ICICI Prudential PMS Flexi-Cap Strategy

"Investing is all about the art of effective risk management"

Market Outlook:

Equity Markets in Anticipation of a Peak-out in Covid-19 Cases-
Indian Equity Markets remain volatile as Covid-19 cases rise. However, a focus on vaccine availability and flattening of the Covid-19 curve, may help revive market sentiments in the coming months.

Portfolio Update:

Overweight on Auto Ancillaries, Underweight on Financials-
The Strategy remains overweight on Auto Ancillary companies and underweight on Banks and Finance, as compared to its benchmark S&P BSE 200, as on April 30, 2021.

PORTFOLIO INSIGHTS:

INVESTMENT APPROACH

• Investment Objective: ICICI Prudential PMS Flexicap Strategy (the “Strategy”) is a diversified equity strategy that endeavours to achieve long term capital appreciation and generate returns by investing across market capitalisations.

• Basis for Selection of Securities: The Portfolio Manager selects equity and equity related securities of companies from the listed universe space across market capitalisation which fit into the investment strategy of the portfolio. The Portfolio Manager uses a blend of top-down and bottom-up approach for stock selection. The top-down approach helps to identify key macro-economic and sectoral themes for stock selection. The bottom-up approach helps to identify companies that are believed to be attractive investment opportunities in various industries and market conditions.

• Benchmark: S&P BSE 200 index

• Indicative Investment Horizon: 4 years and above

STOCKS ADDED:

Tata Steel Ltd.

• Export opportunities for the Company could offset pandemic-driven challenges to near-term domestic demand. Valuations headwinds such as high leverage have moderated with realization improving and management targeting additional $1bn deleveraging per year.

• Regional steel prices continue to hit new highs in 4QFY21 led by consistent sequential demand recovery across regions, environment-led supply restrictions in China and reduction in export rebate by China. Coking coal prices were flat whereas iron ore prices shot up 20% qoq due to weaker supply by Brazil and Australia.

• The Company’s EBITDA and PAT in Q4FY21 were better than estimates, as higher prices and better volume mix led to better-than-expected realisations.

TOP 10 STOCK HOLDING IN THE PORTFOLIO:

1 ICICI Bank Ltd- Weightage (%): 6.69

CMP: INR 601, MARKET CAP: INR 415,418 Cr

• The Bank is the second largest private sector bank in terms of loan book size, having a pan-India presence.

• In Q4FY21, the Bank’s performance was marked by broad-based sequential growth, a pick-up in domestic corporate loan growth, and sequential NIM expansion aided by a lower cost of funds.

Axis Bank Ltd- Weightage (%): 4.86

CMP: INR 715, MARKET CAP: INR 219,035 Cr

• The Bank commands a good asset-quality position, with the bank having front-loaded provision which translates into an improved balance sheet and provides impetus for growth.

• The Bank’s Q4FY21 PAT of INR 26.8bn improved on the back of higher treasury income and lower credit cost.

Motherson Sumi Systems Ltd- Weightage (%): 4.47

CMP: INR 215, MARKET CAP: INR 67,799 Cr

• The Company is a global supplier of auto components, modules and systems.

• The Company has significant exposure to European Union and US markets.

HDFC Bank Ltd- Weightage (%): 4.39

CMP: INR 1,412, MARKET CAP: INR 778,906 Cr

• The Bank has developed a core of retail, salaried customer base, which it monitors closely for business growth as well as effective risk management.

Bharti Airtel Ltd- Weightage (%): 4.30

CMP: INR 537, MARKET CAP: INR 294,785 Cr

• The Company is a potential beneficiary of the Indian wireless market consolidation.

ACC Ltd- Weightage(%): 4.19

CMP: INR 1,883, MARKET CAP: INR 35,356 Cr

• The Company with 33 million ton per annum (mtpa) cement capacity is a pan India player.

Sun Pharmaceutical Industries Limited- Weightage (%): 4.06

CMP: INR 654, MARKET CAP: INR 157,021 Cr

• One of the leading pharmaceutical companies that is present across a broad spectrum of chronic and acute therapies.

Marico Ltd- Weightage (%): 3.99

CMP: INR 411, MARKET CAP: INR 53,133 Cr

• The Company’s performance mirrors a partial revival of consumer sentiment over the past few months.

SBI Life Insurance Company Limited- Weightage (%): 3.78

CMP: INR 929, MARKET CAP: INR 92,877 Cr

• The Company is one of India’s largest private life insurers with an Individual Weighted Retail Premium (WRP) market share of 13.3% in FY20.

Reliance Industries Ltd- Weightage (%): 3.71

CMP: INR 1,995, MARKET CAP: INR 1,264,588 Cr

• The Company announced acquisition of spectrum for US$7.7bn, increasing its owned spectrum footprint by 55%.

GLOSSARY OF ABBREVIATIONS