Prudent Corporate Advisory Services Limited · NSE:PRUDENT
Prudent Corporate Advisory Services — DSP BlackRock Investment Managers — Investor Presentation (March 2010)
27 slides from Prudent Corporate Advisory Services's investor presentation, March 2010
Slide 1: Indian Equity Market Presentation March 2010
FOR PROFESSIONAL INTERMEDIARIES DSP BlackRock Investment Managers Indian Equity Market Presentation March 2010
Slide 2: Contents
Contents I. Indian Economy II. Market Snapshot III. Appendices 1
Slide 3: Indian Economy
Indian Economy DSP BLACKROCK INVESTMENT MANAGERS
Slide 4: Strong Relative GDP Growth
Strong Relative GDP Growth India’s GDP growth deceleration was modest* Exports as a percentage of GDP amongst the lowest 1 (%GDP) 15% 120 YoY 10% 100 5% 80 0% 60 -5% 40 -10% 20 India Brazil China Korea Taiw an -15% 0 1QCY06 3QCY06 1QCY07 3QCY07 1QCY08 3QCY08 1QCY09 3QCY09 Sing Malay Thai Taiwan Kore
Slide 5: Resilience in Demand
Resilience in Demand Bank NPLs: Strength of Indian Banks Economic activity is picking up 18.0% 50 (%) 16.0% 40 14.0% 12.0% 30 10.0% 20 8.0% 6.0% 10 4.0% 0 2.0% 0.0% -10 Apr-08 Oct-08 Mar-09 Aug-09 Jan-10 F1997 F1999 F2001 F2003 F2005 F2007 F2009 Gross NPL ratio Net NPL ratio Consumer Durables YoY (%
Slide 6: Drivers of India's Growth
Drivers of India’s Growth • Consumption • Infrastructure • Outsourcing 5
Slide 7: Consumption
CONSUMPTION Source: IIFL Research 6
Slide 8: Consumption: Demographic Advantage
Consumption: Demographic Advantage India has the second largest population in the world, adding one Australia every year Significant demographic advantages • One of the youngest countries in the world with 60% of the population below 30 yrs of age • Large pool of skilled labour • Increasing disposab
Slide 9: Consumption: Rural Economy – Coming of Age
Consumption: Rural Economy – Coming of Age 70% of the population is linked to rural sectors. This segment is seeing an increased spending power due to: • Increase in prices of agricultural produce • Salary hike of government employees • NREGA (National Rural Employment Guarantee Act) • Growth in rur
Slide 10: Hero Honda: Steady Ride to Dominance
Hero Honda: Steady Ride to Dominance • World's single largest two wheeler company Strong and sustainable volume growth • Market cap of approx. USD 7.70 billion (as at Feb 26, Volume -LHS % Gr - RHS 2010) 450 40% • Over 20 million Hero Honda two wheelers on Indian roads, 400 almost as many as the num
Slide 11: Infrastructure
INFRASTRUCTURE Source: Link:http://aabaad.com/yahoo_site_admin/assets/images/17india2650kx5.93205223.jpg 10
Slide 12: Infrastructure
Infrastructure • India has grown at an average of 8% over the last 5 years despite a deficit in physical infrastructure • Presence of a stable government at the centre is expected to provide a big boost to infrastructure activity • The Government of India has announced infrastructure spending of US$
Slide 13: Bharti Airtel: Best-in-class Telecom Provider
Bharti Airtel: Best-in-class Telecom Provider • India’s largest mobile services provider Strong growth in subscriber base (in mn) 100 • Market cap of approx. USD 23.02 billion (as at Feb 26, 90 2010) 80 • Total mobile subscriber base of over 100 mn, accounting 70 for 24% of the total market 60 50 •
Slide 14: Outsourcing
OUTSOURCING Source: BlackRock 13
Slide 15: Outsourcing
Outsourcing It all started with Software Services • 80% of Fortune 500 companies outsource to India • India’s services exports have grown at a CAGR of 33% over the last five years* Momentum is increasing in the non-IT sectors • Merchandise exports have grown at a CAGR of 21% over the last five years
Slide 16: Infosys: Consistent Performer
Infosys: Consistent Performer • India’s second largest Information Technology company Strong revenue growth with over 100,000 professionals 1 Revenue (US$ m) • Market cap of approx. USD 32.38 billion (as at Feb 26, 5000 2010) 4500 4000 • Infosys Technologies was started in 1981 by seven people 3500
Slide 17: Market Snapshot
16 | Market Snapshot DSP BLACKROCK INVESTMENT MANAGERS
Slide 18: Size and Scale
Size and Scale India is the third largest market in Asia ex-Japan Well diversified holdings (BSE 500 Index)1 Market Capitalisation (US$ bn) Public FII 13.1% 14.2% 2,739 ADR/GDR 3,000 MFs 2.6% 2,500 4.0% Other 1,945 2,000 Other dom. foreign 1,500 1,084 inst. 1.8% US$1,269bn 1,000 718 6.7% 580 395 500
Slide 19: Well Diversified Market
Well Diversified Market Consumer Consumer MSCI wt (%) Energy Materials Industrials Pharma Financials IT Telecom Utilities Top-2 discretionary staples China 17.6 6.0 8.5 5.3 4.5 0.2 37.9 5.9 12.2 2.0 55.5 Hong Kong 0.7 0.0 10.6 11.0 0.0 0.0 61.8 1.8 0.4 13.8 72.8 Indonesia 14.1 8.0 4.1 12.3 7.2 0.0 2
Slide 20: Valuation Snapshot
Valuation Snapshot • Market capitalization US$ 1,281 bn • Market capitalization to GDP ratio 120% • Daily turnover* US$ 22.23bn (derivatives US$ 17.1bn) Sensex PE band chart 22000 22.0x 19000 18.0x 16000 13000 13.0x 10000 10.0x 7000 4000 1000 Apr-98 Oct-99 Apr-01 Sep-02 Mar-04 Aug-05 Feb-07 Feb-10 J
Slide 21: Valuation v/s Profitability
Valuation v/s Profitability • Indian corporates have managed capital more efficiently • Consistent earnings growth Return on equity (ROE) trend Earnings growth Nifty EPS - absolute 30.0% 400 350 18% 25.0% 300 10% 9% 1% 20.0% 250 28% 200 9% 15.0% 29% 150 42% 10.0% 18% Nifty trailing RoE Average 100 8
Slide 22: Sensex 5 year Rolling Returns
Sensex 5 year Rolling Returns Median CAGR 17.7% Sensex 5yr rolling returns (absolute) 800% 700% 600% 500% Median grow th 400% 300% 200% 100% 0% -100% Apr-84 Jun-86 Jul-88 Aug-90 Oct-92 Nov-94 Dec-96 Feb-99 Mar-01 Apr-03 May-05 Jul-07 Aug-09 On a 5 year rolling basis, Sensex has delivered a positive
Slide 23: Summary
Summary India’s GDP should grow at 7.0% in the long term • Domestic consumption and government spending on infrastructure will support growth Indian market is well diversified and efficient • This provides good investment opportunities across sectors Long term corporate earnings growth to support eq
Slide 24: Thank You
23 | Thank You DSP BLACKROCK INVESTMENT MANAGERS
Slide 25: Appendices
24 +t Appendices DSP BLACKROCK INVESTMENT MANAGERS
Slide 26: DSP BlackRock - Equities Investment Process
DSP BlackRock - Equities Investment Process Market Liquidity Investable Portfolio Analysis Screening Universe Monitoring Macroeconomic Peer Group Dominant Trends Performance Companies Market Capitalization Interest Rate Management FM Outlook Quality Guidelines Trading Volumes / Liquidity Portfolio E
Slide 27: Disclaimers
Disclaimers Statutory Details: DSP BlackRock Mutual Fund was set up as a Trust and the settlors/sponsors are DSP ADIKO Holdings Pvt. Ltd. & DSP HMK Holdings Pvt. Ltd. (collectively) and BlackRock Inc. (Combined liability restricted to Rs. 1 lakh). Trustee: DSP BlackRock Trustee Company Pvt. Ltd. Inv
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