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IOP Strategy November 2019

Investment Objective
The Strategy aims to generate long term capital appreciation by creating a focused portfolio of high growth stocks having the
potential to grow more than the nominal GDP for next 5-7 years across and which are available at reasonable market prices.

Key Features
1. Small cap oriented portfolio which invests in companies with high earnings growth.
2. Identifying companies in early stages which have the potential to become midcap or large cap resulting in wealth creation
3. Around 60% of the portfolio is in small cap and the balance is in midcap and large cap
4. 9+ years track record across market cycles
5. High quality concentrated portfolio of 23 stocks

Portfolio Attributes 2.71X

1. Index agnostic: ~91% away from benchmark Nifty Smallcap 100


2. Key sector allocation is to Banks, NBFC and Consumer-oriented businesses
3. For Q1FY20, IOP Portfolio delivered earnings growth of 20.3% (excluding IIFL Finance) vis-a-vis negative earnings growth
of (-)28% for the Nifty Smallcap 100 Index (weighted average ex of IIFL Finance has been taken as the growth % for the
same is high and results in abnormal weighted percentage)
4. IOP has delivered outperformance over the benchmark in 4 of the last 5 FYs (including FY20TD)
5. Portfolio earnings have maintained their high trajectory although stock prices have corrected in the past one year. This
has been on account of the broad based selling in the small cap segment

Portfolio Actions in last 6 months


• Companies Added: ICICI Securities, ICICI Bank
• Companies Exited: 5Paisa Capital, IIFL Wealth Management, Lakshmi Vilas Bank
How Buy Right : Sit Tight works

Market Cap Market Cap Wealth creation


Initial Purchase Absolute is achieved
Company Rs. Crores Rs. Crores CAGR (%)
Date Growth through holding
(Purchase Date) (31st Oct 19)
quality
companies for a
DCB Bank Aug-16 3,038 5,588 1.8X 21% long period of
time
Mahanagar Gas Aug-16 5,061 10,073 2.0X 24%

Top 10 Holdings & Sectoral Allocation


Banks 16.3
Scrip Names % Holdings NBFC 14.3
DCB Bank 10.4 Consumer Durable 13.0
Oil and Gas 12.9
ICICI Securities 7.9
Cement & Infrastructure 8.5
TTK Prestige 7.4 Engineering & Electricals 8.2
Birla Corporation 7.1 Pharmaceuticals 8.2
Mahanagar Gas 6.7 Healthcare Services 6.1
Blue Star 6.5 Services 3.4
Miscellaneous 2.0
Aegis Logistics 6.1
FMCG 2.0
Dr. Lal Pathlabs 6.1
Chemicals 1.9
Alkem Laboratories 6.0 Agriculture 1.5
ICICI Bank 6.0 Retail 0.8

Disclaimers and Risk Factors


IOP Strategy Inception Date: 15th Feb 2010; Data as on 31st October 2019; Data Source: MOAMC Internal Research; RFR – 7.25%; *Earnings as of June 2019 quarter and market price as on 31st October 2019; Source:
Bloomberg consensus, Capitaline and Internal Analysis; Please Note: The above strategy returns are of a Model Client as on 31st October 2019. Returns of individual clients may differ depending on time of entry in
the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Returns below 1 year are absolute and above 1 year are annualized.
Strategy returns shown above are post fees & expenses. The stocks forming part of the existing portfolio under IOP Strategy may or may not be bought for new client. Name of the PMS Strategy does not in any
manner indicate its future prospects and returns. The Company names mentioned above is only for the purpose of explaining the concept and should not be construed as recommendations from MOAMC.
IOP Strategy November 2019
Performance Since Inception
50
IOP Strategy Nifty Smallcap 100
40 IOP Strategy has
30
delivered a CAGR of
2.7X 10.9% vs. Nifty
20 Smallcap 100 returns
10 of 5.3%, an
1.7X outperformance of
0
5.5% (CAGR) since
May-11

May-16
Oct-16

Apr-19
Dec-10

Nov-13
Apr-14

Dec-15
Oct-11
Mar-12
Aug-12
Jan-13

Mar-17
Aug-17
Jan-18
Jul-10

Jun-13

Jul-15

Jun-18
Nov-18

Sep-19
Feb-10

Sep-14
Feb-15
inception (15th
2.71X
February 2010)

IOP Strategy Nifty Smallcap 100


11.9 10.9
7.4 8.7 7.7
5.3
1.7 2.2

-0.7
-5.2 -2.9 -4.0

-13.3
-18.0
1 year 2 Year 3 Years 4 years 5 years 7 years Since Inception

Fund Contributors (1 Year Trailing 31st October 2019) Ageing


Top 5 Contribution Number of Scrips Holding Period
Dr. Lal Pathlabs 2.8% 11 > 3 Years
Blue Star 2.1% 6 > 2 Years but < 3 Years
Can Fin Homes 1.8% 6 < 2 Years
Kajaria Ceramics 1.7% The average holding period for stocks held under IOP
Strategy is over 2 years and 6 months
AU Small Finance Bank 1.6% *IOP was restructured as a Small Cap Strategy in July 2016

Bottom 5 Contribution Market Capitalization


ITD Cementation India -1.5% 8.0%
Large Cap
IIFL Finance -1.5% 31.6%
Aegis Logistics -2.0% Mid Cap
59.7%
Dishman Carbogen Amcis -2.1% Small Cap

Lakshmi Vilas Bank -3.4% Weighted Average Market Cap Rs. 26,400 Crs

*Portfolio Fundamentals Risk Ratios

TTM FY20E FY21E 3 Year Data Strategy Benchmark


Churn Ratio 11.8% -
PAT Growth 15% 41% 22%
Standard Deviation 16.2% 19.7%
RoE 17% 21% 22% Beta 0.6 1.0
PE 30 22 19 Sharpe Ratio -2.0 -2.2

Disclaimers and Risk Factors


IOP Strategy Inception Date: 15th Feb 2010; Data as on 31st October 2019; Data Source: MOAMC Internal Research; RFR – 7.25%; *Earnings as of June 2019 quarter and market price as on 31st October 2019; Source:
Bloomberg consensus, Capitaline and Internal Analysis; Please Note: The above strategy returns are of a Model Client as on 31st October 2019. Returns of individual clients may differ depending on time of entry in
the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Returns below 1 year are absolute and above 1 year are annualized.
Strategy returns shown above are post fees & expenses. The stocks forming part of the existing portfolio under IOP Strategy may or may not be bought for new client. Name of the PMS Strategy does not in any
manner indicate its future prospects and returns. The Company names mentioned above is only for the purpose of explaining the concept and should not be construed as recommendations from MOAMC.