VINIDHAN

Annual Report FY15

April 15, 2015

Period Ending: 31/03/2015

Portfolio Inception date: 19/11/2014

MARKET COMMENTARY
Growth picked up in financial year 2015, inflation declined markedly helped by lower global oil
prices and positive policies. The outlook for India is for economic strengthening through
infrastructure spending and continued reform to financial and monetary policy. The government
has moved to tackle politically difficult structural problems that have stalled investments in the
past years.

INDIA OUTLOOK
While the global outlook looks weak, IMF and World Bank in separate forecasts see India
overtaking China in 2015 to become the worlds fastest growing major economy and widening the
gap further in 2016. Growth in the gross domestic product is expected to accelerate to 7.8% in
2015 on improved performance in both industry and services as policy addresses structural
bottlenecks and external demand improves.
Growth is expected to edge up further to 8.2% in 2016, helped by a supportive monetary policy in
2015, as inflation continues to trend lower and by a pickup in capital expenditure.

Period Ending: 31/03/2015

Portfolio Inception date: 19/11/2014

FUND PERFORMANCE
For the financial year 2015, Vinidhans portfolio returned 16.01% compared to 0.60% for its
benchmark, the NSE Nifty 50 Index. The annualized return of the Fund stands at 50.31%.
The portfolios relative better performance versus the NSE Nifty 50 Index was due to the
Portfolios asset allocation strategy as stock selection in defensive sectors helped the Portfolio in
outperforming the benchmark. The Portfolio also outperformed S&P BSE Sensex Index, which
returned a loss of 0.84% during the period.
The performance of the Fund in comparison with the benchmark indices are as shown in the table
below.
Table: Fund performance relative to benchmark indices

Vinidhan Portfolio
March 31st 2015
Investment Performance
50-day ended
09th January
2015
The Fund
NSE Nifty 50
BSE Sensex

1.12%
-2.27%
-2.16%

Year ended
31st March
2015
16.01%
0.60%
-0.84%

The Jensen measure also known as alpha calculates the excess return that a portfolio generates
over its expected return. The Fund has an alpha of 15.16% and shows the fund in good light. The
beta value for the fund is 0.88 which shows lower risk and volatility as compared to the benchmark
indices. The Treynor ratio for the Fund which measures returns in excess of that which could have
been earned on a risk free investment is 15.01% and once again shows how well the Fund has
performed during the period.

PORTFOLIO OVERVIEW
The fund has over 32% of the portfolio invested in the pharmaceutical sector in the form of
Aurobindo Pharma and Lupin. The sector has seen solid performance over the period and Lupin
has been the star performer with returns of over 42%. The fund also has considerable investments
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Period Ending: 31/03/2015

Portfolio Inception date: 19/11/2014

in the IT sector with Infosys and HCL Technologies combining to form just under 35% of the
portfolio.
The Fund has a diversified portfolio with investments in six diffferent sectors. Overall, defensives
outperformed as can be seen in the sector wise performance charts below.
Figure: Sector wise performance for a sample corpus of Rs 10,000
4000.00
3500.00

3000.00
2500.00
2000.00
1500.00
1000.00
500.00
0.00
-500.00

IT

Pharma

FMCG

Bank

Invested Amount

The sector wise holdings of the Fund is

as shown in the pie chart on the right.
Information Technology has the highest
weightage in the fund closely followed
by Pharma sector. The weightage is
based on the holdings as on 31st March
2015 and is subject to change as and
when deemed necessary.

Power

Automobile

Unrealized gain/loss

SECTOR-WISE HOLDINGS
Power
5%

Automobile
8%
IT
35%

Bank
12%

FMCG
8%
Pharma
32%

Period Ending: 31/03/2015

Portfolio Inception date: 19/11/2014

Table: Current Fund Portfolio holdings

Vinidhan Portfolio
Stock

March 31st 2015

% of net assets

Aurobindo Pharma
Axis Bank
Bajaj Auto
HCL Technologies
JSW Energy
Infosys
Lupin
Marico
Total

15.27%
11.69%
8.42%
16.35%
4.94%
18.50%
16.75%
8.08%
100.00%

HCL Technologies witnessed broad based business growth across geographies, verticals and
horizontals during the last year. Constant currency growth and strong client additions ensures a
RoE well in excess of 30 per cent. As a result, the board gave dividends of Rs 8 per share along
with a 1:1 bonus share issue. The stock has given returns of close to 20 per cent since being added
to the fund. The earnings result of HCL Tech is expected on 21st April 2015.
Infosys, another IT giant, beat estimates for its third quarter earnings and retained its annual
guidance of 7-9% for the fiscal year 2015. With the US expected to grow faster than Europe,
Infosys is in a better position compared to the other IT firms. With revenues from India seeing a
considerable growth it can only augur well for the IT giant. The fourth quarter and annual results
of Infosys will be announced on 24th April 2015.
Marico, the FMCG representative in the Fund, expects continued volume growth in the range of
8-10 per cent. Copra prices are expected to cool down in the coming year and this can improve the
margins considerably in the coming years. The firm announced dividends of Rs 1.5 per share last
quarter and is expected to continue paying high dividends. With its strategy to enter less
competitive segments and international markets by leveraging on its brand value along with its
strong pricing power in the coconut oil segment, Marico has a potential for strong consistent
growth.
Aurobindo Pharma is driven by accelerating US contribution to its sales mix and has seen higher
margins in US revenues. Aurobindo Pharma is set for 40% CAGR growth in the next two years
and has given returns in excess of 11 per cent during the short period and we see further growth in
the stock.
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Period Ending: 31/03/2015

Portfolio Inception date: 19/11/2014

Lupin is driven by international sales contributing to 74 per cent of its revenues, with 37 per cent
coming from the US. The continuously evolving US drugs portfolio ensures sustainable top-line
growth of 19% Y-o-Y. An average of 30 ANDA filings each year ensures its portfolio keeps
growing steadily. This pharmaceutical big shot was the star performer for the fund with returns of
over 42 per cent.
JSW Energy has 3740 MW of operational generating capacity and a further 8630 MW under
development phase. Net sales and PAT are expected to grow at a CAGR of 5% and 18%
respectively in the next two years. With demand expected to grow strongly with economic
resurgence JSW Energy has positioned itself well for a sustainable future.
With improved economic conditions and good monsoon expectations we can expect strong sales
from Bajaj Auto this coming year. Although the industry has been struggling with lackluster sales
KTM Duke has grown considerably in the premium bike segment. Bajaj has a string of new bike
releases in the year including the new Pulsar A-S 150 and A-S 200 that aim to target buyers looking
for an affordable adventure sport bike. Bajaj Auto is in prime position to take advantage of a
renewal in the industry which is very much expected.
Banking sector has struggled in past quarters with increasing NPA levels and dropping NIM. A
shining star in this segment is Axis Bank. The NPAs have consistently remained well below 1.5
and NIM has inched closer to 4%. With a great focus on retail business and strategy to move
towards higher risk adjusted return business like credit cards, personal loans and mortgage, we
expect the profit to grow by at least 17%. Axis Bank has given returns in excess of 20 per cent and
we expect them to continue providing strong returns.

PORTFOLIO OUTLOOK
We believe that economic growth will move ahead and will favor the Indian equity markets. In
such an environment, strategic allocation adjustments between various sectors in equity should be
key drivers of performance going forward.

Vinidhan SIF team

15th April 2015

Period Ending: 31/03/2015

Portfolio Inception date: 19/11/2014

MANAGEMENT
Appellant Authority
Dr. C. Joe Arun SJ, Director, Goa Institute of Management
Faculty Advisor
Prof. Amiya Kumar Sahu, Goa Institute of Management
VINIDHAN TEAM
Fund Manager
Deepak K S (8113085314)
Fundamental Head
Gaurav Nolakha (7738922273)
Fundamental Team
Anu Khatri, Ashish Sood, Nidhi Kalani, Nikita Bindal, Nisarg Popat, Toshan Oswal, Yash Gupta
Technical Head
Sunil Khale (7768004041)
Technical Team
Abhishek Nigam, Saurav Kumar, Vigneswar N, Vinodh Ramadas
Contact Information
Goa Institute of Management,
Poriem, Sattari,
Goa 403505
Email: vinidhan@gim.ac.in
Disclaimers and Disclosures
This report has been prepared by the members of Vinidhan. The views and opinions expressed in
this document may or may not match or may be contrary at times with the views, estimates and
rating of other equity research reports of Vinidhan The SIF. This report is for informational
purposes only and is not an investment suggestion.
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Period Ending: 31/03/2015

Portfolio Inception date: 19/11/2014