SAPM_B_1_PGDM 2013-15pptx

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Performance nalysis

Of ICICI Prudential FocusedBluechip Equity Fund

SAPM BGroup 1

Bhuvnesh Garg 1301-331Divya Arora 1301-337

Harshit Singhal 1301-343

Kapil Goyal 1301-354

Kritika Sharma 1301-357

Nalini Chandrika Rayudu 1301-369

Rohit Tolani 1301-398

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Net Assets : Rs. 5884.5 crore as on 30 th June, 2014 NAV : Rs. 26.36 as on 22 nd Aug, 2014

Fund Profile

To invest in 20 large cap companies fromthe top 200 stocks listed on the NSE on thebasis of market capitalization

About

Key Features Sector Allocation (as of 31 st March 2014)

Investment Strategy Investment Focus

To create reasonable diversification across sectors capitalization

Long term focus with "buy and hold" approach

Long term wealth creation solution

Launched : May 2008

Fund Manager : Mr. Manish Gunwani (since Jan 2012)

Type : Open Ended

Minimum Investment (Rs.) : 5000

Minimum SIP Investment (Rs.) : 1000

In case, the total assets undermanagement crosses Rs.1000 crore, thenmore than top 20 large companies wouldbe added to the portfolio.

Exit Load : 1% for redemption within 365 days

Financials27%

InformationTechnology

15%

Energy13%Consumer

Discretionary12%

ConsumerStaples

9%

Materials7%

Health Care7%

Industrials

5%

Utilities3%

Telecommunication Services

2%

Funds0%

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Agenda

About ICICI Prudential Focused Bluechip Equity Fund

Portfolio Attribution Analysis

Performance Analysis

Holding Period Analysis

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Portfolio ICICI Prudential Focused Bluechip Equity Fund ; Benchmark CNX 100

Portfolio Classification PortfolioWeights

BenchmarkWeights Portfolio Return

BenchmarkReturn

Pure Sector Allocation

Effect

Within Sector Allocation

Effect

InteractionEffect

Financials 27.28% 27.50% 18.63% 10.14% 0.02% 2.33% -0.02%

Energy 12.60% 10.54% 15.09% 13.32% -0.15% 0.19% 0.04%

Information Technology 14.65% 14.41% 34.07% 32.30% 0.03% 0.25% 0.00%

Industrials 5.18% 6.61% 24.90% 35.86% -0.22% -0.72% 0.16%

Consumer Discretionary 11.55% 9.37% 61.46% 35.20% 0.32% 2.46% 0.57%

Consumer Staples 9.24% 11.68% 17.70% 18.30% 0.06% -0.07% 0.01%Materials 6.92% 8.12% 11.23% 20.44% 0.00% -0.75% 0.11%

Health Care 6.78% 6.02% 36.95% 30.37% 0.07% 0.40% 0.05%Utilities 3.16% 3.28% 3.37% -2.27% 0.03% 0.19% -0.01%

Telecommunication Services 2.43% 2.48% 8.57% 26.42% 0.00% -0.44% 0.01%Funds 0.21% 0.00% 34.51% 0.00% -0.04% 0.00% 0.07%

Total Returns 100.00% 100.01% 25.67% 20.72% 0.11% 3.83% 1.00%Difference between portfolio

and benchmark return4.95%


The allocation effect measures fund managers ability to effectively allocate their assets to various segments

The total return for the portfolio is 4.95% higher than the benchmark index return

The pure allocation effect for the fund is positive, i.e. , 0.11% which initially describes the better performance of the fund manager inallocating the weights to the sectors, however 5 out of 10 sectors had negative/ zero pure sector allocation effect. It was only due toefficient allocation in the Consumer Discretionary Sector, the negative effects were weighed out and the pure sector allocation effect

was positive.

Analysis

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Agenda





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Ratios

Performance Measure ICICI Focused Bluechip Equity Fund

Sharpe Ratio34.08%

M square measure 9.97%

Information ratio123.88%

Sortino ratio (Variant 1)1.3033

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Agenda





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Energy

After an initial spike towards $115 levels in June 2014 priceshave been on a downward spiral and recent developments onthe price front have opened up further negative implicationsin the near term

Fundamental

Technical

Ample supply from the US and reopening of major export ports from Libya

Positive news in the Iraq conflict (US intervention))

Falling crude prices leads to decline in overall petroleum subsidy wherein OMCs are one of the key burden contributors along with

the Government of India and upstream companies. Hence, based on positive sentiments emanating from falling subsidies and

improving profitability, it is recommended to go long on OMCs.

After moving above the band for an year, the crude prices linewent below the 200 EMA

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Consumer Staples

Many of the companies are overvalued with the average sector P/E ratio being much higher than average.

Supply side will come into effect later, so that will effect the performance of these stocks.

Inflation will contribute to pushing the prices to higher side, that will also effect the performance of these stocks.

Deficient monsoon is likely to adversely affect the sector as low agricultural production will create supply-side constraints for the

companies.

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Financials

Muted Growth but Encouraging Signs

No substantial loan growth in Q1FY15 (+16% YoY)

Asset quality & NIMs have been stable, though fee income remained subdued due to a slowdown in corporate-based fee income

PAT for the sector grew 10.5% YoY (+9.8% QoQ) led by improving NII growth and tight leash on operating expenses

Better Positioned Going Forward

Disinvestment target of Rs. 58,425 crores set by govt. for FY15 to be led by disinvestment in PSU banks

Improving sales of two-wheelers and passenger cars expected to drive

retail credit growth

Decreasing stress on assets led by recovery in GDP growth, softening

interest rate and better loan growth expected to be major catalysts

going forward.

Incentives for long term infra finance by RBI would lead to lower cost of

funds for banks

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Consumer Discretionary

Q1FY15 - Best quarter in terms of volume sales growth in the past nine quarters.

Investment in National Highways Authority of India and State Roads to the tune of Rs.37,880 to be positive for M&HCV segment.

All auto companies to benefit from 4-6% excise duty reduction, and interest rate cuts, if any, would lead to uptick in demand in

coming quarters.

Domestic market growth slowly improving, registering an 8% increase in the first quarter of 2014.

Indian generic pharma companies also expected to benefit from patent expiries in the US.

US represents a substantial growth opportunity for Indian drugmakers, with rich pipelines of generics awaiting US Food and Drug

Administration (FDA) approval.

However, recent price control directive by NPPA is a derogative step for the industry

Overall sectoral view positive

Healthcare

Increase in exemption limit for direct tax by Rs. 50,000 to lead to improved demand for consumer discretionary products.

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Telecom

Year 2013 acted as a game changer for Telecom Industry

Government tried to reduce regulatory hurdles by providing clear information on issues such as mergers and acquisitions

Increase in the Foreign direct investment limit from 76% to 100%

Lower competition on the back of cancellation of several licenses

Recovery in growth expected going forward

Active subscriber growth slowed down from 19% in FY12 to 6% in FY13 to 9% in FY 14 beating total subscriber base growth and

growing in single digit

Increasing penetration of data services and healthy voice pricing can drive profitable growth going ahead.

Due to operating leverage from traffic growth and RPM improvement, EBITDA margin for Indian business is expected to improve

QoQ by 60-65 basis points for companies like Bharti/Idea

Indian telecom operators have registered a 12% rise in gross revenue in Q1FY15

Gradual improvement is expected in voice RPMs by industry in FY15

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Materials

Recent major News/ Events

A category of stocks that accounts for companies involved with the discovery, development and processing of raw materials. Thebasic materials sector includes the mining and refining of metals and chemical producers .

The Union Cabinet decision to hike royalty rates on majorminerals such as iron ore, bauxite and manganese willsqueeze margins of companies in the metals sector

Metals stocks were also hit by demand concerns afterPurchasing Managers' Index indicated China's factory sectorhad slowed down to a three month low in August.

Fundamental

Due to weak demand, higher imports, subdued global pricesand seasonality domestic steel prices in the near term arelikely to remain under pressure

Materials sector is sensitive to changes in the business cycle as the sector supplies materials for construction, it depends on astrong economy.

This sector is also sensitive to supply and demand fluctuations because the price of raw materials, such as iron, steel or othermetals, is largely demand driven

Global raw material prices(steel) are expected to remain soft

due to lower demand from China and new capacities coming onstream

Base metals prices maintained their strength and advancedfurther with lead joining the rally catching up zinc to a majorextent.

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238.9279.5

223.4 215.2 245.1

165.4 178.2 176.7 174.8 180.3

0

100

200

300

2010-11 2011-12 2012-13 2013-14 2014-15

Capital goods index rises inQ1FY15

Q1 Capital Goods Index (Base Year 2004-05)

Q1 Manufacturing Index (Base year 2004-05)

Industrials

To get push by budgetary announcements and favourable govt. Policies

Clearance of Infra projects stuck in environment regulations

Introduction of INVITs will provide long term funds for the sector

Excluding Infra lending from bank reserve calculations will encourage lending to infra sector

Capital Goods Sector

Construction Sector

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Utilities

Constitutes mainly power companies

7GW additional power capacity to beinstalled in FY15

Tariff regulations will hurt the profitearning capacity

Any negative outcome of SC verdicton Coal Block Allocation will haveserious impact on power companies

Overall the sector outlook is not goodin next one year

Since the portfolio is slightlyunderweight in this sector, so it will be

positive for the fund as compared tobenchmark

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Information Technology

Unemployment rate falling in US

149202

164

237274

84144

222 203

304

229

298

209

050

100150200250300

350

US Job data indicate economicrecovery

Non-farm Job data (Seasonaly adjusted)

Significant part of Revenue comes from US

The growth for the Tier 1 companies was3.5% quarter-on-quarter; highest in the pastsix months

In June 2014 -ending quarter, the USeconomy surprised positively with over 4%growth

Industry aggregate growth rates at 3.9&(Quarter- on-Quarter) and 11.1% (Year-on-Year) for the US region, benefits havetrickled down to the IT sector

Growing IT strategy consulting

US immigration bill may restrict the margins Overall sector is expected to perform

exceedingly well in FY15

Portfolio is underweight in IT sector so it isexpected to underperform the benchmark

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The fund has outperformed benchmark in past one year by 4.65%

The performance was mainly attributed to better stock selection within the sector (3.83% excess returns)

High within sector allocation effect shows ability of the analysts to identify the investment opportunities

With overall positive domestic and global economic outlook, sectors like Financials, Industrials, Energy and Healthcareare expected to generate higher returns

The sectors in which fund is the overweight such as IT, Energy, consumer discretionary and healthcare are expected tooutperform the market

Ability to indentify good stocks will help to generate excess returns from bearish sectors

Overall, the fund is expected to outperform the benchmark and investors should invest in this fund

Conclusion

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Sources

Bloomberg, 2014. Portfolio Weights, Returns, Stock Prices, 10- year Generic Govt. Security Yield, CNX 100 index values.

Research, V., 2014. ICICI Prudential Focused Bluechip Equity Fund - Regular Plan - Fundcard

India, N. S. E. o., 2014. CNX 100 Stock list and Weights as of 31/03/2014

ET Intelligence.com Sector wise Reports

CMIE Economic Outlook Capital Goods Index

US employment Data- www. Bls.gov

Equitymaster.com- BSE Power returns

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Thank You!!

SAPM_B_1_PGDM 2013-15pptx

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