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Motilal Oswal MOSt Focused Midcap 30 Fund
(MOSt Focused Midcap 30)
An open-ended equity scheme
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Product labeling
This product is suitable for investors who are seeking*
Long-term capital growth
Investment in equity and equity related instruments in a maximum of 30 quality mid-cap companies
having long-term competitive advantages and potential for growth
High risk (BROWN)
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Note: Risk is represented as:
(YELLOW) investors
(BROWN) investors
(BLUE) investors understand that understand that their
understand that their
their principal will be at low risk principal will be at medium
principal will be at high risk
risk
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Our investment philosophy – ‘Buy Right: Sit Tight’
A philosophy distilled from over 25 years of wealth creation expertise of
Motilal Oswal Securities Ltd (Our Sponsor)
Buy Right Stock Characteristics Sit Tight Approach
QGLP
Buy and Hold: We are strictly buy and hold
‘Q’uality : Quality of business and investors and believe that picking the right
management business needs skill and holding onto these
‘G’rowth : Growth in earnings and sustained business to enable our investors to benefit
RoE from the entire growth cycle, needs even
‘L’ongevity : Longevity of the competitive more skill.
advantage /economic moat of the business
‘P’rice : Buying a good business for a fair Focus: Our portfolios are high conviction
price rather than buying a fair business for a portfolios with 20 to 25 stocks being our ideal
good price. number. We believe in adequate
diversification but over-diversification results
in diluting returns for our investors and
adding market risk.
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MOSt Focused Midcap 30 targets an unique and relatively untapped opportunity
No. of Companies Market Cap
Extensively researched
148 Moderate Growth
>110 billion
High institutional holding
Under-researched , Under-owned
Sweet spot of High growth
602 6 billion-110 billion
the equity Demonstrated management history
market
<6 billion Many fail at pre-emergence stage
2,254
Business models not established
The sweet spot of the Indian markets is replete with investment ideas in the midcap space
Midcaps offer excellent balance between strong growth and a demonstrable history of
management success
Source : Capitaline and Internal Analysis, Data as on 31st December 2014
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MOSt Focused Midcap 30 aims to capture ‘Emergence to Endurance’ winners
Organic growth often
flatten
Enters the Virtuous
growth cycle
Source: 18th Motilal Oswal Wealth Creation Study (WCS)
Motilal Oswal 18th Wealth Creation Study (WCS) maps the journey of Emergence* to Endurance
The study highlights how large investment gains were made by identifying players entering their
virtuous growth cycle, a majority of such companies being midcaps
* Emergence: A company is said to have emerged when it crosses the threshold ROE of 15% for the first time in its history
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Successful ‘Emergence to Endurance’ leads to disproportionate wealth creation
Market Capitalization on Current Market PAT CAGR
inclusion in CNX Midcap Index Capitalization as part of (FY06-13)(%)
NIFTY
July’05
Axis Bank 6.0 bn 92x 552 bn 40
July’05 11x
Kotak Bank 50 bn
563 bn 26
July’05
Lupin 14x 411 bn 33
30 bn
July’05
Asian Paints 11x 475 bn 26
42 bn
July’05 11x
IndusInd Bank 21 bn
225 bn 60
Companies which have successfully transitioned from Midcap to Large cap have created
disproportionate wealth (average MCap. CAGR of 52%, over FY05-13 for above companies)
Outstanding earnings growth tends to be a key feature in this journey of wealth creation
(average PAT CAGR of 37%, over FY05-13 for above companies)
Source : Bloomberg & Internal Analysis, 17th January 2014.
The Stocks mentioned above are used to explain the concept and is for illustration purpose only and should not used for development or implementation of an
investment strategy. It should not be construed as investment advice to any party. The stocks may or may not be part of our portfolio/strategy/ schemes. Past
performance may or may not be sustained in future 7
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‘Emergence to Endurance’ winners are products of large or expanding Industry Profit Pools
If an industry has a high profit pool, a company with the right value proposition/strategy
can claim a rising share of this pool and emerge a Value Creator over time.
Source: 19th Motilal Oswal Wealth Creation Study (WCS) Data for FY2015.
The sector mentioned herein are for general and comparison purpose only and not a complete disclosure of every material fact. It
should not be construed as investment advice to any party. Past performance may or may not be sustained in future.
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Midcaps: High on Growth and Speed of Wealth Creation
Over the years, majority of the fastest wealth creators, in ‘Motilal Oswal Wealth Creation Study (WCS)’ have been Midcaps
Motilal Oswal Wealth Creation Study (over 2011-2013) Fastest Wealth Creators
Midcaps have typically grown higher than large caps over 5 and 7-year periods
5-Yr CAGR(%) 7- Yr CAGR(%)
NIFTY INDEX MIDCAP INDEX NIFTY INDEX MIDCAP INDEX
Revenue 15.0 19.0 15.8 20.9
EBITDA 11.4 20.4 14.1 20.0
EPS 6.4 8.6 10.1 16.1
Dividend 12.0 11.2 10.3 13.8
Source : Bloomberg & Internal Analysis,19thMotilal Oswal Wealth Creation Study, Data as on 31st December 2014 Calendar Years
The Stocks mentioned above are used to explain the concept and is for illustration purpose only and should not used for development or
implementation of an investment strategy. It should not be construed as investment advice to any party. The stocks may or may not be part of our
portfolio/strategy/ schemes. Past performance may or may not be sustained in future
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Midcaps: Under-Researched & Under-Owned
Under owned: FII and MF ownership levels in
Under Researched: Fewer analysts cover midcap
midcaps are significantly lower than those in
companies
large caps
Source: Capitaline and MOAMC internal analysis, Data as on 30 th September 2014
Source: Bloomberg & MOAMC Internal Analysis, Data as on 31th December 2014
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Midcaps: Geared to the Indian Economy
Only 20% revenues of all companies and 30% revenues of non-
Midcaps financial sector companies are international or influenced by
international factors
38% revenues of all companies and 50% revenues of
Large Caps non-financial sector companies are international or influenced by
international factors
Source : IISL, Bloomberg & MOAMC Internal Analysis, Data as on 31st December 2014
The Stocks mentioned above are used to explain the concept and is for illustration purpose only and should not used for development or implementation of an
investment strategy. It should not be construed as investment advice to any party. The stocks may or may not be part of our portfolio/strategy/ schemes. Past
performance may or may not be sustained in future
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Midcaps trade at attractive valuations on a risk-adjusted basis
In reality, midcaps have delivered better
risk-adjusted returns v/s large caps
Source : Bloomberg & Internal Analysis, Data as on 31st December 2014, Note: Past performance may or may not be sustained in future
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Motilal Oswal MOSt Focused Midcap 30 Fund
(MOSt Focused Midcap 30)
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MOSt Focused Midcap 30 – Key Features
Quality, Growth,
Focused, High Conviction
Longevity and Price ‘Buy and Hold’ Strategy
Portfolio Construct
(QGLP)
• Will invest in • Long term growth over • Maximum 30 stocks
companies with: economic cycles • Bottom-up stock
• Enduring economic • Enables compounding picking
moats that ensure of growth • Optimal Diversification
quality and longevity • Low Churn: Cost
• High growth potential Efficient
• Buying a good business • Portfolio churn driven
at a fair price. by fundamentals over
valuations
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Why Quality?
Quality companies are those which have enduring economic moats (EMC’s)
Payoff profile of EMCs, Non-EMCs and Sensex
25%, 9.3x
1000
EMCs Non-EMCs Sensex
(All rebased to 100 in March 2002)
750
33% CAGR, 5.5x 18%, 5.0x
500
250 20% CAGR, 3x 12%, 3.1x
0
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
Source: 17th Motilal Oswal Wealth Creation Study (WCS) Data upto FY2012
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Why “Buy and Hold”?
Improved Quality companies held for longer duration
23% Nifty
20.65%
20% 19.03%
C 17%
A 14.44%
G 14% 12.94%
R 11.29%
11% 10.38%
8%
5%
Index < 3 yrs < 5 Yrs < 7 yrs 10 - 18 yrs Index Always
Source : MOAMC internal analysis, Data as on December 31, 2014; Period - January 1, 2001 to December 31, 2014
Note: Past performance may or may not be sustained in future . The above graph is only for illustration purpose and should not be
construed as recommendation.
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Focus: Seeking Optimal Diversification
Diversifiable
Risk Non-Diversifiable
Systemic Risk
Source: An Introduction to Risk and Return Concepts and Evidence by Franco Modigliani and Gerald A. Pogue
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Investment Process – Stock Screening
Top down analysis market views, thematic drivers, winner categories and categories winners
Investment Quantitative
Research Fund Portfolio
Universe Screening
• Greater than • Earnings • ‘360 degree • High
min. market growth, ROA view’ of Conviction
cap of CNX and ROE etc. company Ideas
Midcap Index • Identify • Improved risk-
competitive adjusted
advantages, return
barriers to characteristics
entry
• Nature and
sustainability
of catalysts
Eg. ~500 Stocks 100-150 Stocks 75-100 Stocks Max 30 Stocks
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Investment Process (contd…) – Stock Evaluation
A business Favorable Able and
Margin of
we long term trustworthy
Safety
understand economics management
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Portfolio Construct
For Whom
Investors who like to invest with a Long-term wealth creation view and believe that wealth is created by ‘BUY
RIGHT SIT TIGHT i.e. buying quality companies and riding their growth cycle .
Investment Horizon
Medium to Long Term
Number of Stocks
Maximum 30 Stocks
Allocation
•Minimum 65%:between Top 101st and 200th listed companies by market capitalization
•Maximum 25%: beyond the Top 200th listed company and with market capitalization not lower than INR 600 cr.
•Maximum 10% : Debt, Money Market Instruments, G-Sec, Bonds, Cash and cash equivalents, etc.
* subject to maximum of 30 companies
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Fund Details
• Type of Scheme: An open ended equity • Options (Under each plan): Dividend (Payout
scheme and Reinvestment) and Growth
• Investment Objective: The investment • Minimum Application Amount : Rs. 5,000 /-
objective of the Scheme is to achieve long term and in multiples of Re. 1/- thereafter.
capital appreciation by investing in a maximum of • Additional Application Amount: Rs. 1,000/-
30 quality mid-cap companies having long-term and in multiples of Re. 1/- thereafter.
competitive advantages and potential for growth. • Systematic Investment Plan (SIP):Minimum
However, there can be no assurance or guarantee installment amount - Rs. 1,000/-(weekly /
that the investment objective of the Scheme fortnightly/monthly) and Rs. 2,000/- (quarterly)
would be achieved. and in multiples of Re. 1/- thereafter with
• Benchmark: CNX Midcap Index minimum of 6 installments for weekly
• Entry Load: Nil /fortnightly/monthly frequency and minimum 3
• Exit Load: Nil installments for quarterly frequency.
• Plans: Regular Plan and Direct Plan The dates for Auto Debit Facility shall be on the
1st, 7th,14th, 21st or 28th of every month.
•Minimum Redemption Amount: Rs. 1,000/- and
in multiples of Re. 1/- thereafter.
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Sector allocations
Industry Allocation
Finance 19.50%
Pharmaceuticals 12.14%
Transportation 7.96%
Auto Ancillaries 7.93%
• Finance, Pharmaceuticals, and
Consumer Non Durables 7.66%
Transportation are the top 3 sector
Auto 7.50% exposures
Textile Products 7.47%
Consumer Durables 6.37% • Portfolio is well represented across
Petroleum Products 4.55% a wide range of sectors
Software 4.38%
Industrial Products 4.13%
Construction Project 3.46%
Banks 3.08%
Industrial Capital Goods 2.52%
Cash & Equivalent 1.33%
Data as on 31st December 2014
Industry classification as recommended by AMFI
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Portfolio holdings
Top Holdings
% to Net
Name of Instrument
Assets
Ajanta Pharma Limited 8.25
Gujarat Pipavav Port Limited 7.96
•TOP 5 Stocks % to NAV=39.11%
Amara Raja Batteries Limited 7.93 • TOP 10 Stocks % to NAV =64.08%
TVS Motor Company Limited 7.50 •Currently we Hold 20 Stocks
Page Industries Limited 7.47
Bajaj Finance Limited 7.09
CRISIL Limited 4.58
H P C Limited 4.55
Mindtree Limited 4.38
P & G Hygiene and Health Care Limited 4.38
Data as on 31st December 2014
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Fund Manager Details
Mr. Taher Badshah Senior Vice-President & Head of Equities
Taher Badshah is the Fund Manager of this Scheme and is responsible for managing investments in equity and
equity related instruments of the Scheme. Mr. Badshah is a B.E. in Electronics from the University of Mumbai and
has followed it up with a Masters in Management Studies (Finance) from the SP Jain Institute of Management,
Mumbai.
Taher Badshah brings with him 19 years of rich experience in fund management and investment research. He
started his career as an automobiles analyst with Motilal Oswal and has been well-regarded in the industry for his
work in this sector. He has also worked in different capacities with organizations like Kotak Investment Advisors,
Alliance Capital Asset Management Pvt. Ltd., Kotak Institutional Equities Ltd., and Prudential ICICI Asset
Management Company Ltd. He has spent the first 10 years of his career doing sell-side equity research and the
past 9 years in active fund management. He is also Fund Manager of Motilal Oswal MOSt Focused Midcap 30 Fund.
Mr. Abhiroop Mukherjee (For Debt Component)
He is [Link] (H), MBA with 4 years of experience in Trading Fixed Income Securities viz. G-sec, T-bills, Corporate
Bonds CP, CD etc. He has earlier worked with PNB GILTS LTD. as a WDM Dealer for the period 2007-2011
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Disclaimer
This presentation has been prepared and issued on the basis of internal data, publicly available information and other
sources believed to be reliable. The information contained in this document is for general purposes only and not a
complete disclosure of every material fact and terms and conditions and features of Motilal Oswal MOSt Focused
Midcap 30 Fund (MOSt Focused Midcap 30).The information / data herein alone is not sufficient and shouldn’t be used
for the development or implementation of an investment strategy. It should not be construed as investment advice to any
party. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on date and are subject
to change without notice. While utmost care has been exercised while preparing this document, Motilal Oswal Asset
Management Company Limited does not warrant the completeness or accuracy of the information and disclaims all
liabilities, losses and damages arising out of the use of this information. The statements contained herein may include
statements of future expectations and other forward-looking statements that are based on our current views and
assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for
any decision taken on the basis of this presentation. No part of this document may be duplicated in whole or in part in any
form and/or redistributed without prior written consent of the Motilal Oswal Mutual Fund/Motilal Oswal Asset
Management Company Limited. Readers should before investing in the Scheme make their own investigation and seek
appropriate professional advice. Please read Scheme Information Document (SID) and Statement of Additional
Information (SAI) carefully before investing .
Statutory Details: Constitution: Motilal Oswal Mutual Fund has been set up as a trust under the Indian Trust Act, 1882.
Trustee: Motilal Oswal Trustee Company Limited. Investment Manager: Motilal Oswal Asset Management Company Ltd.
Sponsor: Motilal Oswal Securities Ltd.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Past performance of the Sponsor/ AMC/ Mutual Fund and its affiliates does not indicate the future
performance of the scheme and may not provide a basis of comparison with other investments.
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