ICICI Prudential Life
Stage Assure after completing 10
years. Is it the fund value OR Fund
value+GMA OR Fund value+GMA-
taxes. If taxes are there, what
would be its proportion? I have
taken my policy in Feb 2009.
- Sudhir Kumar
A. If you surrender the policy,
you would be receiving only
the fund value; the Guaranteed
Maturity Addition (GMA) will
not be paid. As you have taken
the policy in February, 2009,
the surrender value would not
be taxed, if the sum assured of
your policy was at least 5 times
the premium paid every year.
However, if it's not the case,
then you would have to pay tax
on the difference between the
fund value and the sum of
premiums paid, as per your
income slab. For such cases,
the insurance company would
deduct 1% TDS on the amount,
if the amount to be received
exceeds Rs.1 lakh in a financial
year.
Q. I have taken an ICICI Prudential
Life Time Pension Plan taken in
2004 March. Total sum assured
was 1lk and I am paying 10000
premium yearly. Now it i getting
expire in 2019 and current value is
340000. Just want to know if I Opt
for taking full money on maturity, do
i need to pay income tax for the
whole money? if so what is the
percent of tax i need to pay? I am
working and i am already under
30% tax bracket.
- Uday
A. This is an unit linked pension
policy. For all pension policies,
on maturity, you would be able
to withdraw only a maximum rdof 1/3 of the maturity value as
lumpsum and the balance
amount has to be converted
into annuity. You would start
receiving regular pension from
such amount, depending on
the frequency opted by you. rdThe lumpsum amount of 1/3
withdrawn would be exempt
from tax. The pension you
would be receiving every year
would be added to your
income and taxed as per your
income slab.
Tax-planning is a crucial part of your personal finance
ASK OUR PLANNER
ICICIdirect Money Manager June 201840
Q. I would like to know being an
NRI and if I surrender Pension
Policy of 40 lakhs corpus nearing
maturity of years and reinvest in
other ICICI fund or ulip directly if
available without getting the
surrender value back what are tax
impl icat ions and any opt ion
available for saving the TDS on the
same. Alternately if I produce Tax
Residency Certificate and Form 10F
is the surrender value still taxable.
- Jeffry Fernandes
A. If you surrender a pension
policy, then the entire
surrender proceeds would be
added to your income and
taxed as per your income slab,
irrespective of how you utilize
the surrender proceeds.
However, if you are a NRI, no
tax wil l be deducted for
countries where DTAA benefit
is available as per Section 90 of
The Income Tax Act, 1961, and
if you have submitted complete
& valid Form 10F and Tax
residency certificate with the
insurance company. This
benefit is only available if the
DTAA treaty with the country of
your residence specifies that
the income is taxable in other
country and not in India. These
forms should be submitted by
res iden ts o f on ly those
countries who have a NO TDS
agreement as per DTAA with
the country of their residence.
Please visit
https://www.iciciprulife.com/s
ervices/nri-corner/nri-tax-bene
fits-on-life-insurance.html for
further information.
Q. I have bought my first home with
home Loan from SBI and paying
EMI of Rs.20,000. The house I
reside in currently was bought 3
years back with home loan from
another bank, for which I pay EMI
of Rs. 26,000. I am claiming tax
benefits for the first home given for
rent for the past 7yrs. Now I want to
change this & claim Tax benefit for
the second home (self-occupied)
because I am paying higher EMI.
What should I do?
- Mangesh Manohar
A. You can claim deduction on
the interest on the home loan
taken for both the house
proper t ies . For the f i rs t
p roper ty, you wou ld be
declaring rent and accordingly
the deduction would be loss on
house property, which is
limited to Rs.2 lakh. For the
second property, which is self-
occupied, the interest on
ASK OUR PLANNER
ICICIdirect Money Manager June 201841
house loan can be claimed
upto Rs.2 lakh separately.
Q. I recently moved to New
Zealand, where my employer
p rov ides adequa te med ica l
coverage. I have a family floater
plan in India that also covers my
parents. Can I remove my name
from the plan and let my parents
continue the policy? I'm the policy
proposer
- Shashi Bohra
A. Yes, you can remove your
name from the list of insured
persons in the plan and let your
parents only remain as insured.
You can choose to continue to
be the proposer and pay the
premiums or either of your
parents can become the
proposer. Any kind of such
changes can happen only
during the renewal of the
policy.
Q. Is it advisable for me to invest Rs.
5 lac in fixed annuities (with
guaranteed return of principal) that
was gifted to me in cash by my
parents? I am 40 years old. I need to
invest this lump sum for the goal of
my retirement. Please suggest
suitable options.
- Ramchandra G. Vartak
A. If you are looking to invest
this amount for your retirement,
you can choose the investment
avenue based on the time left
for retirement. If you have more
than 15 years to retire, you can
choose to invest into equity
oriented instruments l ike
mutual funds and post your
retirement, you can invest the
accumulated corpus into
annuity plans, to receive a fixed
annuity from the same.
Instead of investing the entire
amount in one go into equity
m u t u a l f u n d s , y o u c a n
consider investing the amount
into liquid funds and shift the
amount systematically into
equity funds every month over
next 1 to 2 years through
Systematic Transfer Plan
(STP).
Do you also have similar queries to ask our experts? Write to us at: [email protected].
MUTUAL FUND ANALYSIS
Investing in infrastructure funds
ICICIdirect Money Manager June 201842
The year 2018 has been an extremely volatile year so far with profit booking being witnessed in broader markets along with a change in sectoral performances compared to earlier years. With sharp deter iorat ion in markets sentiments due to global and domestic factors, sectors like infrastructure underperformed in recent months.We believe the recent correction in infrastructure and related stocks offers a good investment o p p o r t u n i t y . V a r i o u s infrastructure segments remain well placed to offer a better inves tment oppor tun i ty. Segments like roads, railways, ports, oil & gas, defence and housing have been key thrust areas of the government. Policy measures to create a favourable env i ronment for pr iva te investment along with the government ' s own huge e x p e n d i t u r e o n t h e infrastructure segment have started to result in order inflows and execution on the ground.
Tendering activity in infra and capex segments is a lead indicator of a pick-up in
economic activity. Tendering is followed by actual awarding of contracts, which later leads to ground level execution. Large scale tendering for mega infra projects is beneficial for larger, stronger companies that are more typically found in the o r g a n i s e d s p a c e . W h i l e t e n d e r i n g a c t i v i t y w a s dominated by the government, participation of private players in tendering activity was very limited in the last three to four years due to high leverage and an elevated interest rate scenario along with uncertainty o v e r p o l i c y f r a m e w o r k . However, we believe private investment could see an uptick in investment possibly, going forward, as there are early signs of corporate balance sheet repairs. Overall, we believe execution activity would be boosted over the next few months as tendering activity, which has already picked up (and is highest since 2012), will ultimately translate into action.
Furthermore, opening up of various financing options like InvITs, REITs along with Budget
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201843
focus on promoting the bond m a r k e t f o r l o w e r r a t e d companies will make the b u s i n e s s e n v i r o n m e n t conducive to private investment in infrastructure.
In its Budget announcements, the government has underlined its commitment to provide a continued thrust to the infra space. Budgetary allocation to roads, highways and transport increased 16.3% YoY while that t o u r b a n d e v e l o p m e n t increased 11.2% YoY. Railways received a bumper push, with budgetary allocation increasing 32.7% YoY. Consequently, a l l o c a t i o n t o w a r d s k e y development related schemes increased 14.1% YoY.
Over the past few years, the government has been working on providing the much needed groundwork that can see the infrastructure sector take off in coming years. The removal of sectoral bottlenecks like land acquisition, environmental approvals, allocation of mining
resources along with
measures for ease of doing business may lead to timely completion of infrastructure projects. As infrastructure projects involve high capital expenditure, a sharp fall in interest rates has significantly added to the profitability of the sector.
Infrastructure funds focusing o n s p e c i f i c c o m p a n i e s capitalising on growth potential in the sector are offering good i n v e s t m e n t o p t i o n s t o investors. Aggressive investors may consider investing in the recommended infrastructure funds as a part of their thematic allocation.We recommend the following f u n d s : A d i t y a B i r l a S L Infrastructure Fund, L&T In f ras t ruc tu re Fund and Reliance Diversified Power Sector Fund. Investors should avoid allocating more than 10% of their equity mutual fund corpus in any sector or thematic fund.
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201844
Aditya Birla Sun Life Infrastructure Fund
Fund Objective:
An open-ended growth scheme
with the objective of providing
for medium to long-term capital
appreciation by investing
predominantly in a diversified
portfolio of equity and equity
related securities of companies
that are participating in the
growth and development of
Infrastructure in India.
NAV as on May 31, 2018 (|) 34.3Inception DateFund Manager Vineet MalooMinimum Investment (|) Lumpsum 1000
SIP 1000Expense Ratio (%) 2.68Exit Load 1% on or before 1Y, Nil after 1YBenchmark NIFTY INFRA - TRILast declared Quarterly AAUM(| cr) 689
Key Information
March 17, 2006
Product Label:This product is suitable for investors who are
seeking:
· Long term capital growth
· Investments in equity and equity related
securities of companies that are participating
in the growth and development of
Investors understand that their principal will be at high risk
Performance:
The fund has managed to beat
the Nifty Infra TRI index, its
benchmark, across most time
h o r i z o n s a n d s i n c e i t s
inception (as of May 31).
However, its performance
relative to peers has not been
as impressive over the last
three years. It has generated
CAGR of 8.9% and 18.9% in the
last three years and five years
vs. 2.5% and 8.8% returns by
benchmark, respectively (as of
May 31).
Performance vs. Benchmark (CAGR Returns %)
4
8.9
18
.9
10
.6
5.3
2.5
8.8
3.5
0
5
10
15
20
1 Year 3 Year 5 Year SinceInception
Fund Benchmark
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201845
%
5.5
4.3
3.4
3.4
3.3
3.1
3.0
2.7
2.4
2.2
KEC International Ltd. Domestic Equities
NTPC Ltd. Domestic Equities
Hindalco Industries Ltd. Domestic Equities
Asset Type
Honeywell Automation India Ltd. Domestic Equities
Carborundum Universal Ltd. Domestic Equities
Bharat Electronics Ltd. Domestic Equities
Clearing Corporation Of India Ltd. Cash & Cash Equivalents and Net Assets
PNC Infratech Ltd. Domestic Equities
Indraprastha Gas Ltd. Domestic Equities
Tata Steel Ltd. Domestic Equities
Top 10 Holdings
%22.2
17.0
15.3
10.2
8.8
7.4
5.2
2.0
1.9
1.9
Others Domestic Equities
Cement & Cement Products Domestic Equities
Automobile Domestic Equities
Others Domestic Equities
Consumer Goods Domestic Equities
Domestic Equities
Construction Domestic Equities
Financial Services Domestic Equities
Metals Domestic Equities
Top 10 Sectors Asset TypeIndustrial Manufacturing Domestic Equities
Energy
Portfolio:
The fund has traditionally
invested heavily in financials
and industrials with these two
sectors regularly constituting
~50-55% of the portfolio.
However, over the last two to
three years, it has consistently
cut exposure to these sectors
while increasing allocation to
mater ia l s . The por t fo l io
displays a significant midcap
bias with the portfolio seeing
allocation of ~40% in large
caps and ~60% in midcap and
small cap stocks. At the stock
level, the fund tries to mitigate
this risk by diversifying heavily.
It currently holds 65 stocks
with the top 10 bets making up
around a third of the portfolio.
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201846
Our View:
The fund has worked on
diversifying its portfolio by
moving away from highly
concentrated positions in
financials and industrials.
Having reduced exposure to
sectors such as consumer
discretionary and financials the
fund is now truer to the
infrastructure theme. Investors
can consider this fund from a
three-year perspective.
You can view performance of
other schemes being managed
by the fund manager of this
scheme on the following link:
https://mutualfund.adityabirla
capital.com//media/bsl/files/re
sources/factsheets/2018/emp
ower-may-2018.pdf
Data as on May 31, 2018; Portfolio details as on April-2018� �Source: ACE MF, ICICI Direct Research
%
0.5
0.3
1.4
Whats In
JSW Steel Ltd.
The Ramco Cements Ltd.
ICICI Bank Ltd.
%
1.1
1.3
Whats out
The India Cements Ltd.
Axis Bank Ltd.
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201847
L&T Infrastructure Fund
Fund Objective:
The scheme seeks to generate c a p i t a l a p p r e c i a t i o n b y investing predominantly in equity and equity related instruments of companies in the infrastructure sector.
NAV as on May 31, 2018 (|) 17.2Inception DateFund Manager Soumendra Nath LahiriMinimum Investment (|) Lumpsum 5000
SIP 500Expense Ratio (%) 2.10Exit Load 1% on or before 1Y, Nil after 1YBenchmark NIFTY INFRA - TRILast declared Quarterly AAUM(| cr) 2106
Key Information
September 27, 2007
Product Label: This product is suitable for
investors who are seeking
• Long term capital appreciation
• Investment predominantly in
equity and equity -related
instruments of companies in the
Investors understand that their principal will be at high risk
Performance:
The fund has been a top
quartile performer over the last
one year, three year and five-
year time frames (as on May
31), indicating its relative
outperformance over its peers.
It has also comfortably and
cons i s ten t l y bea ten the
benchmark Nifty Infra TRI by
~8% (one year), ~13% CAGR
(three years) and ~15% CAGR
(five years) (as of May 31).
Performance vs. Benchmark (CAGR Returns %)
13 16.1
24.1
5.2
5.3
2.5 8
.8
-1.7-10
0
10
20
30
1 Year 3 Year 5 Year SinceInception
Fund Benchmark
The portfolio has undergone a
significant change in character
over the years. Till 2012, the
holdings were dominated by
financial, energy and industrial
stocks. However, post 2012 it
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201848
started shedding financial
stocks in favour of materials
sector and post 2015, the
holdings in financial stocks has
been cut, to a large extent. As a
result, now the fund truly
resembles an infrastructure
f u n d w i t h t h e p o r t f o l i o
predominantly comprising
a p p r o p r i a t e c o n s t i t u e n t
sectors , v i z . industr ia ls ,
materials, energy and telecom.
Currently, there are 56 stocks in
the fund with the top 10
holdings making up close to
38% of the portfolio. The fund
also has ~8% of the portfolio in
cash currently.
%
8.3
7.0
4.9
4.6
3.7
3.5
3.3
3.2
3.1
2.6
Top 10 Holdings Asset Type
Domestic Equities
Lakshmi Machine Works Ltd. Domestic Equities
Bharti Airtel Ltd. Domestic Equities
Grasim Industries Ltd. Domestic Equities
Cash & Cash Equivalent Cash & Cash Equivalents and Net Assets
Larsen & Toubro Ltd. Domestic Equities
Shree Cement Ltd. Domestic Equities
The Ramco Cements Ltd.
Graphite India Ltd. Domestic Equities
Carborundum Universal Ltd. Domestic Equities
Hindustan Zinc Ltd. Domestic Equities
%28.1
20.9
17.2
8.3
6.7
4.0
3.3
1.9
0.8
0.2
Top 10 Sectors Asset TypeIndustrial Manufacturing Domestic Equities
Cement & Cement Products Domestic Equities
Construction Domestic Equities
Metals Domestic Equities
Telecom Domestic Equities
Services Domestic Equities
Consumer Goods Domestic Equities
Others Domestic Equities
Energy Domestic Equities
Others Domestic Equities
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201849
Our View:The fund is on the aggressive side with higher allocation to midcaps than large caps. However, the portfolio is well const ruc ted in te rms o f diversi f icat ion. Investors looking for a true-blue infra f u n d c a n c o n s i d e r L & T Infrastructure Fund.
You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://www.ltfs.com/content/dam/lnt-financial-services/lnt-mutualfund/downloads/factsheets/201819/LT%20Factsheet%20April%202018.pdf
Data as on May 31, 2018; Portfolio details as on April-2018� �Source: ACE MF, ICICI Direct Research
%
1.2
Whats In
Grindwell Norton Ltd.
%
0.6
1.5
Whats out
Hindustan Petroleum Corporation Ltd.
Jindal Steel & Power Ltd.
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201850
Reliance Power & Infra Fund
Fund Objective:
The pr imary inves tment
objective of the scheme is to
generate long term capital
appreciation by investing
predominantly in equity and
equity related securities of
companies in the power sector.
NAV as on May 31, 2018 (|) 109.4Inception DateFund Manager Sanjay DoshiMinimum Investment (|) Lumpsum 5000
SIP 100Expense Ratio (%) 2.11Exit Load 1% on or Before 1Y, Nil After 1YBenchmark NIFTY INFRA - TRILast declared Quarterly AAUM(| cr) 1944
Key Information
May 8, 2004
Product Label:This product is suitable for
investors who are seeking
• Long term capital growth
• Investment in equity and equity
related securities of companies in
power sector
Investors understand that their principal will be at high risk
Performance:
The fund has outperformed its
benchmark BSE Power Index
strongly over the years. The
one year, three years and five-
year performance (as of May
31) is 9.7%, 14.2% CAGR and
18.1% CAGR, respectively
compared to Nifty Infra Index'
5.3%, 2.5% CAGR and 8.8%
CAGR. When compared to its
c a t e g o r y p e e r s , t h e
performance has picked up
over the last three years but
over five years time frame it
has underperformed.
Performance vs. Benchmark (CAGR Returns %)
9.7
14.2
18.1
18.5
5.3
2.5
8.8
9
0
5
10
15
20
1 Year 3 Year 5 Year SinceInception
Fund Benchmark
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201851
%
8.1
7.6
5.4
5.1
4.8
4.4
4.4
4.2
3.9
3.4
Top 10 Holdings Asset Type
Domestic Equities
Jindal Stainless (Hisar) Ltd. Domestic Equities
KSB Pumps Ltd. Domestic Equities
Apar Industries Ltd. Domestic Equities
Larsen & Toubro Ltd. Domestic Equities
KEC International Ltd. Domestic Equities
GE Power India Ltd. Domestic Equities
PTC India Ltd.
Torrent Power Ltd. Domestic Equities
NTPC Ltd. Domestic Equities
Sterlite Technologies Ltd. Domestic Equities
%37.1
36.2
14.0
4.8
1.6
1.5
0.4
Top 10 Sectors Asset TypeEnergy Domestic Equities
Industrial Manufacturing Domestic Equities
Construction Domestic Equities
Others Domestic Equities
Telecom Domestic Equities
Cement & Cement Products Domestic Equities
Others Domestic Equities
Portfolio
I n d u s t r i a l s a n d u t i l i t i e s
consistently make up ~75-
80% of the scheme portfolio.
The scheme has taken outsized
positions on these sectors over
the years. In recent times,
exposure to materials has also
increased. It is now the third
largest holding in terms of
sectors. The fund likes to take
large bets on its top holdings,
with the top five stocks all
individually constituting ~5%
or more of the portfolio and the
top 10 stocks constituting
~52% of the portfolio. Overall,
the fund currently has 36
stocks in the portfolio and has a
pronounced midcap tilt.
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201852
Data as on May 31, 2018; Portfolio details as on April-2018��Source: ACE MF, ICICI Direct Research
%
0.9
0.9
1.6Bharti Airtel Ltd.
Whats In
Bharat Electronics Ltd.
The India Cements Ltd.
%
1.3
0.6
Whats out
ICICI Bank Ltd.
Texmaco Rail & Engineering Ltd.
Our View:The fund is more suited to s a v v y, e x p e r i e n c e d & aggressive investors due to factors like significant midcap bias of ~80% and heavily concentrated calls in terms of stocks as well as sectors.
You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://www.reliancemutual.com/InvestorServices/FactsheetsDocuments/Fundamentals-May-2018.pdf
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201853
Performance of other schemes managed by these fund managers:
1. Aditya Birla Sun Life Infrastructure Fund
2. L&T Infrastructure Fund
17.89 3.70 7.9311.71 10.73 13.806.74 9.14 12.9611.71 10.73 13.804.13 -- --3.48 8.37 8.62
2.33 11.47 12.60-- -- --
1.53 7.34 13.86
11.17 13.34 12.220.87 9.50 18.461.52 2.26 8.21NIFTY INFRA - TRI
CRISIL Hybrid 50+50 - Moderate IndexAditya Birla SL Dividend Yield Fund(G)NIFTY DIV OPPS 50 - TRIAditya Birla SL Infrastructure Fund(G)
Fund Name 1 Year 3 Years 5 Years
Top 3 Performing Schemes Aditya Birla SL Intl. Equity Fund-A(G)NIFTY 50 - TRI
Bottom 3 Performing Schemes
Performance of other schemes managed by the fund manager - Vineet Maloo
Aditya Birla SL Intl. Equity Fund-B(G)NIFTY 50 - TRIAditya Birla SL CPO Fund-Sr 30CRISIL Hybrid 85+15 - Conservative Index
Aditya Birla SL Balanced Advantage Fund(G)
Note : The schemes may or may not have been managed by the same Fund Manager since its inceptionNote : The concerned Fund Manager manages 10 other schemes of the concerned Mutual Fund
12.91 24.28 --9.34 16.32 --9.46 14.46 19.1311.17 12.02 15.529.42 16.12 23.631.52 2.26 8.21
7.12 5.63 15.1611.17 12.02 15.526.60 11.62 18.28
11.17 12.02 15.525.85 11.30 17.9711.17 12.02 15.52
Performance of other schemes managed by the fund manager - Soumendra Nath Lahiri
L&T Tax Advt Fund-Reg(G)S&P BSE 200 - TRIL&T Infrastructure Fund-Reg(G)NIFTY INFRA - TRI
Fund Name 1 Year 3 Years 5 Years
Top 3 Performing Schemes L&T Emerging Businesses Fund-Reg(G)S&P BSE Small-Cap - TRI
S&P BSE 200 - TRI
Bottom 3 Performing SchemesL&T Dynamic Equity Fund-Reg(G)S&P BSE 200 - TRIL&T Large and Midcap Fund-Reg(G)S&P BSE 200 - TRIL&T Hybrid Equity Fund-Reg(G)
Note : The schemes may or may not have been managed by the same Fund Manager since its inceptionNote : The concerned Fund Manager manages 8 other schemes of the concerned Mutual Fund
MUTUAL FUND ANALYSIS
ICICIdirect Money Manager June 201854
3. Reliance Power & Infra Fund
10.46 8.80 --9.70 10.54 13.935.88 14.37 17.331.52 2.26 8.21
Performance of other schemes managed by the fund manager - Sanjay Doshi
Reliance Power & Infra Fund(G)NIFTY INFRA - TRI
Fund Name 1 Year 3 Years 5 Years
Top 3 Performing Schemes Reliance Capital Builder Fund-II-B(G)S&P BSE 200
Note : The schemes may or may not have been managed by the same Fund Manager since its inceptionNote : The concerned Fund Manager manages 2 other schemes of the concerned Mutual Fund
26.71 7.75 12.9711.71 10.73 13.8019.21 -- --13.51 10.77 13.9314.36 22.58 34.929.34 16.32 --
-- -- --9.70 10.54 13.93
-- -- --9.70 10.54 13.93
-- -- --9.70 10.54 13.93S&P BSE 200
Bottom 3 Performing SchemesReliance Capital Builder Fund-IV-B(G)S&P BSE 200Reliance Capital Builder Fund-IV-C(G)S&P BSE 200
Reliance Capital Builder Fund-IV-D(G)
Reliance ETF Hang Seng BeESNIFTY 50 - TRIReliance US Equity Opp Fund(G)S&P BSE Sensex - TRIReliance Small Cap Fund(G)S&P BSE Small-Cap - TRI
Performance of other schemes managed by the fund manager - Kinjal Desai
Fund Name 1 Year 3 Years 5 Years
Top 3 Performing Schemes
Note : The schemes may or may not have been managed by the same Fund Manager since its inceptionNote : The concerned Fund Manager manages 49 other schemes of the concerned Mutual Fund
Data as on May 31, 2018; Portfolio details as on April-2018��Source: ACE MF, ICICI Direct Research
ICICIdirect Money Manager June 2018
This month on iCommunity
55
DiscussionYour voice matters! Voice your opinions on: Will this monsoon affect your portfolio?It is believed that normal monsoons for a third successive year are likely to result in an increase in food grain production with a consequent rise in farm income. This could boost rural demand, thereby benefiting sectors like farm mechanization (tractors, tillers, and pumps), agricultural input (seeds, agro chemicals), and FMCG and consumer durables, among others. So do you subscribe to our view?
Share your thoughts on ICICIdirect's exclusive information platform - iCommunity.Join the discussions: http://community.icicidirect.com/service_forum
Q & A SessionQ & A Session with Travel Insurance Expert - ICICI Lombard
Below mentioned questions were asked during the event -
a) What types of casualties are covered in Travel Insurance? Can you
please elaborate?
b) What if I want to stay away longer than originally planned? Can I
extend my policy to cover me for the extra time I'm out of India, and
how do I make the necessary arrangements?
c) What kind of coverage do I need for a 4 family member visit to USA
for a period of 18 days?
What is iCommunity?iCommunity is ICICIdirect's interactive platform where one can answer and get answered as well. With extensive range of forums, events & discussions iCommunity serves as an opportunity to learn more about financial world.
EQUITY MODEL PORTFOLIO
ICICIdirect Money Manager June 201856
Our indicative large-cap equity model portfolio is delivering an
impressive return (inclusive of dividends) of 131.8% till date (as on May
30, 2018) since its inception (June 21, 2011) vis-à-vis the benchmark
index (S&P BSE Sensex) return of 103.5% during the same period, an
outperformance of 28.3. This validates our thesis of selecting
companies with sound business fundamentals that forms the core
theme of our portfolio. We have revised stocks in our midcap portfolio.
It continues to outperform, delivering 343.7% (inclusive of dividends)
till date (as on May 30, 2018) vis-à-vis the benchmark index (CNX
Midcap) return of 145.6%, outperformance of 198.1. Our consistent
outperformance demonstrates our superior stock picking ability as
markets aligned to our view of favourable risk reward, good franchisee
vs. reward-at-any-risk businesses.
We have always suggested the SIP mode of investment and still find a
lot of merit in it as the preferred mode of deployment given the market
conditions and volatility associated since the inception of the portfolio.
We highlight that the SIP return of our portfolio has consistently
outperformed the indices.
Following the same pace and opportunities in the market, our latest
portfolio (large caps) remains overweight on BFSI sector – HDFC Bank
(10%), HDFC (9%), Axis Bank (6%) Bajaj Finance (6%) and SBI (6%). ITC
is the latest addition to the large-cap portfolio, given6% weightage.
Affirming our view on consumption demand, Dabur (5%) and Marico
(4%) continue to be part of our large cap portfolio.
We remain positive on auto, IT and pharma. However, please note that
the weightage for Tata Motor DVR, Maruti and EICHER Motor is revised.
We remain overweight to neutral on pure play defensives (IT, FMCG) as
secular earnings coupled with sector rotation could lead to
consolidation in near term valuations and offer stock specific
opportunities.
We continue to remain underweight on metals and oil & gas with our
only pick being Gail Ltd., which has a better risk reward opportunity.
Among individual names, we recommend TCS in the IT space, HDFC
and HDFC Bank in the BFSI space, ITC in consumer space and NBCC in
the infra space.
EQUITY MODEL PORTFOLIO
ICICIdirect Money Manager June 201857
Name of the company
Largecap Stocks
Model Portfolio
Largecap(%)
Midcap(%)
Diversified(%)
Tata Motor DVR 3.0 2.1
Maruti 6.0 4.2
EICHER Motors 4.0 2.8
Mahindra & Mahindra (M&M) 4.0 2.8
HDFC Bank 10.0 7.0
Axis Bank 6.0 4.2
HDFC 9.0 6.3
Bajaj Finance 6.0 4.2
SBI 6.0 4.2
L & T 6.0 4.2
UltraTech Cement 4.0 2.8
Dabur 5.0 3.5
Marico 4.0 2.8
ITC 6.0 4.2
Nestle 4.0 2.8
TCS 6.0 4.2
Hindustan Zinc 6.0 4.2
GAIL Ltd. 5.0 3.5
Largecap share in diversified 100.0 70.0
EQUITY MODEL PORTFOLIO
ICICIdirect Money Manager June 201858
Bharat Forge 6.0 1.8
Bajaj Finserve 8.0 2.4
J&K Bank 6.0 1.8
Indian Bank 6.0 1.8
Bharat Electronics 6.0 1.8
Kalpataru Power transmission 6.0 1.8
Ramco Cement 6.0 1.8
Symphony 6.0 1.8
Kansai Nerolac 6.0 1.8
Pidilite 6.0 1.8
Tata Chemicals 6.0 1.8
Bata 6.0 1.8
Graphite India 6.0 1.8
NBCC 8.0 2.4
Container Corporation of India 6.0 1.8
Arvind 6.0 1.8
Total 100.0 30.0
Midcap share in diversified 30
TOTAL 100 0 100.0
ICICI Securities has received an Investment Banking mandate from Mahindra & Mahindra, ONGC and Indian Bank.
EQUITY MODEL PORTFOLIO
ICICIdirect Money Manager June 201859
Performance so far since inception*
131.7698723
343.6897355
180.9073546
103.4961191
145.5595898115.264005
0255075
100125150175200225250275300325350375
Large Cap Midcap Diversified
%
Performance since inception
Portfolio Benchmark
*Returns (in %) as on May 31, 2018
Value of Rs 1,00,000 invested via SIP at end of every month
85
00
00
0
85
00
00
0
85
00
00
0
12
87
31
25
.37
11
23
12
88
.81
12
61
02
27
.83
12
47
52
89
.95
3500000
4500000
5500000
6500000
7500000
8500000
Largecap Midcap Divesified
|
Investment Value of Investment in Portfolio Value if invested in Benchmark
QUIZ TIME
ICICIdirect Money Manager June 201860
Quiz Time1. Q4FY18 has been one of the best quarters for the
banking industry in terms of asset. True/False2. After several quarters of stress in the aftermath of
___________ and ____________, the consumer goods
sector seems to be back on the growth track.3. The growth in building material sector was largely
impacted by a delay in implementat ion of
_____________4. Improving credit growth may enable profitability to
improve in PSU and corporate banks over FY19-20E.
True/False5. Q4 continued to report a _____________quarter for
surface logistics players.
Note: All the answers are in the stories that have appeared in
this edition of ICICIdirect Money Manager. You may send in
your answers at: [email protected]. The
answers will be published in our next edition. The names of
the earliest all correct entries will be published too. So jog
your grey cells and be quick to send in your entries.
Correct answers for the May 2018 quiz are:1. Even if an investor misses 1% of most critical
opportunity to time the market the overall return is less
than a simple buy and hold strategy.2. With time, the volatility of returns on equity
investment decreases.3. Select companies (stocks) with a clean balance sheet
& low debt levels in relation to equity.4. ICICIdirect Research study shows that beyond 25
stocks, the additional diversification benefit starts to
decline. False5. Over diversification runs the risk of complexity True
PRIME NUMBERS
Equity Markets
ICICIdirect Money Manager June 2018
Domestic Equity Indices
Global Equity Indices
Sectoral Indices
61
31-May-18 30-Apr-18 Change (%)
CNX Nifty 10736.0 10739.0 0.0%
CNX Midcap 18903.3 20290.3 -6.8%
S&P BSE Sensex 35322.4 35160.4 0.5%
S&P BSE 100 11040.8 11153.0 -1.0%
S&P BSE 200 4654.4 4723.5 -1.5%
S&P BSE 500 14765.7 15047.7 -1.9%
31-May-18 30-Apr-18 Change (%)
Dow Jones 24,415.8 24,163.2 1.0%
S&P 500 2,705.3 2,648.1 2.2%
Nasdaq 7,442.1 7,066.3 5.3%
FTSE 7,678.2 7,509.3 2.2%
DAX 12,604.9 12,612.1 -0.1%
CAC 40 5,398.4 5,520.5 -2.2%
Nikkei 22,201.8 22,467.9 -1.2%
Hang Seng 30,468.6 30,808.5 -1.1%
Shanghai Composite 3,095.5 3,082.2 0.4%
Taiwan Weighted 10,875.0 10,657.9 2.0%
Straits Times 3,428.2 3,613.9 -5.1%
31-May-18 30-Apr-18 Change (%)
S&P BSE Auto 24,471.6 25,833.8 -5.3%
S&P BSE Bankex 30,007.1 28,651.9 4.7%
S&P BSE FMCG 11,291.5 11,305.7 -0.1%
S&P BSE Healthcare 13,002.7 14,153.6 -8.1%
S&P BSE Metals 13612.1 14276.9 -4.7%
S&P BSE Oil & Gas 14,429.4 14,429.5 0.0%
S&P BSE Power 2,129.3 2,238.1 -4.9%
S&P BSE Realty 2,234.7 2,420.2 -7.7%
S&P BSE Teck 6,966.2 7,097.4 -1.8%
PRIME NUMBERS
ICICIdirect Money Manager June 2018
Debt Markets
Volatility Index (VIX)
62
Note : Data not available on Bloomberg for 1 month CP post 3/28/18
Note : Data not available on Bloomberg for 3,6 and 12 month Tbill post 3/28/18
31-May-18 30-Apr-18
VIX 13.22 12.36
Government Securities Yield May-18 Apr-18 Change (bps)
10 year 7.83 7.75 8
5 year 7.93 7.78 15
3 year 7.70 7.59 11
1 year 6.91 6.70 21
Corporate Bond Yields May-18 Apr-18 Change (bps)
AAA 10 year 8.58 8.59 -1
AAA 5 year 8.54 8.27 27
AAA 3 year 8.44 8.17 27
AAA 1 year 8.31 7.81 50
AA 10 year 9.02 9.05 -3
AA 5 year 8.97 8.78 19
AA 3 year 8.88 8.63 25
AA 1 year 8.69 8.20 49
Commercial Paper May-18 Apr-18 Change (bps)
12 Months 8.43 7.48 96
6 Months 8.08 7.33 76
3 Months 7.58 7.10 48
1 Month 0
T-Bills Yields May-18 Apr-18 Change (bps)
91D TB 0
182D TB 0
364D TB 0
PRIME NUMBERS
10-year benchmark yields (%) across countries
ICICIdirect Money Manager June 2018
Macro-economic Indicators
Consumer price index (CPI)
Wholesale price index (WPI)Month
63
Countries 31-May-18 30-Apr-18 Change in bps
US 2.859 2.953 (9)
UK 1.230 1.418 (19)
Japan 0.040 0.055 (2)
Spain 1.487 1.274 21
Germany 0.341 0.559 (22)
France 0.664 0.784 (12)
Italy 2.794 1.785 101
Brazil 11.456 9.835 162
China 3.638 3.648 (1)
India 7.826 7.767 6
MF Investment May-18 Apr-18 Fy18
Equity 13618 11293 24912
Debt -14085 20165 6079
FII Investment May-18 Apr-18 Fy18
Equity -9660 -13950 -15900
Debt -17750 -6209 -31700
Items Weights(%) Feb-18 Mar-18 Apr-18
Food&bev. 45.86 3.46 3.08 3.00
Pan,tob& intox. 2.38 7.27 7.72 7.91
Cloth & Foot 6.53 4.93 4.91 5.11
Housing 10.07 8.28 8.31 8.50
Fuel & light 6.84 6.88 5.73 5.24
Misc. 28.31 3.85 4.16 4.96
CPI 100 4.44 4.28 4.58
Weights Feb-18 Mar-18 Apr-18WPI 100.0 2.84 2.48 2.47 Primary Articles 22.6 2.37 0.79 0.24 Fuel & Power 13.2 4.08 3.81 4.70 Manufactured Goods 64.2 2.78 3.04 3.03
WPI numbers are based on new series with 2011-12 as the base year’
PRIME NUMBERS
Commodities
Sources for above data: Bloomberg, Reuters, CRISIL, MOSPI, ICICIdirect.com Research
ICICIdirect Money Manager June 2018
Mutual Funds: Category Average Returns
Equity Funds Returns (in %)Tenure Diversified Funds Mid-cap &
Small-cap Funds
Large-capFunds
ELSS (Tax-
savingfunds)
Returns as on May 31, 2018
Debt Funds Returns (in %)
Returns as on May 31, 2018
Tenure Liquid Funds
Index of industrial production (IIP) Sector-wise growth rate (%)
Currencies and CommoditiesCurrencies
Debt ST Ultra ST Debt LT
64
Categories Apr-18 Mar-18 Feb-18 Weight(%)Mining -20.9 19.3 -3.9 -0.8Manufacturing -11.0 6.7 -2.8 1.3Electricity -1.9 15.1 -9.0 3.9Overall -11.5 9.0 -3.6 1.2
*IIP numbers are based on new series with 2011-12 as the base year’
31-May-18 27-Apr-18 Change (%) StatusUSDINR 67.4 66.7 1.1% DepreciatedEURINR 78.8 80.5 -2.1% AppreciatedGBPINR 89.9 91.8 -2.1% AppreciatedAUDINR 51.1 50.4 1.5% DepreciatedCHFINR 68.3 67.3 1.6% DepreciatedJPYINR 0.6 0.6 1.5% DepreciatedCNYINR 10.5 10.5 -0.1% Appreciated
30-May-18 30-Apr-18 Change (%)Crude ($/barrel) 77.1 74.9 3.0%Gold ($/ounce) 1,298.5 1,315.0 -1.3%
6 months -0.95 -3.03 1.47 -0.771 year 9.68 11.61 9.33 10.443 year 10.64 13.83 8.83 10.685 year 18.29 25.84 15.19 18.11
6 months 6.50 3.27 5.23 0.12
1 year 6.46 4.98 6.03 2.73
3 year 6.90 7.32 7.34 6.74