Uti Asset Management Co. Ltd. · NSE:UTIAMC
Uti Asset Management — Investor Presentation (December 2020)
37 slides from Uti Asset Management's investor presentation, December 2020
Slide 1: Grow with tomorrow's leaders. UTI Small Cap Fund
Grow with tomorrow's leaders. UTI Small Cap Fund (Small Cap Fund - An open ended equity scheme predominantly investing in small cap stocks) ‡ This product is suitable for investors who are seeking*: Risk-o-meter • Long term capital appreciation • Investment predominantly in equity and equity related
Slide 2: Presentation flow
Presentation flow Why Small Caps? ― Diverse opportunities across sectors ― Ability to invest in niches ― Under-researched and under-owned Risks of investing in Small Caps ― Business and promoter risks ― High volatility, lower liquidity and high impact cost How to mitigate the risks ― Sound ris
Slide 3: Diverse opportunities across sectors
Diverse opportunities across sectors Indices Sector Weights Nifty Smallcap 250 Nifty Midcap 150 Nifty 100 Overweight Sectors Underweight Sectors 35 33 30 25 % Sectoral allocation 22 20 16 15 14 13 12 10 10 10 10 8 8 8 8 7 5 4 5 5 3 3 3 3 3 2 2 2 0 1 0 1 1 0 Industrial Pharma Services Chemicals Const
Slide 4: Ability to invest in niches
Ability to invest in niches New and emerging business models often emerge in small cap space Britannia Industries Heritage Foods Market Cap (Oct-20) Market Cap (Oct-20) ` 1,400 Crores ` 83,600 Crores Revenue Break-up (FY20E) Revenue Break-up (FY20E) Dairy, 2.6% Vet Care, 3.7% Others, 0.4% Others, 0.
Slide 5: Wealth creation from investing in niches
Wealth creation from investing in niches Leading Player in Chemicals Industry Leading QSR Player Business built on end-to-end partnerships with global One of the largest food chain company in India with innovators based on reliability, trust and respect for IP over 1,350 restaurants across 288 c
Slide 6: Under-researched and under-owned
Under-researched and under-owned Small caps have low analyst coverage In-house framework for and institutional ownership close monitoring of stocks 40 INVESTMENT UNIVERSE 304 Analyst Coverage per stock (Average) 35 Large Caps 30 COMPANIES 25 20 Mid Caps Coverage based on Market cap 15 Large Cap 94 1
Slide 7: Coming next…
Coming next… Why Small Caps? ― Diverse opportunities across sectors ― Ability to invest in niches ― Under-researched and under-owned Risks of investing in Small Caps ― Business and promoter risks ― High volatility, lower liquidity and high impact cost How to mitigate the risks ― Sound risk fra
Slide 8: Return outcome could have wide range
Return outcome could have wide range 1 Year Period Rolling Returns – 15 Years Period Large Cap -57% 113% 0.56 RAR Min Max Mid Cap -67% 169% 0.48 RAR Min Max Small Cap -70% 175% 0.39 RAR Min Max Brace for higher volatility in small cap space, particularly in short-term RAR – Risk Adjusted Return Sour
Slide 9: Liquidity and Impact cost challenges
Liquidity and Impact cost challenges Market cap / Turnover (Volume) / Impact Cost of Indices (weighted average) Market Cap (` Crs) Turnover (` Crs) Impact Cost 4,09,700 18,400 5,500 22,400 1,800 580 0.04% 0.14% 0.30% Large Cap Large Cap Large Cap Small Cap Small Cap Small Cap Mid Cap Mid Cap Mid Cap
Slide 10: Exposed to business and promoter risks
Exposed to business and promoter risks More vulnerable to business cycles Lesser access to low cost capital Hard to attract professionals or quality managerial staff High product and geographical concentration Lower scale benefits resulting in higher overhead costs Newer businesses may h
Slide 11: Coming next…
Coming next… Why Small Caps? ― Diverse opportunities across sectors ― Ability to invest in niches ― Under-researched and under-owned Risks of investing in Small Caps ― Business and promoter risks ― High volatility, lower liquidity and high impact cost How to mitigate the risks ― Sound risk fra
Slide 12: About our equity investment team
About our equity investment team Swati Kulkarni, CFA Ajay Tyagi, CFA V Srivatsa Sanjay Dongre Rajeev Kumar Gupta Ankit Agarwal Fund Manager Fund Manager Fund Manager Fund Manager Fund Manager Fund Manager Vetri Subramaniam Head Equity & Fund Manager Collective MF Sachin Trivedi Amit Premchandani Sha
Slide 13: Framework for finding stock ideas
Framework for finding stock ideas 210 MID & SMALL CAPS Stock selection driven by Analyst/Fund Manager conviction on ideas Choice of stocks across the OCF & RoCE tiers FUND MANDATE & Market cap allocation INVESTMENT STYLE Qualitative factors - Management quality, scalability, company vision e
Slide 14: 360⁰ risk assessment framework
360⁰ risk assessment framework Diversified Portfolio Position Sizing Maintain judicious portfolio Based on the relative diversification across stocks conviction, market depth DIVERSIFICATION and sectors and overall stock level risks Research Framework Portfolio Review Standardized and in-depth Conti
Slide 15: Stock picking is key in small caps
Stock picking is key in small caps Return range of companies in Nifty 500 Index – 5 years period Growth Large Cap Mid Cap Small Cap >10x 0 0 2 5x to 10x 4 6 10 2x to 5x 21 32 46 50% to 100% 17 19 26 0% to 50% 19 21 33 -20% to 0% 11 15 24 < -20% 5 12 33 < -50% 8 15 28 Not Available 13 26 51 UTI team’
Slide 16: Coming next…
Coming next… Why Small Caps? ― Diverse opportunities across sectors ― Ability to invest in niches ― Under-researched and under-owned Risks of investing in Small Caps ― Business and promoter risks ― High volatility, lower liquidity and high impact cost How to mitigate the risks ― Sound risk fra
Slide 17: Market cap share could rise
Market cap share could rise Market Cap Break-up – Nifty 500 Index Large Cap Mid Cap Small Cap 90% 84% 81% 80% 78% 75% ?? 70% 60% Market Cap (%) 50% 40% 30% 20% 17% 16% 13% 12% 10% 5% 8% 6% ?? 4% 0% Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 This is an exciting area with ne
Slide 18: Trailing P/B: Close to long-term averages
Trailing P/B: Close to long-term averages Trailing P/B - Nifty Smallcap 250 Index Trailing P/B Average P/B +1 Std Dev -1 Std Dev 3.0 Expensive 2.70 2.5 Fair Valuation 2.20 2.0 1.98 P/B Multiple 1.5 1.27 1.0 Cheap 0.5 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 P/B mu
Slide 19: Dividend Yield: In favourable zone
Dividend Yield: In favourable zone Dividend Yield (%) - Nifty Smallcap 250 Index Dividend Yield % Average Div. Yield (%) +1 Std Dev -1 Std Dev 2.5 2.0 High Dividend Yield 1.76 Dividend Yield (%) 1.61 1.5 Moderate Dividend Yield 1.19 1.0 0.78 0.5 Low Dividend Yield 0.0 Oct-10 Oct-11 Oct-12 Oct-13 Oct
Slide 20: Potential for sharp revival
Potential for sharp revival 3 Years Rolling Returns Nifty 100 TRI Nifty Midcap 150 TRI Nifty Smallcap 250 TRI 40% 38.4% 37.0% 30% 20% ?? CAGR (%) 10% 4.3% 0% -0.1% -8.5% -10% -9.2% -13.2% -20% -17.5% Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Gap between small caps
Slide 21: Potential for sharp revival (contd.)
Potential for sharp revival (contd.) 35% 5 Years Rolling Returns Nifty 100 TRI Nifty Midcap 150 TRI Nifty Smallcap 250 TRI 30% 27.0% 25% 22.9% 20% ?? CAGR (%) 15% 10% 8.9% 5% 6.2% 3.5% 0% -5% -6.2% -5.8% -10% Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Gap between small caps and l
Slide 22: Presenting UTI Small Cap Fund
Grow with tomorrow's leaders. Presenting UTI Small Cap Fund (Small Cap Fund - An open ended equity scheme predominantly investing in small cap stocks) ‡ This product is suitable for investors who are seeking*: Risk-o-meter • Long term capital appreciation • Investment predominantly in equity and equ
Slide 23: Mid & Small Cap Fund Manager: Ankit Agarwal
Mid & Small Cap Fund Manager: Ankit Agarwal Experience Over 13 years of industry experience across the market cycles Investment Philosophy Focuses on businesses that have a long runway of growth or have some turnaround or transformation Ankit joined UTI in August 2019. Prior to joining UTI he was pl
Slide 24: A Snapshot on Fund Performance – UTI Mid Cap Fund
A Snapshot on Fund Performance – UTI Mid Cap Fund Fund Performance Vs Benchmark as of 31/10/2020 3 Months Rolling Returns (Absolute Returns) Fund / Index Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 UTI Mid Cap Fund - Growth 7.2% 3.0% -24.2% -19.2% -16.3% 21.7% 15.4% 23.9% 1
Slide 25: Investment Approach
Investment Approach BUSINESS SCALABILITY ― High and consistent growth companies with sustainable business models, long growth runway and run by seasoned managements carrying attributes of Profitable Volume Growth BUSINESS SCALABILITY Cost Leverage Product Innovation High Return on Invested C
Slide 26: Investment Framework
Investment Framework Blend with Growth Tilt 01 Investment Style (Biased to High RoCEs & Strong OCFs) Bottom-up Approach 02 Stock Selection Preference for quality companies with long run-way for growth Small cap dominated 03 Market Cap Preferred Allocation: Small Cap: 65-80%, Mid Cap: 20-35% Single S
Slide 27: UTI Small Cap Fund Snapshot
Fund Snapshot Scheme Objective The objective of the scheme is to generate long term capital appreciation by investing Type of Scheme predominantly in equity and equity related An open-ended equity scheme securities of small cap companies. predominantly investing in small cap stocks However, there ca
Slide 28: A few illustrative stock ideas
A few illustrative stock ideas >> 28
Slide 29: Leading hospital chain
Leading hospital chain Hospitals have the largest share (~68%) of Indian healthcare industry pegged at about ` 10 trillion — Private hospitals account 60% of beds whereas corporate chains account for only 10% of bed capacity Hospitals have grown at 14% CAGR over 1995-2018 and are expected to dem
Slide 30: A play on formalization of employment
A play on formalization of employment Flexi-staffing is a large market in India – fragmented and highly unorganized. The key value propositions for the clients are flexibility and reduced compliance burden. Indian formal flexi-staffing growth is ~14% CAGR (on headcount), however the penetration
Slide 31: A capital efficient diversified engineering company
A capital efficient diversified engineering company Diversified component supplier to automobile & industrial segments like railways, process industries Dominant supplier of tubes to 2W & high precision tubes to industrial segment Second-largest cycle manufacturer – a cash rich business Play
Slide 32: Leading tractor player with a focus on improving market share
Leading tractor player with a focus on improving market share Continues its focus on gaining market share (+120 bps in the past 5 years), strategy of dual-brand and network expansion Its second leg (railways segment) has been a combination of robust growth and high profitability Its constructi
Slide 33: How would the portfolio look today?
How would the portfolio look today? Active Sector Sector Weight Weight* Top 5 Sectors# Consumer Goods 18% 4% Financial Services 13% 0% Construction 10% 2% Industrial Mfg. 9% -1% Chemicals 8% 1% Aims to strike a balance between risk & return through bottom-up stock picking approach Above is based on
Slide 34: Who should invest in UTI Small Cap Fund?
Who should invest in UTI Small Cap Fund? Risk Allocation Return Expectation Investors looking to add a high Investors seeking higher returns risk strategy to balance an overall relative to other diversified equity conservative portfolio construct funds and willing to ride the underlying portfolio vo
Slide 35: Why invest in UTI Small Cap Fund?
Why invest in UTI Small Cap Fund? A true-to-label small-cap fund with a focus on scalable business models and long growth runway. Portfolio with zero large cap names, however, a mid cap growing to large cap may be part of the portfolio. Small-Caps have limited coverage on the sell side. UTI co
Slide 36: Mutual Fund Investments are subject to market risks
The information contained in this document is for general purposes only and is not an offer to sell or a solicitation to buy/ sell any mutual fund units / securities. The information / data here in alone are not sufficient and should not be used for the development or implementation of an investment
Slide 37: Market Capitalisation definitions
Market Capitalisation LARGE CAPS 1st - 100th company in terms of full market capitalization MID CAPS 101st - 250th company in terms of full market capitalization SMALL CAPS 251st company onwards in terms of full market capitalization Market Capitalisation: Definition of Large Cap, Mid Cap and Small
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