Model Portfolio update - ICICI Direct

1 Model Portfolio update March 16, 2018. Latest Model Portfolio Deal Team At Your Service Large cap Midcap Name of the company Weightage(%). Name of the company Weightage(%). Auto Auto Tata Motor DVR Bharat Forge Maruti BFSI EICHER Motors Bajaj Finserve Mahindra & Mahindra (M&M) J&K Bank BFSI Indian Bank HDFC Bank Capital Goods Axis Bank Bharat Electronics HDFC Kalpataru P ow er trans mis s ion 6. 0. Bajaj Finance Cement SBI Ramco Cement Capital Goods Consumer L &T Symphony Cement Kansai Nerolac UltraTech Cement Pidilite FMCG/Consumer Tata Chemicals Dabur Bata Marico Metals ITC Graphite India Nestle Infrastructure IT NBCC TCS Logistics Metals Container Corporation of India Hindustan Zinc Textile Oil and Gas Arvind GAIL Ltd. Total Total Exclusion Zee Entertainment, Asian Paints and reduced weight in Tata Exclusion Supreme Industries Motors DVR Inclusion Kalpataru Power Transmission Inclusion ITC and increased weight in Eicher, Maruti and L&T.

2 Source: Bloomberg, Research *Diversified Portfolio - Combination of 70% large cap and 30% midcap Portfolio Outperformance Deal Team Atcontinues across all portfolios . Your Service Our indicative large cap equity Model Portfolio has continued to deliver an We continue to maintain our high allocation towards the BFSI space with impressive return (inclusive of dividends) of since its inception total weightage of 37% in the large cap Portfolio and 20% in midcap (June 21, 2011) vis- -vis the index return of during the same Portfolio . Apart from this, we continue to remain positive on consumption period, an outperformance of 19%. This validates our thesis of selecting theme with allocation of 19% and 30% in large cap and midcap Portfolio , companies with sound business fundamentals that form the core theme of respectively our Portfolio .

3 Our midcap Portfolio has outperformed the benchmark by Over the last quarter, companies continue to witness pressure on gross (since June 2011), posting returns of 350%. margins on account of a rise in commodity prices, which remains low in Our consistent outperformance demonstrates our superior stock picking our Portfolio pecking order. Our preferred picks are companies with ability over these years aligned to our view of favourable risk-reward, higher capacity utilisation along with improved operating leverage good franchisee vs. reward-at-any-risk businesses. Some key performers A revival in the capex cycle coupled with a lower interest rate scenario of our Portfolio are Bajaj Finance, HDFC Bank and HDFC in the large cap would benefit the BFSI and construction space (SBI, UltraTech, L&T, HDFC. Portfolio while Natco Pharma, Kansai Nerolac and Bajaj Finserv have and HDFC Bank).

4 Delivered stupendous returns in the midcap Portfolio . We continue to advocate the SIP mode of investment as the preferred mode of deployment given the rich valuations that some pockets of the market House view on Index have reached. We highlight that the SIP return of our Portfolio has We maintain our index targets (Sensex at 37,600 & Nifty at 11,725) with consistently outperformed indices. This affirms our belief in the staggered revised Sensex earnings, implying ~17x P/E on FY20E EPS, which is in and systematic approach of investment amid market volatility tandem with the long period average. The earnings growth at the index Quarterly results are encouraging thereby depicting upbeat domestic level will be led by the index heavy (~40% weight) banking & NBFC space economic sentiments (also depicted by November-December 2017 IIP primarily tracking bottoming of asset quality pressure and resolution of numbers) thereby reinforcing our view of a smart earnings recovery being big ticket stressed assets through NCLT mechanism.

5 In the consumer under way. Sensex companies (ex-banks) posted a robust Q3FY18 space, the earnings growth will be led by the auto space performance partly due to the low base due to demonetisation in base quarter Q3FY17 and adapting of trading channel to the new GST Strategy 2018 - Sensex & Nifty Target regime. On the sectoral front, in Q3FY18, the auto space continued the 2400 positive momentum with overall 16% volume growth on a YoY basis. The 2200 key surprise was upbeat M&HCV sales (up 37% YoY) 2000. 1800. Given the outperformance, we have increased the allocation to the auto 1600 sector by 100 bps to 17% (vs. earlier 16%). The Portfolio ideology 1400 remains receptive to newer opportunities available in the market. (|) 1200. Subsequently, we have made several changes to the Portfolio . The new 1000.

6 800 additions in our large cap Portfolio is ITC. Moreover, in addition to the 600 auto sector, we have increased allocated weights in L&T. In our midcap 400. Portfolio , we have added Kalpataru Power. Considering the near term 200 1480 1869 2190. challenges in the business profile, we have reduced our weightage in Tata 0 Motors. We have exited Zee Entertainment from the large cap Portfolio . FY17 FY18E FY19E FY20E. Moreover, given the strengthening crude prices we have also excluded Sensex EPS Growth (%). Supreme Industries Performance Deal Team soAtfar* Service Your Portfolio performance since inception Portfolio performance since last update (August 2017). 18. 400 16. 14. 300 12. 10 200 %. 8. %. 6. 100. 4. 2. 0. 0. Large Cap Midcap Diversified Large Cap Midcap Diversified Portfolio Benchmark Portfolio Benchmark The large cap equity Model Portfolio continued its outperformance vis- - Since the last update (August 2017), our large cap Portfolio has slightly vis the index with return since its inception (June 21, 2011) vis- - outperformed the benchmark index performance generating a return of vis index return of in the same period.

7 Our sustained preference for 5% compared to benchmark return of The index outperformance high quality names has aided this outperformance on a consistent basis. was mainly on the back of performance in Gail and Maruti. Our large cap We continue to be rewarded for our meticulous approach towards stock Portfolio was impacted by the underperformance of Tata Motors and selection while we endeavour to emulate the broader index Eicher Motors On the other hand, given the astute selection in the midcap Portfolio , the Our conservative stock selection in the midcap Portfolio continues to outperformance in the same continues, with a return of compared exhibit strong outperformance vs. the broader indices. The Portfolio to the midcap index return of outperformed with a return of compared to index return of Given the overall outperformance in both (large & midcap) portfolios, the Strong performance in Graphite India and Symphony resulted in the diversified Portfolio (combination of 70/30 ratio) has outperformed its outperformance.

8 However, the Portfolio performance was impacted by benchmark indices J&K Bank and Bharat Electronics Source: Bloomberg, Research Top Dealmovers*. Team soAtfar . Your Service Large cap Midcap Diversified 400 Gainers Gainers 500 Gainers 300 350. 250 400 300. 200 250. 300. (%). 200. (%). (%). 150. 200 150. 100. 100. 100. 50 50. 0 0 0. Bajaj HDFC Bank HDFC TCS Axis Bank Natco Kansai Bajaj Ramco IndusInd Natco Kansai Bajaj HDFC Bank Bajaj Finance Pharma* Nerolac* Finserve* Cements Bank Pharma* Nerolac* Finance Finserve*. Large cap Midcap Diversified Draggers Draggers Draggers 0 0 0. -5. -5. -10 -8. -10. -15. -15. -20 -16. (%). -20. -25. (%). (%). -30 -25. Castrol India -24. CARE. Indigo Exide Industries Ltd United Spirits Aurobindo Pharma Coal India Bharti Airtel Biocon Tata Steel -32. -40. Castrol Exide CARE Coal India Biocon India Industries Ltd Source: Bloomberg, Research , *Starred stocks have been included in the Portfolio since the last rejig in July 2012/May, August ,December 2013/ April, June, December 2014/ May 2015/July 2015/October 2015.

9 Rest all are since inception in June 2011. Performance*. Deal Team so At far in SIP. Your mode . Service 16,000,000. 24,219,262. 14,000,000. 8,300,000. 8,300,000. 8,300,000. 12,000,000. 10,000,000. 13,388,398. 13,052,600. 12,514,565. 8,000,000. 11,951,854. 11,768,760. | 6,000,000. 4,000,000. 2,000,000. 0. Largecap Midcap Divesified Investment Value of Investment in Portfolio Value if invested in Benchmark Systematic investments at regular intervals in all our three portfolios have outperformed their respective benchmarks, acting as a perfect shield to the volatility that the market encountered last year Assuming | 1,00,000 invested as SIP at the end of every month Start date of SIP is June 30, 2011. Source: Bloomberg, Research What's in, what's Deal Team out? Service At Your What's in? Name Portfolio Weight ITC Largecap 6%.

10 L&T Largecap Increased from 4% to 6%. Maruti Largecap Increased from 5% to 6%. Eicher Motors Largecap Increased from 3% to 4%. Kalpataru Power Midcap 6%. What's out ? Name Portfolio Weight Zee Entertainment Largecap 4%. Asian Paints Largecap 5%. Tata Motors DVR Largecap Reduced from 4% to 3%. Supreme Industries Midcap 6%. Source: Research The Dealstory Teamof the stocks . At Your Service Kalpataru Power (KALPOW) ITC (ITC). Kalpataru Power is a leading power T&D EPC player with well diversified ITC is a leading player in the Indian cigarettes industry with a market operations in both domestic and international markets. The company has share of over 80%. Apart from cigarettes, it has a diversified presence in also emerged as a leading EPC player in the railways and oil & gas the hotels, agri, paperboards & packaging and FMCG industry.