Scheme Riskometer: First Tier Benchmark Riskometer:

Nifty Energy TR Index

The benchmark riskometer

is at Very High risk
 Indian Energy Theme – A multi decade Aatmanirbhar Bharat story

India among the largest and fastest growing Stable policies combined with past underinvestment
energy markets in select segment of value chain could improve cash
flow from extant business

With a shift from combustion to electrification,

Redeployment of cash flow from traditional energy
energy consumption ex of coal & oil to grow at
business into green energy could enhance value
6.4% CAGR through 2050

India’s natural advantage in green energy to result

Energy segment is underrepresented in the broader
in India moving from energy deficiency to
market index; valuations reasonable
energy self-sufficiency

Energy self-sufficiency could insulate government

policies from external turbulence like oil price spike

Source: BP Energy Outlook 2023; 2050 estimates are for Net Zero scenario, SBIMF research

SBI Funds Management Limited (A joint venture between SBI & AMUNDI)
 India is expected to be the fastest growing energy market in the world

Primary Energy Consumption India’s Primary energy consumption by fuel

(in Exajoules) (% share)
-0.2% 100%
160
147 90% 22%
140 138
2.5% 80%
-0.9% 3%
120 70% 68%
97 1%
100 88 60%
-1.5%
80 74 50% 45%
65 -0.5% 40%
60 6%
42 42 30% 8%
40 -0.2% 5%
30 26 20%
16 15 6%
20 7%
10% 24%
5%
0 0%
United States Brazil EU Russia China India
-20 2019 2050
2019 2050 Growth Oil Natural gas Coal Nuclear Hydro Renewables*

• India is world’s 3rd largest energy market and is expected to be the fastest growing energy market globally through 2050
• India’s primary energy consumption is expected to grow at 2.5% CAGR through next three decades. Excluding coal & oil, energy
consumption is expected to grow by 6.4% as share of renewables will increase to 68% vs 22% at present

Source: BP Energy Outlook 2023; 2050 estimates are for Net Zero scenario
*Renewables include wind, solar, geothermal, biomass, biomethane and biofuels

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 Energy consumption directly correlated to GDP growth

Per capita Income (USD) & Per capita Income (USD) &
Energy consumption in China (Gigajoule) Energy consumption (Gigajoule) in India
14000 120
3000 30
12000 100
2500 25
10000
80 2000 20
8000
60 1500 15
6000
40 1000 10
4000

2000 20 500 5

0 0 0 0
1982

1992

2002

2012

2022
1980

1984

1990

1994

2000

2004

2010

2014

2020
1986
1988

1996
1998

2006
2008

2016
2018

Primary energy: Consumption per capita* China (RHS) Primary energy: Consumption per capita* India (RHS)
Gross domestic product per capita, current prices China (LHS) Gross domestic product per capita, current prices India (LHS)

• India’s per capita energy consumption is 1/3rd of global average. China’s consumption is 4.4x of India and Korea is 9.5x of India. Peers
like Thailand, Indonesia and Vietnam are also at 2.75x, 1.4x and 1.8x of India
• Energy consumption in an economy is directly linked to economic growth. With India expected to be the third largest economy in the
world, its per capita energy consumption could also witness significant rise

Source: KPMG 2023 Global Energy Outlook; IMF World Economic Outlook, SBIMF Research;
*In this review, primary energy comprises commercially-traded fuels, including modern renewables used to generate electricity

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 Tailwind from favorable government policies – Traditional energy

Shift from energy deficiency to energy self-sufficiency

could insulate government policies from external turbulence

Oil Value Gas Value Power Value

Chain Chain Chain

• Remunerative realisation for • Government targets to increase • Impetus on domestic coal

domestic Oil and Gas along with
favourable exploration and
production policy to encourage
growth in domestic production
• Auto fuel subsidy has been
eliminated. Stability in crude price
has provided government the
necessary backdrop for
policy impetus
• Unified tariff with principle of one
the share of natural gas from
current ~6.5% to 15% by 2030.
Accordingly, national gas grid has
been expanded by 40% over past
5 years. Emphasis has been laid
on expansion of city gas
distribution (CGD) networks by
bidding out districts covering 95%
of the population
nation one grid has been
implemented
production will ensure fuel
security
• Reforms in power transmission
and distribution will ensure that
this ecosystem builds the
necessary capacity to facilitate
growth in efficient manner

Source: The green shift - The low carbon transition of India’s Oil & Gas sector report by Ministry of Petroleum and Natural Gas,
SBIMF research.

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 Tailwind from favorable government policies – Green Energy

India’s Commitment in COP 26 - 'Panchamrit' Strategy

Carbon intensity of Reduce total

By 2030, India will
By 2070, India will the economy would Non-fossil energy projected carbon
meet 50% of energy
achieve the target of be reduced to less capacity will reach emissions by one
requirement from
Net Zero than 45% by 2030 500 GW by 2030 billion tones from
renewable energy
now onwards till 2030

Subsequent Government Initiatives

Ethanol Blending Biogas blending

Green Hydrogen
Mission – Make India
the global Hub for
production and export of
Green Hydrogen
programme - Targets
PLI to develop solar and
20% blending in petrol
hydrogen value chain
by FY26 and 5%
locally
blending in diesel by
CY30
obligation will be
Launch of National
voluntary till FY25.
Clean Air Mission and
Subsequently,
Jal Shakti to clean
mandatory blending
rivers
obligation would start
from FY26

Source: The green shift - The low carbon transition of India’s Oil & Gas sector report by Ministry of Petroleum and Natural Gas,
SBIMF research.

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 India is indeed walking the green talk

Climate Change Performance Index (CCPI 2023) puts India at best among G-20 countries

Renewable energy accounts for Under renewables, Solar power Share of renewable energy in total
92% of the capacity addition capacity has seen significant growth energy generation is improving rapidly
in megawatt
14%
100% 16,000
13%

12%

75% 12,000
10%

50% 8,000 8%

6%
25% 4,000 5%

4%

0% 0
FY11

FY21
FY12

FY22
FY10

FY14

FY20
FY13

FY16

FY17

FY18

FY19

FY23
FY15

FY11

FY21
FY12

FY22
FY10

FY14
FY13

FY16

FY17

FY20
FY18

FY19

FY23
FY15

2%

FY11

FY21
FY12

FY22
FY10

FY14

FY20
FY13

FY16

FY17

FY18

FY19

FY23
FY15
Thermal Nuclear Hydro Renewable Solar Wind

Source: SBIMF Research

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 Global adoption of clean energy - India at an advantage

Global Climate related policy is gaining further traction with 198 countries recently agreeing to accelerate
effort to limiting global warming to 1.5 degrees vs 2 degrees as formalized in Dec 2015 COP agreement

Directionally, green energy policy of India is aligned with global goals. India is in fact the driving force behind

2 some of the global climate policies. International Solar Alliance and International Bio Energy Alliance were floated
and signed in India

Solar value chain and Hydrogen value chain is the key to achieve these global climate goals. Today China holds

3 85% market share and 50% market share in the key elements of Solar and Hydrogen value chain. With China+1
strategy in place, India has tremendous scope given its competitiveness

Note: GHG – Greenhouse Gas. Source: The green shift report by Ministry of Petroleum & Natural Gas; Paris Agreement;
Climate Action Tracker; Intergovernmental Panel on Climate Change

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 Energy segment is under-represented in the broader market index

S&P BSE 200 Index

25%
Oil & Gas ex-RIL Utilities
20%

15%

10%

5%

0%

• Weight of Energy sector (Oil and Gas ex-RIL + Utilities) fell from 24.86% in Dec 2004 to 6.75% in Dec 2023
• Sector is under-represented in the index because of issue with profit pool and valuations assigned to the available profit pool
• Both these issues are potentially getting addressed with policy reforms in the traditional energy segment and simultaneous impetus on
green energy

Source : Bloomberg, SBIMF research

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 One Global Energy Company > Entire Nifty Energy Index
Market-cap (USD Bn.)

Saudi Aramco Oil & Natural Gas

Corporation Ltd.
Coal India Ltd.

Adani Energy
36.6 29.6 Solutions Ltd.
Reliance Industries Ltd.
NTPC Ltd. Power Grid Corp.
15.0
of India Ltd. BPCL

2,048.7 212.9 36.1 26.6 Tata Power

Co. Ltd.
12.5

Adani Green 13.4

Energy Ltd.
IOC Ltd.

31.9 24.7

Long Potential runway for growth given the

Largest Global Energy Company is 4.6x of the entire Nifty Energy Index

Source: SBIMF research, data as on January 18, 2024

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 Reasonable sector valuations despite historical outperformance

70,000 Nifty Nifty

Energy 50
60,000 Nifty 50 TRI Nifty Energy TRI 19.22% TRI (%) TRI (%)
50,000

40,000 1 Year 30.61 20.73

30,000
14.72% 3 Years 28.22 17.34
20,000
5 Years 21.09 16.23
10,000
10 Years 17.90 14.57
0
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10

Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Jan-11

Since Inception 19.22 14.72

Past performance and valuation:

• Nifty Energy TRI Index has outperformed the Nifty 50 TRI both on Short & Long-term basis
• However, Nifty Energy Index is trading at a discount relative to Nifty 50 TRI and valuations are reasonable even in absolute terms
despite the outperformance
• Nifty Energy Index Trailing P/E at 15.8x is at a 25% discount to Nifty 50 TRI

Source: MFI Explorer, SBIMF research. Data as on Dec 29, 2023

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 Where
do we see
opportunities
in Energy
as a theme?

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 Natural Gas : Value chain about to turn corner (1/2)

200
Gas consumption (mmcmd)
180
160

176
176

171

167
166

164
160
157
140

149
142

138

137
120
100
80
60
40
20
0

FY21
FY13

FY23
FY15
FY12

FY19

FY20

FY22
FY17

FY18
FY16
FY14

• Gas consumption has declined by 0.6% CAGR over the past decade
• However, we are at an inflection point as policy environment has been very conducive. Additionally, infrastructure across the value
chain has seen significant investment over the past five years. Domestic gas production growth has already begun to inch up since
FY23. Gas import terminals have increased from 30mtpa to 53mtpa

Note: MMCMD – Million Metric Standard Cubic Meters per Day. MTPA – Metric Tons Per Annum. Source: Ministry of Petroleum & Natural Gas.

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 Natural Gas : Value chain about to turn corner (2/2)

Gas grid length (km) Global LNG price is normalising and is expected to
remain soft given potential supply glut
25000 23173 80 100%
21715
19998
20000
16994 60 75%
16250 16150 16324 16368
15340 15808
15000
40 50%
10000

20 25%
5000

0 0%
0 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Asia Spot LNG weekly price (USD/mmbtu) (LHS)
Spot LNG as % of 30 days rolling trailing Brent (RHS)

• National gas grid has grown by 40% over past five year and is expected to further grow by 25% by FY27e. Last mile city gas distribution
network has been growing at a high double digit growth. Execution of infrastructure in the regions awarded in recent bidding rounds can
take population coverage to 95%
• Growth in physical infrastructure along with favorable government policy and favorable global gas price can result in Indian Gas
consumption inching up and benefitting the value chain

Source: Ministry of Petroleum & Natural Gas, Reuters, Bloomberg

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 New Energy: India can attain global leadership (1/2)

India among the cheapest solar power India ranks fifth globally for onshore wind
LCOE producers in the world LCOE, among large geographies
Vietnam 69.7 South Africa 87.0
Japan 67.0 Colombia 55.6
Malaysia 63.0 Australia 55.2
United Kingdom 60.6
Poland 52.5
Mexico 51.6
United States of America 50.9 Netherlands 50.1
Germany 50.4 Germany 48.5
Canada 48.9 United Kingdom 47.0
Australia 46.8 Italy 44.1
Solar $/MWh Canada 43.5
South Africa 44.1 Wind $/MWh
Chile 42.4
Italy 42.2 United States of America 41.3
France 41.2 Argentina 41.2
United Arab Emirates 40.8 France 40.6
India 38.3 5th cheapest Sweden 39.3
India 35.3 5th cheapest
China 37.3 Spain 33.7
Turkey 35.7 China 33.4
Spain 33.3 Brazil 28.7
Chile 32.4 Turkey 21.2

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 0.0 20.0 40.0 60.0 80.0 100.0

• India is already competitive in solar despite huge dependence on China which presently controls *85% plus global share in key element
of solar ecosystem
• India has several other offsetting natural advantages which could get further fortified with development of local value chain
• Additionally, India has trilogy of solar and wind power peaking at different time of the day plus hydro power availability which acts as an
economical and renewable form of battery substitute
Note: LCOE: Levelized Cost of Energy. Source: SBIMF Research BNEF, Bernstein analysis, *Jefferies Research

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 New Energy: India can attain global leadership (2/2)

India has the potential to be one the India's Transmission length to GW of installed capacity
lowest cost hydrogen producers globally (ckm/ GW) is higher than nearly all countries benchmarked

Green Hydrogen Production Cost Estimates ($/kg) Transmission length vs. Installed generation
capacity (ckm/GW)
2.50

2.1 600 US
2.00 2.0 2.0 India 662
1.8 1.8 1.8 1,142
1.6 1.6 1.7
1.6 1.6 500
1.5 1.5
1.50
1.3 1.4 1.4 1.4 1.4 1.4
1.3 1.3
1.2 1.2
1.1 400
1.0
0.9 0.9 1.0 1.0 1.0 1.0

000' ckm
1.00 0.9 0.9 0.9 0.9 0.9
0.7 0.7 0.7 0.8 0.8 0.8 300
0.7
0.6 0.6 0.6 0.6 0.7
0.5 0.6
0.50 200 Japan
France
Turkey 748 537
700 Italy
Indonesia 692
100
0.00 Australia 795 Germany
634 Thailand 210
812
-
-
Vietnam 100 200 300 400 500 600 700 800
451 Spain
415 GW
2030 2050

• Competitively priced renewable power and strong grid feeds into advantage in Green hydrogen
• Headline difference in hydrogen generation cost seems low. However, abundant local demand may result in significantly lower delivered
cost
• Hydrogen is very costly to transport. Thus, major export focused downstream investment to consume hydrogen may also come in India

Source: BNEF, Ministry of Finance, Bernstein analysis

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 Presenting
SBI Energy
Opportunities
Fund

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 Investment Universe – The Energy Value Chain

Oil Value Chain

Upstream (Oil Exploration & Production), Integrated refining and
marketing (Refineries & Marketing), Standalone refining (Refineries &
Marketing), downstream petrochemicals (Chemicals & Petrochemicals
companies) and base oil processors (companies engaging in activities
such exploration, production, distribution, transportation and
processing of traditional & new energy), lubricants, oil field services (Oil
Equipment & Services)
Power Ancillaries
Energy EPC, Power T&D value, Heavy Electrical
Equipment, Energy efficiency plays (manufacturing Gas Value Chain
electrical equipment's for production, transmission Gas transmission (Gas Transmission/Marketing),
& distribution of energy) LNG terminal (LPG/CNG/PNG/LNG Supplier), City
gas distribution (LPG/CNG/PNG/LNG Supplier)

Power Value Chain

Green Energy
Coal producer (Coal), power generation, power
Companies undergoing energy transition, Solar value chain,
transmission, power trading
Wind power value chain, Hydrogen value chain, Battery
value chain (companies making components of new energy),
Bio energy value chain (companies involved bio energy value
chain), alternate fuel (companies making components of new
energy)

The above-mentioned sectors, sub sectors are for illustrative purpose. The same may or may not form part of the index/portfolio at all points in time.

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 Portfolio Construction Strategy : Barbell Strategy

TRADITIONAL ENERGY NEW ENERGY

Usage of fossil fuel can reduce due to focus Multi decade growth as share of
on Net zero. However, core investments renewable power in our energy mix will
may fall faster leading to rise in profitability increase from 22% to 68% by FY50
Portfolio strategy:
Barbell portfolio approach
India's competitiveness in green energy
Stable and conducive policy environment and additional support from government
to result in steady and predictable growth policy will ensure localization of entire
value chain and thus the profit pool
could become sizeable in long term
with mix of traditional energy
Traditional energy business could gain and new energy
global competitiveness in extant business Positive economic and political
due to availability of cheap green energy externality plus global push could ensure
Redeployment of cash flow from traditional steady policy support
energy business into green energy
can further enhance value

An optimal mix of traditional & new energy and power utility companies
helps in reducing return volatility and offer better risk adjusted returns.

Source SBIMF Research, The above is just for illustrative purposes, For complete details on Investment strategy,
please refer Scheme Information Document.

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 SBI Energy Opportunities Fund : Fund Facts

Type of Scheme
Scheme Name An open-ended equity scheme following
SBI Energy Opportunities Fund the energy theme

Investment Objective
The investment objective of the scheme is to provide investors with opportunities for long term capital appreciation by
investing in equity and equity related instruments of companies engaging in activities such as exploration, production,
distribution, transportation and processing of traditional & new energy including but not limited to sectors such as oil &
gas, utilities and power. However, there can be no assurance that the investment objective of the Scheme will be realized.

Plans & Options Application Amount

Regular & Direct Plan. Both plans provide • Minimum Investment Amount: Rs. 5000/- `
two options – Growth Option and Income and in multiples of Re. 1 thereafter;
Distribution cum Capital Withdrawal • Additional Purchase Amount: Rs. 1000/-
(IDCW) Option and in multiples of Re. 1 thereafter

Fund Managers
Benchmark
Mr. Raj Gandhi
Nifty Energy TR Index
Mr. Pradeep Kesavan (overseas securities)

Exit Load
For Ongoing basis: 1% of the applicable NAV - If units purchased or switched in from another scheme of the fund are
redeemed or switched out on or before 1 year from the date of allotment.
NIL - If units purchased or switched in from another scheme of the fund are redeemed or switched out after 1 year from the
date of allotment.

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 Disclaimer

This document is for information purposes only and is not an offer to sell or a solicitation to buy any mutual fund units/securities. The views
expressed herein are based on the basis of internal data, publicly available information & other sources believed to be reliable. Any
calculations made are approximations meant as guidelines only, which need to be confirmed before relying on them. These views alone are
not sufficient and should not be used for the development or implementation of an investment strategy. It should not be construed as
investment advice to any party. All opinions and estimates included here constitute our view as of this date and are subject to change without
notice. Neither SBI Funds Management Limited, SBI Mutual Fund nor any person connected with it, accepts any liability arising from the use
of this information. The recipient of this material should rely on their investigations and take their own professional advice.

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

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