July 2015

Fundamental Drive

Since September – 2014 in our various communications we have been highlighting that a fall in crude prices will have positive impact on the companies owned by us. The June – 2015 quarterly results have demonstrated the same with us having more hits than misses. Our hit rate was close to 70% where companies have surprised estimates on street by a significant margin. Most of our stocks have seen strong movement in their stock prices which has helped us deliver strong performance in our funds.

In the past few weeks and months the market has severely punished some of the stocks and sectors which got impacted due to macro environment factors. Sectors like metal got affected due to de-acceleration of global growth and lower than expected China growth figures, information technology due to sharp appreciation of INR against global currencies like Euro and Yen and export oriented domestic pharma due to currency and structural issues with the sector. We have clearly stayed away from these sectors in our stock picking and our weight in these sectors which are much favored by fund managers was negligible. We continue to focus on risks emerging in the market and stay away from them. This will help us deliver superior risk adjusted returns to our clients.

In the last few years we have clearly identified few successful themes for our investors like MNC pharma companies, high end engineering, chemicals & NBFC. These themes have outperformed broader markets and created alpha for our investors. We are still positive on these ideas and we believe that they have potential to become large themes in time to come.

Regards,

Vinod Jain