Hdfc Asset Management Co. Ltd. · NSE:HDFCAMC
Hdfc Asset Management — Investor Presentation (August 2023)
38 slides from Hdfc Asset Management's investor presentation, August 2023
Slide 1: Embrace the Techvolution
1 Embrace the Techvolution Invest in the potential of the future NFO PERIOD: HDFC Technology Fund 25th August to 5th September, 2023 (An open-ended equity scheme investing in Technology & technology related companies) Refer product labelling & riskometer on page 36 Refer disclaimer on page 37
Slide 2: Why invest in HDFC Technology Fund?
Why invest in HDFC Technology Fund? Increasing tech intensity is a secular trend, across markets and industries Indian IT – Consistent market share gainer Outperformed / evolved across tech cycles Talent is India’s biggest moat in tech world Increase in tech spending and offshoring are medium term t
Slide 3: Increasing Tech Intensity
1 Increasing Tech Intensity A secular trend 02 03
Slide 4: Technology - Changing the way we live
Technology - Changing the way we live Before After Before After Banking Payments Bank Branches Digital Banking Cash, Cheque/DD UPI, online transfer, E-Rupee Retail Manufacturing Purchasing physically from stores E-Commerce Manual operations in factories Robotic Manufacturing Capital Markets Educatio
Slide 5: Tech penetration is increasing across markets and industries
Tech penetration is increasing across markets and industries Tech Spending as a % of GDP US Banks - Technology Spends as % of Revenues 5.0% 12% 11% 4.4% 4.5% 10% 4.0% 3.4% 3.5% 8% 7% 3.0% 7% 2.3% 6% 6% 2.5% 5% 2.0% 4% 4% 1.5% 1.1% 1.0% 2% 0.5% 0.0% 0% CY2006 CY2010 CY2014 CY2018 CY2022 Citi J P Morg
Slide 6: Tech companies have gained scale in the economy
Tech companies have gained scale in the economy USA - Tech Market Cap as a % of Total Market Cap Top 10 Companies by Market Capitalization in 2005 2023 30.0% S&P 500 Index 28% Company 1 Technology Technology 25.0% Company 2 Non-Technology Technology Company 3 Non-Technology Technology Company 4 Non-
Slide 7: Indian IT
1 Indian IT A consistent share gainer 02 07
Slide 8: IT services – A fast-growing segment within technology
IT services – A fast-growing segment within technology Worldwide IT Spending CAGR (%) (in USD billion) 2010 2015 2019 2022 2027E 2015-19 2022-27E Software 245 310 477 811 1,524 11% 13% IT Services 801 866 1,040 1,306 2,119 5% 10% Others 2,241 2,211 2,294 2,411 2,750 1% 3% Total 3,287 3,387 3,811 4,5
Slide 9: Indian IT has consistently outgrown global spending
Indian IT has consistently outgrown global spending 40 Indian IT Exports as % of Global IT Services Spending 35 Indian IT exports (% YoY) 16% 15% 30 Global IT Services spending (% YoY) 25 14% 12% 20 10% 15 8% 10 6% 5 4% 0 2% (5) 0% FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY1
Slide 10: Indian IT has evolved stronger through technology cycles
Indian IT has evolved stronger through technology cycles AI, Data and Cloud Cloud / Digital, Automation Did you know? Growth Drivers Remote Infrastructure management Services, BPO# Top 3 large Indian IT Services firms have USD 1 bn+ revenues Offshoring, Application Outsourcing, ERP** Implementation
Slide 11: The Industry is diverse and gives global exposure
The Industry is diverse and gives global exposure Segment-wise Breakup of Growth of Indian IT Industry Geographic Breakup of Indian IT Revenues(%)- FY22 10% 8% 6% 28% 62% Americas Europe 16% Rest of the World 51% USD INR Depreciation favouring Indian IT Revenue Growth 19% 20% 3% 15% 10% 19% 16% 5% 0
Slide 12: Talent
1 Talent India’s key moat in tech world 02 12
Slide 13: India ranks amongst the best in tech talent availability
India ranks amongst the best in tech talent availability in addition to a large talent pool Indian Workforce highly skilled One of the top in terms of AI skills 2nd largest in terms of AI/ML BDA talent 3rd globally, in terms of installed supply penetration pool, globally of Cloud professionals. Coun
Slide 14: Tech talent is scarce globally; Indians key for the ecosystem
Tech talent is scarce globally; Indians key for the ecosystem Tech unemployment rate in the US has historically Indians account for close to three-fourths of H1B been lower than the overall unemployment visas (skilled immigrant visa) granted by the US rate An indicator of high demand US Unemployment
Slide 15: IT has been a success story for India
IT has been a success story for India Indian IT Revenues as a % of India’s GDP has become sizeable over the years – ~7.5% in FY23 Share of Indian IT Revenues as % of GDP 8.0% 7.4% 7.0% 6.0% Indian IT contributes to 53% of India’s 5.0% Services Exports 4.0% 3.0% 2.2% 2.0% 1.0% FY02 FY05 FY08 FY13 FY1
Slide 16: Medium Term Tailwinds
1 Medium Term Tailwinds Increase in tech spends, offshoring 02 16
Slide 17: Tech spending is likely to grow at 2x pace compared to pre-pandemic levels
Tech spending is likely to grow at 2x pace compared to pre-pandemic levels Global IT Services Spending (CAGR %) IT Services Spending - CY22-25 CAGR (%) 12% 25% 10% 21% 10% 20% 8% 15% 15% 14% 6% 10% 5% 10% 4% 5% 2% 0% Total Public IoT Analytics and 0% cloud services Business 2016-19 2022-27E Intellig
Slide 18: Offshoring has increased since the pandemic
Offshoring has increased since the pandemic High demand for skilled tech talent during Indian IT Revenues expected to double by FY30 the pandemic led to increase in offshoring Offshore Employees as a % of Total (%) Indian IT Industry Revenue (in USD billion) Due to the Pandemic 600 79% 500 76% 500 7
Slide 19: Digitalization in India
1 Digitalization in India Long runway for growth 02 19
Slide 20: Digital consumption is increasing across platforms
Digital consumption is increasing across platforms Online shoppers set to double in FY22-25E on increasing Increasing Internet Penetration in India access to internet and higher income levels 120 Online Shoppers (Transacts on online retail platforms) ATUs* (in crore) 99 100 80 80 38 40 60 40 30 17 1
Slide 21: Headroom for growth is strong
Headroom for growth is strong E-Commerce Penetration (%) 50% 43% 40% Indian E-Commerce penetration to 26% 28% 30% double by 2025, but will still be below 20% 15% 10% 7% global peers, providing growth visibility 0% for the long term India US UK South Korea CY22 CY25E Digital Ad Spends as % of Total A
Slide 22: Why Technology now?
i HDFEC BHAROSA APNO KA 7) a 7 Why Technology now?
Slide 23: Healthy fundamentals and superior dividend yield
Healthy fundamentals and superior dividend yield S&P BSE TECk Index has healthier fundamentals Dividend Yield - relative to S&P BSE 100 Index S&P BSE TECk Index vs S&P BSE 500 Index 70% Key Financial Parameters - 10 year CAGR / Average 3 63% 60% 2.5 50% 2 40% 1.5 30% 24% 26% 1 20% 20% 14% 11% 9% 11%
Slide 24: Valuations are reasonable
Valuations are reasonable S&P BSE TECk Index – 1-year Forward P/E (x) Premium / Discount of S&P BSE TECk Index to S&P BSE 500 40 70% 35 60% 50% 30 40% 30% 25 20% 20 10% 0% 15 -10% 10 -20% Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22 Jul-23 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17
Slide 25: Derating since 2022 due to concerns of a global slowdown
Derating since 2022 due to concerns of a global slowdown IT spending is correlated to Global economic growth Global Economic growth is expected to slow down in 2023, relative to 2022 GDP vs IT Services Spending (% Y-o-Y) Real GDP Growth (% Y-o-Y) 20 4.0% 15 10 3.0% 5 0 2.0% -5 -10 1.0% -15 2003 2004
Slide 26: Introducing HDFC Technology Fund
1 Introducing HDFC Technology Fund 02 26
Slide 27: Investment strategy
Investment strategy Core of the portfolio (> 80%) will be invested in stocks in technology & technology related Core Portfolio companies within the basic industries like IT services, software, consulting, and outsourcing companies etc IT products and hardware including computers, electronic componen
Slide 28: Universe fundamentals
Universe fundamentals By Sector Market Capitalization (in INR crore) Count of Companies Information Technology 30,54,519 (72%) 61 Telecommunication 7,32,227 (17%) 17 Consumer Services 2,01,819 (5%) 7 Media, Entertainment & Publication 1,17,804 (3%) 23 Financial Services 88,510 (2%) 4 Other Services
Slide 29: S&P BSE TECk TRI and S&P BSE Sensex – Performance since inception
S&P BSE TECk TRI and S&P BSE Sensex – Performance since inception Value of INR 1 lakh invested on August 01, 2006^ 9,000 S&P BSE TECk TRI: INR 6.8 lakh 8,000 S&P BSE Sensex: INR 6.2 lakh 7,000 6,000 CAGR* as on July 31, 2023 5,000 Return Periods 4,000 S&P BSE Sensex S&P BSE TECk TRI 3,000 2,000 1 ye
Slide 30: Benchmark highlights
Benchmark highlights Particulars S&P BSE TECk Index S&P BSE 500 Index Price to Earnings (Trailing) 30.9 25.2 Price to Earnings (Forward) 26.3 21.0 Price to Book (x) 7.0 3.4 Profit Margins (%) 11.5% 10.9% Dividend Yield (%) 2.1% 1.3% Return on Equity (%) 24% 13% FCF yield (%) 4.0% 2.6% Weighted Avera
Slide 31: Risks and mitigants
Risks and mitigants Risks Mitigants Dependence on global economic Value proposition of tech is evolving from costs / efficiency to revenue growth / macro variables generation, making tech spends more sticky across economic cycles Sharp currency moves impact near-term profitability. In the long term,
Slide 32: About Benchmark and its constituents
About Benchmark and its constituents Company Index Weight (%) Sub-Sectors of S&P Weight (%) Infosys Ltd 31.5% BSE TECk Index Tata Consultancy Services Ltd 22.5% Information Technology 79.0% Bharti Airtel Ltd 14.0% HCL Technologies Ltd 7.6% Telecommunication 18.1% Tech Mahindra Ltd 4.5% Wipro Ltd 3.8
Slide 33: Know your Fund Manager
Know your Fund Manager 1 Balakumar B Fund Manager and Senior Equity Analyst Balakumar has over 12 years of experience in equity research, consulting, application development He joined HDFC Asset Management Company Ltd in September 2021. Prior to that, has worked with Sanford C. Bernstein (India) Pri
Slide 34: Fund facts
Fund facts 1 Particulars HDFC Technology Fund Type of Scheme An open-ended equity scheme investing in Technology & technology related companies To provide long-term capital appreciation by investing predominantly in equity and equity related securities of Technology & Investment Objective Technology
Slide 35: Asset allocation
Asset allocation 1 Under normal circumstances, the asset allocation (% of Net Assets) of the Scheme's portfolio will be as follows: Minimum Allocation Maximum Allocation Type of Instruments Risk Profile (% of Net Assets) (% of Net Assets) Equity and Equity related instruments of Technology & technol
Slide 36: Product Labelling and Riskometer
Product Labelling and Riskometer 1 HDFC Technology Fund (An open-ended equity scheme Riskometer# investing in Technology & technology related companies) is suitable for investors who are seeking*: • To generate long-term capital appreciation • Investment predominantly in equity & equity related inst
Slide 37: Disclaimer
Disclaimer 1 The presentation dated August 22, 2023 has been prepared by HDFC Asset Management Company Limited (HDFC AMC) based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you mu
Slide 38: Thank you!
Thank you!
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