Axis Capital Builder Fund – Series 4 (1582 days)

NFO period: 3rd Dec, 2018 to 14th Dec, 2018 (A close ended equity scheme investing across large cap, mid cap and small cap stocks)

1

This product is suitable for investors who are seeking*:

• capital appreciation over long term

• Investment in a diversified portfolio of predominantly equity

and equity related instruments across market capitalisation

*Investors should consult their financial advisers if in doubt

about whether the product is suitable for them.

Market Update

2

2018 has been a tough year

3

Market witnessed broad based correction & heightened volatility

Rising crude price Depreciating

currency Liquidity squeeze

Foreign investor selling

Rising interest rates

Concerns on NBFC sector

However, some hints of stabilisation

4

Source: Bloomberg, Past Performance may or may not be sustained in future. Data as on 14th Nov 2018

Sharp fall in crude has driven improvements in other metrics

Crude Currency

Markets Interest Rate

65

70

75

80

85

90

Aug-18 Sep-18 Oct-18 Nov-18

Crude - Brent (Last 3 months)

9,000

10,000

11,000

12,000

Aug-18 Sep-18 Oct-18 Nov-18

Nifty 50 Index (Last 3 months)

69

71

73

75

Aug-18 Sep-18 Oct-18 Nov-18

(Reversed scale)

INR/USD (Last 3 months)

7.7

7.8

7.9

8.0

8.1

8.2

Aug-18 Sep-18 Oct-18 Nov-18

10 year G-Sec (Last 3 months)

Significant easing of NBFC liquidity concerns

5

Source: Bloomberg, CLSA, Axis Capital, Data as on 31st Oct 2018. *Gross Non-performing loans as a % of Assets for banks under CLSA coverage in INR terms. * till 15th Nov 2018.

Swift and significant policy response helped

• RBI providing liquidity through OMOs, Banks acquiring portfolios from NBFCs using securitisation

• Benign inflation and smooth CP repayments during October and November have provided additional confidence

Benign Inflation RBI providing liquidity through OMOs

3

3.5

4

4.5

5

5.5

Oct-17 Jan-18 Apr-18 Jul-18 Oct-18

NBFCs have grown faster

6%

17%

19%

22%

Bank Loans NBFCs NBFCs +HFCs

HFCs

Growth in credit over FY16-18CL

780 435

10,360 10,300 10,000

20,000

48,000

32,002

Jan-18 Mar-18 May-18 Jun-18 Jul-18 Sep-18 Oct-18 Nov-18*

OMOs (INR cr)

Currency sell-off do not have a lasting effect

6

Source: Bloomberg, Axis MF Internal Analysis, data as on 9th Oct 2018 (Peak point for currency @ 74.39). Returns are in INR terms.

Equities tend to recover once currency stabilises

Rupee depreciation episodes

(3 month period with >12%

depreciation)

Currency & market performance in

depreciation episodes

Currency & market performance over the

next 3 months

INR/USD Nifty INR/USD Nifty

Oct 97 - Jan 98 -12.4 -14.0 2.4 21.9

Jul 08 - Oct 08 -18.6 -41.7 1.6 5.0

Aug 11 - Nov 11 -14.8 -4.9 5.9 19.1

Feb 12 - May 12 -14.7 -8.1 1.1 7.4

May 13-Aug 13 -23.0 -13.5 9.3 15.3

Aug 18- Oct 18 -8.3 -5.1 - -

Structural reforms support growth, reducing uncertainty

7

Source: CLSA, Trading economics, As on 30th Sep 2018, *Data as on 25th Nov 2018.

Ease of business seeing consistent improvement

Measure Outcome

Inflation targeting CPI halves; Positive real rates trigger jump

Inflation targeting in financial savings

NPL resolution

Corporate bankruptcies happen for the first

time in India, though process sees some

legal hurdles

GST Substantial simplification of indirect taxes

Financial

inclusion

Opening up 300m+ bank accounts

substantially boosts formal financial system

access across India

Subsidy reduction Deregulation of auto-fuel prices, DBT

mechanism a positive;

Ease of business Substantial process easing & digitisation

Rera Real estate sees regulatory body for first

time; push for affordable housing

Demonetisation Some improvement in formalised economy

0

50

100

150

200

250

300

Jan-03 Jan-06 Jan-09 Jan-12 Jan-15 Jan-18

India's economic policyuncertainty index

India’s policy uncertainty index

132 133

139

132 131 134 134

131 130

100

77

2008 2010 2012 2014 2016 2018

Ease of doing business India ranking*

Ease of doing business: India jumped 53

places in 2 years

Economy picking up growth momentum

8

Source: Bloomberg, CLSA, Axis Capital, Topline Growth indicates Net sales in case of Non-BFSI and NII incase of BFSI . Past performance may or may not be sustained in future. Data as on 31st Oct 2018

Growth came back to 8%+ level Nifty Earnings growth

Strong PMI numbers Strong corporate revenue growth

8.2

4.0

5.0

6.0

7.0

8.0

9.0

2012 2013 2014 2015 2015 2016 2017 2018

India Annual GDP Growth Rate

11.2 13.8

16.4

23.2

11.1 12.8

6

20.4

0

10

20

30

Q2FY18 Q3FY18 Q4FY18 Q1FY19

Topline Growth – Nifty 50 (yoy%)

Topline Growth (yoy%) BFSI Topline Growth (yoy%) Non-BFSI

7% 10%

3%

-4%

8%

14%

21% 16%

FY13 FY14 FY15 FY16 FY17 FY18CL FY19CL FY20CL

48.00

49.00

50.00

51.00

52.00

53.00

Oct-17 Jan-18 Apr-18 Jul-18 Oct-18

PMI - Sevices (3 month average%)

Government focusing on rural economy

9

Source: Axis Capital. CLSA. Data as on 30th Sep 2018

Will remain a priority in the run up to the general elections

Accelerated push towards rural housing Increase in farm support prices will

support incomes

Strong growth in tractor and two-

wheeler sales

0.2 0.3

1.1 1.1 1.2

1.8

3.2

4.5

0.9

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

# of rural houses built under central schemes (mn)

-5

0

5

10

15

20

25

30

FY01 FY04 FY07 FY10 FY13 FY16 FY19

Kharif MSPincrease (WPIwtd aggregate)

Rural wagegrowth (Indiaaverage)

-15

-10

-5

0

5

10

15

20

25

FY14 FY15 FY16 FY17 FY18

Annual growth (%)

Tractor Sales

Two-wheeler sales

India is witnessing a digital transformation

10

Source: CLSA, PMJDY, UIDAI, Company data, TRAI, IDC, NPCI, Morgan Stanley Research. Past Performance may or may not be sustained in future. Data as on 31st Oct 2018.

India likely to be 3rd biggest ecommerce market Most of the population is still untapped

11

30

40

41

71

76

97

114

132

383

629

710

Indonesia

Russia

India-2017

Canada

Korea

France

Germany

UK

Japan

India-2028

US

China

62 60

36

22 15

7

27

14

17 38

42

21

11

26

47 41 42

73

Japan USA China Brazil Mexico India

% of population

Online Shoppers Online but not shopping Not online

(US$bn)

0

100

200

300

400

500

FY 13 FY 14 FY 15 FY 16 FY 17 FY 18

Total Data Subscribers (mn)

Total Data Subscribers

Valuations to get support from earnings pick up

11

Source: Motilal Oswal,. Past Performance may or may not be sustained in future. Data as on 31st Oct 2018.

Recent correction has brought valuation closer to long run averages Markets expecting uptick in earnings, RoE

17.6

9

13

17

21

25

Oct-

08

Oct-

09

Oct-

10

Oct-

11

Oct-

12

Oct-

13

Oct-

14

Oct-

15

Oct-

16

Oct-

17

Oct-

18

NIFTY P/E (x) - 1 Year Forward

10 Year Avg:

17.1x 15.4

12.5

13.9

15.3

16.7

18.1

Oct-

08

Oct-

09

Oct-

10

Oct-

11

Oct-

12

Oct-

13

Oct-

14

Oct-

15

Oct-

16

Oct-

17

Oct-

18

NIFTY RoE (%) - 1 Year Forward

10 Year Avg:

15.0%

Time in the market is more important than Timing the market.

12

Source: Bloomberg, Axis MF Research. Since Jan 2000 till 15th Nov 2018. Past performance may or may not be sustained in future.

Corrections offer suitable entry points for long term investors

• Markets tend to react to short

term events in a knee jerk

reaction and revert back to their

fundamental valuations once the

event is analyzed.

• So long as fundamentals remain

positive, markets will follow the

general trajectory of the

economy.

0

5000

10000

15000

20000

25000

30000

35000

40000

45000S&P BSE Sensex

Dot Com Bubble,

9/11 Twin Tower

attacks

Ketan Parekh

Scam

Sub Prime Crises

Euro Crises, PIIGS

Default

US loses AAA

rating

China Meltdown

Demonetisation & US

Presidential Elections

LTCG re-introduced

• Company fundamentals showing improvement

• Over the last two years earnings growth for stocks has been patchy and inconsistent.

• Q1FY19 was the first quarter, after the two patchy & inconsistent years where market wide earnings growth (ex-PSU banks) clocked a growth of 20%.

• A pick up in earnings can overshadow the other negatives and support markets

• We will be quality centric to stay with companies who have the strength to sail through

• Focus on bottom-up approach to find such stories

While some uncertainty remains in near term, we remain bullish in the medium to long term

13

Introducing Axis Capital Builder Fund – Series 4 (1582 days)

14

The portfolio allocation will be based on the prevailing market conditions and is subject to change depending on the fund management view. The scheme will invest as per asset allocation mentioned in scheme information document.

Aim to build a high quality portfolio with mid to high

growth than benchmark

Intend to invest across market cap

spectrum

Benchmark agnostic while

being diversified reducing

concentration risk

Equity Investment Approach Investment Objective

To generate income and long term capital

appreciation by investing in a diversified portfolio of

equity & equity related instruments across

market capitalization.

The above mentioned numbers are indicative. The portfolio allocation will be based on the prevailing market conditions and is subject to change depending on the fund management view. The

scheme will invest as per the overall investment objective & strategy in scheme information document.

Stock Selection

Total no of listed companies available for trade

(over 4000)

No of companies in Axis MF Universe

(around 350)

Diversified portfolio while being

benchmark agnostic

• Bottom up approach to investing

• Follow the Key pillars of Axis MF approach to investing which

are

• Growth biased - focusing on sustainable growth

• Look for quality businesses

• Aim to deliver superior risk adjusted returns

• High conviction Investing

• Disciplined investment process which is clearly articulated &

focused on risk mitigation

• Concentrated yet diversified portfolio of ‘best ideas’ generated

from in-depth research and articulated investment strategy

Why Axis Capital Builder Fund – Series 4 (1582 days)?

• Offers long term wealth creation opportunity

• Long term orientation for both investors and fund manager

• No liquidity pressure on the portfolio

Features at a glance

17

Fund

manager

Benchmark Min.

Application

amount

Plan/

Options

Type

A close ended

equity scheme

investing across

large cap, mid cap,

small cap stocks.

Anupam Tiwari Nifty 500 Index Rs. 5,000 and in

multiples of Re.

10/- thereafter

Regular & Direct

Plan - Growth and

Dividend Option

(Payout Facility)

Statutory Details and Risk Factors

18

Disclaimer: Past performance may or may not be sustained in the future. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).

Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) . Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

Thank You