Motilal OswalLarge and Midcap Fund
INVEST IN TODAY’S AND TOMORROW’S LEADERS
NFO Opens: 27th Sep, 2019
Closes: 11th Oct, 2019
India: $5 Trillion Economy by 2025 1
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186
193
201 218
212 233 249 279 297
296 321
270 288
279 327 360 393 416
421 459
468 485 515 60
8 709 82
0 940
1217
1199 13
4216
76 1823
1828 1857 20
39 2104 22
9026
53 2726
2972
3258
3577
3924
4306
4729
0
500
1000
1500
2000
2500
Indi
a G
DP
(cur
rent
$ b
n)
3000
3500
4000
4500
5000FY
1980
FY 19
81FY
1982
FY 19
83FY
1984
FY 19
85FY
1986
FY 19
87FY
1988
FY 19
89FY
1990
FY 19
91FY
1992
FY 19
93FY
1994
FY 19
95FY
1996
FY 19
97FY
1998
FY 19
99FY
2000
FY 20
01FY
2002
FY 20
03FY
2004
FY 20
05FY
2006
FY 20
07FY
2008
FY 20
09FY
2010
FY 20
11FY
2012
FY 20
13FY
2014
FY 20
15FY
2016
FY 20
17FY
2018
FY 20
19FY
2020
EFY
2021
EFY
2022
EFY
2023
EFY
2024
E
1st US$ tn
2nd US$ tn
3rd US$ tn
4th US$ tn
Nearing 5th US$ tn
Source: statisticstimes.comPast performance may or may not sustain and does not guarantee future performanceNote - Above forward looking statements are based on external current views and assumptions and involve known and unknown risks and uncertainties that could affect actual results. Investments are subject to market risk.
According to World Bank data, India has now become the world’s sixth-largest economy
India is one of the fastest growing among major economies
2Low Inflation & Falling Interest Rate
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5.40
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
Jul/
01
Feb/
02
Sep/
02
Apr/
03
Nov/
03
Jun/
04
Jan/
05
Aug/
05
Mar
/06
Oct
/06
May
/07
Dec/
07
Jul/
08
Feb/
09
Sep/
09
Apr/
10
Nov/
10
Jun/
11
Jan/
12
Aug/
12
Mar
/13
Oct
/13
May
/14
Dec/
14
Jul/
15
Feb/
16
Sep/
16
Apr/
17
Nov/
17
Jun/
18
Jan/
19
Aug/
19
Repo Rate (%)
141210
86420
-2-4-6-8
Nov
-13
Jan-
14
Mar
-14
May
-14
Jul-1
4
Sep-
14
Nov
-14
Jan-
14
Mar
-15
May
-15
Jul-1
5
Sep-
15
Nov
-15
Jan-
16
Mar
-16
May
-16
Jul-1
6
Sep-
16
Nov
-16
Jan-
17
Mar
-17
May
-17
Jul-1
7
Sep-
17
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
3.05
2.45
WPI CPI
Past monetary easing cycles indicate that transmission takes 3-12 months to start reducing the cost of borrowing
Recently, deposits rate has started coming down (total down by 30bps), average lending rate has also come down by 35bps.
Source: Bloomberg, Spark CapitalThe above graph is used to explain the concept and is for illustration purpose only and should not be used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.
WPI - Wholesale Price Index; CPI - Consumer Price Index
Crude price rise to $ 85
CAD widened (>2.7% of GDP) and fiscal deficit deteriorated
Currency depreciated to INR 72 per USD, to support currency, RBI sold USD
Liquidity concerns alongwith IL&FS and other corporate defaults
GST impact
Pressure on fiscal
Consumption demand slowdown
3Investment Environment Improving
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Crude price corrected back to $60-65 range
RBI infused liquidity
Repo rate cuts by RBI getting transmitted to deposit and lending rates
Good Monsoon in 2019
Central government has accelerated spending from Jul’19
Recent steps taken by the government to boost growth
Understanding what led to the fall in demand What is improving incrementally now?
Source: MOAMC Internal Analysis and Spark Capital
4Government is Listening
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Corporate tax rates cut from 30% to 22% (plus surcharge)
15% tax rate for new domestic manufacturing companies incorporated after 1st October 2019
Reversal of enhanced surcharge on equity capital gains
Bank Recapitalisation : Upfront Rs 70,000 crs released to banks to improve lending
Funds worth Rs. 20,000 crs for incomplete real estate projects to help completion of about 3.5 lakh units in affordable and middle income segments
No tax will be levied on public buyback of shares announced prior to 5th July 2019
For SMEs, GST refunds to be fastracked
Note that the above statement is based on the announcement of the Finance Minister and would be subject to provisions of final Finance Act.
5Corporate Earnings to Grow
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73 78 92131 169 184
236281 251 247
315 348 369 406 413 384439 451 482
60325%
19%720
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
E
FY21
E
EPS Growth:FY19-21E: 22.3%
Ni�y Returns: FY08-18: 8%EPS Growth: FY08-18: 4.8%
Ni�y Returns: FY01-08: 22.5%EPS Growth: FY01-08: 21.3%
Ni�
y EP
S
Source: Motilal Oswal Research India Strategy September 2019The statements made herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in future.
In the long run, the markets always follow the earnings pattern. For FY19-21, Nifty EPS is estimated to grow at 22.3% CAGR, which gives scope for markets to catch up.
Demand Boost - Government Spending and Good Monsoon
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Source: RBI, Spark Capital Research; Data as on Sep 2019
23.0%
8.2%
31.2%
8.5%
15.2%11.2%
8.3%
3.7%7.8%
13.1% 15.5%
5.3%1.3%
23.9%
0%
5%
10%
15%
20%
25%
30%
35%Total Central Govt. Spend (%, YoY)
2.2
-10.3
-5.2
-50
-40
-30
-20
-10
0
10
20
30
1stW
2ndW
3rd W
4thW
1st W
2ndW
3rd W
4th W
1st W
2ndW
3rd W
4th W
1st W
2ndW
3rd W
4th W
June July Aug Sep
Rainfall as % of LPA
2019 2018 2017
Central Govt. expenditure picked up from Jul’19
Good rainfall bodes well for the kharif and upcoming
rabi crops
The above graph is used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.
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7Lower Commodity Prices - To Improve Corporate Margins
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Around 5-30% decline in non-agri commodity prices
in the last 12 months
Coal
Petcoke
RLNG Oil Linked
Crude oil (Brent)
Steel
Aluminium
ZINC
VAM
Petrol Retail Price
Diesel Retail Price
Units Current 3M 6M 12M
Palm OilCopper
LeadTitanium Dioxide NNS
Gold
Iron Ore
Rs/tonne
Rs/MT
(Rs./SCM)
Rs/BBL
Rs/MT
Rs/MT
Rs/MT
Rs/MT
Rs./litre
Rs./litre
Rs/qtlRs./MT
Rs/MTRs./kgs
Rs./10gm
Rs/MT
-20.2%
-3.7%
-3.7%
-6.2%
-0.1%
-14.8%
2.8%
0.4%
-1.9%
6.8%0.1%
15.3%-2.6%
19.7%
-8.6%
5,197 -8.8%
-13.3%
5.6%
5.6%
-1.6%
-9.7%
-14.6%
-1.6%
-1.2%
-3.6%
4.2%-6.9%
5.3%-5.4%
26.2%
39.1%
-23.9%
-22.3%
-21.2%
-21.2%
-17.3%
-17.2%
-9.3%
-9.2%
-8.3%
-7.1%
-6.4%-4.4%
-1.3%0.8%
26.7%
42.9%
-32.0%
6,730
20
4,322
39,864
1,23,315
1,58,198
1,12,733
72
65
6,2504,04,488
1,43,966265
39,720
6,277
Non
-Agr
i
Source: Spark Capital Research; Data as on Sep 2019
The sectors mentioned herein are for general and comparison purpose only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. Past performance may or may not be sustained in future.
8Attractive Valuations: Corporate Profit to GDP
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Ni�y-500 - Corporate profit to GDP
India’s corporate profit to GDP ratio for the Nifty-500 has declined from 5.5% to 2.8% - a 15 year low
The above graph is used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.
2.83.4
3.9 4.04.9
5.5
4.34.9 4.8
4.3 4.0 3.83.3
2.9 3.2 2.8
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Average 3.9
Source: MOFSL Report
9Attractive Valuations: Mid and Smallcap
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0.80
1.00
1.20
1.40
1.60
1.80
2.00Ju
l-06
Jan-
04Ju
l-04
Jan-
05Ju
l-05
Jan-
06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
Jan-
14Ju
l-14
Jan-
15Ju
l-15
Jan-
16Ju
l-16
Jan-
17Ju
l-17
Jan-
18Ju
l-18
Jan-
19Au
g-19
Ni�y Midcap 100 Index as a propor�on of Ni�y 50 Index (x)
1.31
1.09
0.99 0.20
0.40
0.60
0.80
1.00
1.20
Jan-
04Ju
n-04
Nov
-04
Apr-
05Se
p-05
Feb-
06Ju
l-06
Dec-
06M
ay-0
7O
ct-0
7M
ar-0
8Au
g-08
Jan-
09Ju
n-09
Nov
-09
Apr-
10Se
p-10
Feb-
11Ju
l-11
Dec-
11M
ay-1
2O
ct-1
2M
ar-1
3Au
g-13
Jan-
14Ju
n-14
Nov
-14
Apr-
15Se
p-15
Feb-
16Ju
l-16
Dec-
16M
ay-1
7O
ct-1
7M
ar-1
8Au
g-18
Jan-
19Ju
n-19
Ni�y Smallcap 100 Index as a propor�on to Ni�y 50 Index (x)
Ratio chart showing Nifty Midcap 100 divided by Nifty 50 and Nifty Smallcap 100 divided by Nifty 50
For Midcap there has been sharp correction to 1.31x from the peak of 1.9x levels
For Smallcap the ratio bottoms at ~0.5x and tops at 1x. Currently the ratio is at the bottom end of the range
0.50
0.460.49
Source: Bloomberg; Data as on Sep 2019
10SEBI Categorisation of Funds
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Classification of Stocks according to Market Cap
` `
Large Cap(Top 100)Fund Type
Fund TypeLarge Cap
Large Cap & Mid Cap
Mid Cap
Small Cap
Multi Cap
Mid Cap(101-250)
Small Cap(Below 250)
>80% 0-20%
35 - 65% 35 - 65% 0-30%
0-35%
>65%
>65%
0-35%
0-35%
>65%
Category has 24 Funds with AuM of ~50,000 crs vs Multicap category has 33 funds with AuM of ~1.35 Lac Crs
Source: AMFI
11
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The Large & Midcap category was created in 2018 due to SEBI recategorization where the category invests minimum 35% in each large and midcaps
Current inhouse asset allocation will be 50% weightage in largecap (top 100 stocks) and 50% weightage in midcap (next 150 stocks)
What is Large & Midcap
Motilal Oswal Large & Midcap Fund
Top 100 Stocks
Next 150Stocks
The above is the current in-house asset allocation and subject to change as per product construct and Fund managers discretion subject to the limits as specified in the Scheme Information Document.
Stability & Growth
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Largecaps Midcaps Large and Midcaps
Bluechip companies
Market leaders in the segment
Established track record
Emerging Businesses
Above averagegrowth profile
An optimal mix of Large Caps and Mid Caps which can deliver high growth with lower volatility
Improved management and capital allocation
+ =Stabilityof Largecaps
Growth potential of Midcaps
Better riskadjusted returns
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13Growth across Market Capitalisation
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The scrip mentioned herein are for general and comparison purpose only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. Source: Capitaline and internal analysis; Data as on 31st Aug 2019; Market cap is in Crores The scrips may or may not be part of our portfolio/strategy/scheme. Past performance may or may not be sustained in the future
The ultimate objective of all investors is to profit from expansion in the value of their stocks, i.e. higher stock price and market capitalization. The growth can be both in Largecap and Midcap wherein the large companies get better and bigger and midcap companies appreciate into large cap stocks.
13432
155026CAGR 28%
103154
847889CAGR
23%
24824
273380CAGR 27%
Asian Paints HDFC Bank
Kotak Mahindra Bank TCS
62768
609433CAGR 26%
1249
44369CAGR 43%
4195
96714CAGR 37%
714
20807
CAGR 40%
Eicher Motors Bajaj Finance
Page Industries
Large grows Bigger Mid grows to Large
IndusInd Bank
747
193250CAGR 74%
*Market Cap change in the last 10 years (` in crores)
Large Midcap vs Multicap
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Data as on 31st Aug 2019; Source: MFI explorer and internal analysis Past performance may or may not be sustained in the future.
The above graph has used Nifty LargeMidcap 250 TRI to illustrate 50%-50% allocation to Largecap and Midcap
9.05
8.39
13.04
10.13
7.37
8.74
13.25
10.63
12.21
9.72
14.78
11.49
1 Year 5 Years 7 Years 10 Years
Ni�y 500 TRIS&P BSE 200 TRINIFTY Large Midcap 250 TRI
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15About the Scheme and Portfolio Construct
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The investment objective is to provide medium to long-term capital appreciation by investing primarily in Large and Midcap stocks. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved
High conviction ideas with improved risk-adjusted return characteristics
Bottom-up stock selection
Investment Horizon: Medium to Long Term
Equity and Equity related instruments of other than above: 0% - 30%
Units of liquid/ debt schemes, Debt, Money Market Instruments, G-Secs, Cash and Cash at call, etc: 0% - 30%
Units issued by REITs and InvITs: 0% -10%
Equity & Equity related instruments of Large cap companies:
Equity and Equity related instruments of Mid cap companies:
35% - 65% 35% - 65%
At Motilal Oswal Asset Management Company (MOAMC), our investment philosophy is centered on 'Buy Right : Sit Tight’ principle.
Buy and Hold: We are strictly buy and hold investors and believe that picking the right business needs skill and holding onto these businesses to enable our investors to benefit from the entire growth cycle needs even more skill.
Focus: Our portfolios are high conviction portfolios of around 25 stocks being our ideal number. We believe in adequate diversification as over-diversification results in diluting returns for our investors and adding market risk
‘Q’uality denotes quality of the business and management
‘G’rowth denotes growth in earnings and sustained RoE
‘L’ongevity denotes longevity of the competitive advantage or economic moat of the business
‘P’rice denotes our approach of buying a good business for a fair price rather than buying a fair business for a good price
Our Investment Philosophy
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Why Invest in Motilal Oswal Large & Mid Cap?
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Buy Right :Sit Tight
Holding quality companies for a long
period of time
Discipline of Allocation
Minimum allocation to both large and
midcaps
Risk Adjusted Return
Less volatile Largecaps and High growth
Midcaps
Concentrated Portfolio
Around 25 stocks#
#Can change as per fund managers discretion subject to the limits as specified in the Scheme Information Document.
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Fund Details
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Large and Midcap Fund - An open ended equity scheme investing in both large cap and mid cap stocks
Large and Midcap Fund
Type of Scheme
Scheme Category
The investment objective is to provide medium to long-term capital appreciation by investing primarily in Large and Midcap stocks. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved
Investment Objective
BSE 200 TRI
Benchmark
Regular Plan and Direct Plan
Plans
Dividend (Payout and Reinvestment) and Growth
Options (Under each plan)
Rs. 500/- and in multiples of Re. 1/- thereafter
Minimum Application Amount
Rs. 500/- and in multiples of Re. 1/- thereafter
Additional Application Amount
Rs. 500/- and in multiples of Re. 1/- thereafter or account balance, whichever is lower.
Minimum Redemption Amount
Rs. 500/- and in multiples of Re. 1/- thereafter
Rs. 500 and in multiples of Re.1/- thereafter (Minimum Installment – 12)
Rs. 1,500 and in multiples of Re.1/- thereafter (Minimum Installment – 4)
Rs. 6,000 and in multiples of Re. 1/- thereafter (Minimum Installment – 1)
The Dates of Auto Debit Facility shall be on the 1st, 7th, 14th ,21st or 28th of every month.
Systematic Investment Plan (SIP)
Entry : NilExit : 1% - If redeemed on or before 15 days from the date of allotment. Nil - If redeemed after 15 days from the date of allotment. A switch-out or a withdrawal shall also be subjected to the Exit Load like any Redemption. No Exit Load applies for switch between MOF25, MOF30, MOF35, MOFEH & MOFDYNAMIC. No Load for switch between Options within the Scheme. Further, it is clarified that there will be no exit load charged on a switch-out from Regular to Direct plan within the same scheme. No Load shall be imposed for switching between Options within the Scheme.
Entry/Exit Load
Weekly SIP
Quarterly SIP
Annual SIP
Fortnightly SIP Monthly SIP
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Product Labelling
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Name of the Scheme This product is suitable for investors who are seeking*
Motilal Oswal Large and Midcap Fund (MOFLM)
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Long term capital appreciation
Investment predominantly in equity and equity related instruments of large and midcap stocks
(Large and Midcap Fund - An open ended equity scheme investing in both large cap and mid cap stocks)
19
For Equity Component
Mr. Aditya has overall 14 years of experience in the Indian equity markets as an investment professional, out of which the last 10 have been in the role of a portfolio manager. Prior to joining Motilal Oswal Asset Management Company Ltd., He was associated with HSBC AMC for over 10 years. Further, he has also worked in esteemed organizations like SBI Mutual Fund, ICICI Prudential AMC and Morgan Stanley Advantage Services.
Fund Manager
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He also manages Motilal Oswal Long Term Equity Fund
He completed his MBA (Finance) from Indian Institute of Management Lucknow and Bachelor of Commerce from St. Xaviers College, Kolkata.
For Debt Component
Aditya Khemani(Fund Manager)
Abhiroop Mukherjee: He is a B.com (H), MBA with over 10 years of experience in trading Fixed Income Securities viz. G-secs, T-bills, Corporate Bonds CP, CD, etc. He has earlier worked with PNB GILTS LTD. as a WDM Dealer for the period 2007-2011
Funds Managed: Motilal Oswal Ultra Short Term Fund and Motilal Oswal Liquid Fund. He is also the Fund manager for the debt component of Motilal Oswal Focused 25 Fund, Motilal Oswal Midcap 30 Fund, Motilal Oswal Multicap 35 Fund, Motilal Oswal Dynamic Fund, Motilal Oswal Hybrid Fund and Motilal Oswal Long Term Equity Fund.
20
This presentation has been prepared and issued on the basis of internal data, publicly available information and other sources believed to
be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact
and terms and conditions and features of Motilal Oswal Large and Midcap Fund. The information / data herein alone is not sufficient and
shouldn't be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any
party. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on date and are subject to change without
notice. While utmost care has been exercised while preparing this document, Motilal Oswal Asset Management Company Limited does not
warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this
information. The statements contained herein may include statements of future expectations and other forward-looking statements that
are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for
any decision taken on the basis of this presentation. No part of this document may be duplicated in whole or in part in any form and/or
redistributed without prior written consent of the Motilal Oswal Mutual Fund/Motilal Oswal Asset Management Company Limited. Readers
should before investing in the Scheme make their own investigation and seek appropriate professional advice. Past performance of the
Sponsor / AMC / Mutual Fund and its affiliates does not indicate the future performance of the scheme and may not provide a basis of
comparison with other investments. Please Read Scheme Information Document (SID) and Statement of Additional Information (SAI)
carefully before investing.
Scheme Specific Risk Factors: In line with its investment objective, the scheme will be required to maintain a minimum exposure of 35%
each to both the large cap and the mid cap market segments at all times regardless of the prevailing market conditions/outlook for these
market cap segments. The Scheme is subject to the principal risks described below. Some or all of these risks may adversely affect Scheme’s
NAV, yield, return and/or its ability to meet its objectives.
Statutory Details: Constitution: Motilal Oswal Mutual Fund has been set up as a trust under the Indian Trust Act, 1882.
Trustee: Motilal Oswal Trustee Company Ltd. Investment Manager: Motilal Oswal Asset Management Company Ltd. (CIN:
U67120MH2008PLC188186) Sponsor: Motilal Oswal Financial Services Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Disclaimer
‘BUY RIGHT : SIT TIGHT’
21
Call: 81086 22222 or 022-4054 8002 Email: [email protected] Website: www.motilaloswalmf.com