HDFC Large Cap Fund

(An Open-Ended Equity Scheme)

Provide solidity to your Investments

This product is suitable for investors who are seeking*:

Capital appreciation over long term.
Investment in equity and equity related instruments of large cap companies
High risk.
(BROWN)
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.

Note: Risk is represented as:

(BLUE) investors understand that their principal will be at low risk
(YELLOW) investors understand that their principal will be at medium risk
( BROWN) investors understand that their principal will be at high risk

April 2015

Table Of Contents

Fund History & Philosophy

Characteristics Of Large Cap Stocks

Equity Market Outlook

Investment Strategy & Approach

Bottom Up Investing

Why HDFC Large Cap Fund

Portfolio Composition

Product Features

Asset Allocation

Disclaimer

Fund History

Formerly Morgan Stanley Growth Fund launched in Feb 1994.

Scheme acquired by HDFC Mutual Fund effective close of business hours on June 27th
2014.

Renamed as HDFC Large Cap Fund.

Investment focus positioned to target Large cap stocks having a market capitalization
equal to or above that of the bottom 25th percentile stock in the CNX Nifty Index.
(Currently ~ Rs 40,000 Crs. and above in market cap).

Source: Bloomberg, NSE

Fund Philosophy

To actively manage a large-cap# diversified equity fund that has the potential to
appreciate in the long run
Focus on companies that have demonstrated a potential ability to grow at a
reasonable rate for the long term
Strong emphasis on price of purchase, avoids chasing growth at expensive
valuations.

Portfolio that adequately covers all major components of the CNX Nifty Index.

Focus primarily on a buy and hold strategy at most times & balance it with a rational
approach to selling

# For the purpose of the Scheme, Large-cap Companies are those companies that have a market capitalization equal to or above that of the bottom 25th
percentile stock in the CNX Nifty Index.
4

Why do We Target Large Cap Stocks

Large-cap stocks tend to grow in

tandem with the market.

Large Cap stocks are the first to react

to an economic revival.

Large Cap stocks perform across

various market cycles.

Highly traded on stock exchanges

ensuring good liquidity.

Advantages of Size & Scale.

Source: Bloomberg. Data as of 27th February 2015

Market Freefloat

30%

70%

CNX Nifty Free Float

Market Cap
CNX 500 Free Float
Market Cap Ex Nifty

CNX Nifty accounts for approximately 70% of the total

market free float of stocks listed in the CNX 500

Large Caps in Numbers

Large Cap Companies form a major
portion of the market in terms of
market cap and profits.
The market cap of the CNX Nifty is ~
63% (USD 933 Bn) of the market cap
of the CNX 500 (USD 1,476 Bn)
FY 2014 Profit After Tax (PAT) for
CNX Nifty is ~ 71% (Rs 3,082 Bn) of
the PAT of the CNX 500 (Rs 4,333
Bn)
Large Cap companies have higher
institutional interest since they have
better disclosure standards.
Source: Bloomberg. Data as of 27th February 2015
USD/INR = 63/$

Total Market Cap

(In Rs. Cr)

Average Market Cap

(In Rs. Cr)

417,706

4,177

CNX Mid Cap Index

1,734,135

17,341

CNX Nifty Index

5,882,017

117,640

Max. Market Cap

(In Rs. Cr)

Min. Market Cap

(In Rs. Cr)

CNX Small Cap Index

17,437

118

CNX Mid Cap Index

81,009

1,975

CNX Nifty Index

521,482

17,735

Index
CNX Small Cap Index

Index

Solidity A Large Cap Trait

Companies that have built a

reputation over time and have
consistently delivered in terms
of performance despite facing
hurdles and business challenges
along the way are those that can
be called Solid.

Year of
No of Year`s
Incorporation in Business

Company

Industry

Bank Of Baroda

Banks

1908

107

ITC Ltd

FMCG

1910

105

Hindustan Unilever

FMCG

1933

82

Cipla

Pharamceuticals

1935

80

ACC Ltd

Building Materials

1936

79

Tata Motors Ltd

Automobiles

1945

70

Asian Paints

Paints & Decoratives

1945

70

Mahindra & Mahindra Ltd

Automobiles

1945

70

Larsen & Toubro Ltd

Engineering Goods

1946

69

BPCL

Petroleum Products

1952

63

State Bank Of India

Banks

1955

60

BHEL

Engineering Goods

1964

51

Reliance Industries

Oil & Gas

1973

42

Essentially, businesses built over a long period of time

Source: Company Websites, Bloomberg
Stocks/sectors referred above are illustrative and are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any
present or future positions in these stocks.

Large Caps Leaders and Market Dominators

Company

Market Cap Segment

Market Share

Asian Paints Ltd

77,422

Decorative Paints

~50%

Bajaj Auto Ltd

62,228

Automobiles - Two Wheelers

~20%

Maruti Suzuki India Ltd

108,882

Passenger Vehicles

~40%

Coal India Ltd

249,654

Coal Production

~80%

Bharti Airtel Ltd

141,988

Telecom

~25%

Hindustan Unilever Ltd

191,911

FMCG-Soaps

~45%

ITC Ltd

315,061

Cigarettes

~75%

Oil & Natural Gas Corp Ltd

277,840

Petroleum Products

~59%

State Bank of India

223,897

Banks

~23%

Sun Pharmaceutical Industries Ltd

182,029

Pharmaceuticals

~12%

Tata Consultancy Services Ltd

521,482

Information Technology

~14%

Source: Company Websites, Bloomberg . Market Cap as of Feb 27th 2015. Market Share as of 31st December 2014.
Stocks/sectors referred above are illustrative and are not recommended by HDFC Mutual Fund/AMC. The Fund may or may not have any
present or future positions in these stocks.

A Story Called India

Improving Macros

India one of the best placed economies

amongst large economies of the world.
Lower commodity prices, lower inflation
and fiscal deficit amongst others have led
to investors taking a positive view on
India.

With a focus on rejuvenating growth, the

government has undertaken a series of
policy measures.
The Make in India initiative has targeted
manufacturing led growth.

2013-14

2014-15E

2015-16E

GDP Growth
(%)

6.9

7.4*

7.9

CPI Inflation

9.5

6.5

5.8

Fiscal Deficit
(% Of GDP)

4.5

4.1**

3.9

Exchange
Rate(US$)^

60.40

62.00

63.00

CAD^

1.7%

1.2%

0.2%

*CSO Advance Estimate, ** Budget Estimate, ^Citi Estimate

E - Estimates

Favourable Metrics

Best demographics

Demographic - 2015
(%) Population (Age 10-40)

Very low penetration of

consumer durables.

2013

Major beneficiary of oil

fall

Dec 2014

Car Penetration per 1000

Oil Imports (% Of GDP)

Deflation not a concern

Jan 2015
CPI

One of the few with peak

rates

Jan 2015
Interest Rates

US
40.1

Europe Japan
37.3
31.8

China
42.8

India
51.5

Brazil
49.6

US
397

Europe Japan
488
471

China
78

India
21

Brazil
213

US
1.5

Europe Japan
2.2
4.2

China
2.2

India
5.0

Brazil
1.6

US
-0.09

Europe Japan
-0.62
2.38

China
1.60

India
6.50

Brazil
7.13

US
1.80

Europe Japan
0.40
0.30

China
3.50

India
7.70

Brazil
11.90

Source: Kotak, Bloomberg, JP Morgan, UN Comtrade, World Economic Outlook, PPAC, Interest rate is 10 Year GSec as on 27th Feb, 2015

10

Equity Market Outlook

India is amongst a handful of large economies with a downward outlook on interest rates,
stable political situation and benefits of lower commodity prices.

Improving growth prospects and margin outlooks for companies are having a positive impact
on Indian markets.

Lower Interest Rates & strong earnings growth to provide impetus to equity markets.

Current P/E multiples of equity markets remain reasonable despite the market run-up.

Room for multiples to expand as expectations of growth improve.

Merit in increasing allocation to equities (for those with a medium to long term view) in a
phased manner and stay invested.

11

Presenting HDFC Large Cap Fund

Provide solidity to your Investments

12

Investment Strategy
The Scheme will invest in Large Cap
stocks
Large Cap stocks are defined as stocks
having a market cap the bottom 25th
percentile stock in the CNX Nifty Index.
There are currently 37 stocks meeting
the criterion. Average Market Cap* of
these stocks is Rs 147,665 Cr or US$23.5
billion.
Includes the option to invest in foreign
securities.

*As on 27th February 2015.

Source : NSE India. Exchange rate calculated at US $1 = 63

Investment Approach
Bottom up approach to investing
No sector bias, No style bias
Select large cap companies that
have demonstrated a potential to
grow at a reasonable rate over the
medium to long term
The fund will invest in stocks with
adequate margin of safety and will
seek growth at a reasonable price
13

Investment Universe

Large caps are the most researched

and well understood stocks in the
Indian market.

Investment Universe*
Average Market Cap
(In Rs. 000 Crore)
148

Most companies falling in this category

have proven track records and have
been through several market cycles.

Own the best names in the market and

give a boost of Solidity to your
portfolio

Targeting the upper end of the large

cap pool of companies.

*Values of stocks in respective indexes/universe as on Feb 27th 2015

118

17
4
CNX Smallcap
Index

CNX Midcap Index

CNX Nifty 50
Index

HDFC Large Cap

Fund Investment
Universe

14

What is Bottom-up Investing?

Target individual companies who

outperform the industry

Opposite of Top Down Approach

Emphasis on Stock Selection

In-depth Understanding
companies invested in.

De-emphasizes the significance of

economic and market cycles.

of

the

15

Bottom Up Factors Considered

Market Share

"It's far better to buy a

wonderful company at a fair
price than a fair company at
a wonderful price."
- Warren Buffet

Business
Transparency

Product
Differentiation

Bottom Up Factors

Room for
Growth

Cost Benefits

Financial
Strength

16

Why HDFC Large Cap Fund

Strong & Stable large Cap companies with a long history of high quality growth.

Small is beautiful; Large is Solid.

Perfect for investors with an eye for large cap equity funds.

Ideal for long term/Goal based investing through Systematic investments (SIP).

"One of the greatest ways to avoid trouble is to keep it simple. When you make it vastly complicated
and only a few high priests in each department can pretend to understand itwhat youre going to
find all too often is that those high priests dont really understand it at all. The system often goes
out of control.
Charlie Munger
17

Portfolio Composition
(As on March 31, 2015)

18

Portfolio Composition
(As on Mar 31, 2015)

Company

% Of
NAV*

ICICI Bank Ltd.

8.46

State Bank of India

7.80

Larsen & Toubro Ltd.

7.45

Infosys Ltd.

7.02

Axis Bank Ltd.

6.42

HDFC Bank Ltd.

6.34

Reliance Industries Ltd.

Cognizant Technology
Solutions Corp

6.10

Tata Motors Ltd. DVR

5.28

HDFC Ltd.$

5.14

6.02

Average AUM for the Quarter ended March 31, 2015 Rs 1292.37 Cr
* Computed on the invested amount
$ Sponsor

19

Product Features
Type of Scheme

An open-ended Income Scheme

Investment Objective

To provide long-term capital appreciation by investing predominantly in large cap companies.

Inception Date

February 18, 1994

Load Structure

Entry Load: Not Applicable

Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI registered Distributor)
based on the investors assessment of various factors including the service rendered by the ARN Holder.
Exit Load
In respect of each purchase / switch-in of units, an Exit Load of 1% is payable if Units are
redeemed/switched-out within 1 year from the date of allotment.
No Exit Load is payable if Units are redeemed / switched-out after 1 year from the date of allotment.

Investment Plan / Options

The Scheme offers two plans:

Direct Plan

Regular Plan
Each Plan offers following sub-options:
Growth & Dividend. Dividend Option offers Payout and Reinvestment facilities.

Minimum Application
Amount

Purchase:
Rs 5,000 and any amount thereafter
Additional Purchase:
Rs 1,000 and any amount thereafter

Benchmark Index

CNX Nifty Index

20
Refer Disclaimer/Risk factors on slide no 24

Asset Allocation Pattern

Under normal circumstances, the asset allocation (% of net assets) of the Schemes portfolio will be as
follows:

Types of Instruments

Normal Allocation
(%)

Risk Profile

Equity and Equity related

instruments of large cap
Companies

80 - 100

Medium to High

Debt and Money Market

Instruments including
securitized debt *

0 - 20

Low to Medium

*Investment in Securitized debt, if undertaken, would not exceed 20% of the net assets of the
Scheme
The scheme may seek investment opportunity in Foreign securities (max 30% of net assets) & Foreign Debt Securities (max. 20% of net
assets). The scheme will not invest in foreign securitized debt. The scheme may use derivatives (max. 50% of net assets) based on the
opportunities available subject to SEBI (Mutual Funds) Regulations, 1996.
For further details, refer SID and KIM available on www.hdfcfund.com and at Investor Service Centres of HDFC Mutual Fund

21
Refer Disclaimer/Risk factors on slide no 24

SCHEME PERFORMANCE HDFC Large Cap Fund

Scheme
HDFC Large Cap Fund#

NAV as on
Discrete Returns in %
31 Mar 2014 to 31 31 Mar 2013 to 30 30 Mar 2012 to 31
31 Mar
Mar 2015
Mar 2014
Mar 2013
2015
90.344

Since Inception
CAGR (in %)

Value of investment
of Rs. 10,000 Since
Inception (Rs.)

23.06

16.06

12.24

11.62

101,908

26.65

17.82

7.31

9.57

68,912

S&P BSE SENSEX 2

24.89
18.68
Other Funds Managed by Vinay Kulkarni, Fund Manager of HDFC Large Cap Fund
HDFC Core & Sattelite Fund
57.488
38.46
18.47

8.23

9.75

71,410

-5.15

18.05

57,488

S&P BSE 200 Index 1

31.93

17.04

6.03

16.23

48,809

S&P BSE SENSEX 2

24.89

18.68

8.23

16.56

50,273

40.72

17.75

-6.41

15.72

42,986

CNX 500 Index 1

33.56

17.56

5.13

14.48

38,617

CNX Nifty Index 2

26.65

17.82

7.31

15.18

41,033

25.63

19.86

8.87

17.02

73,755

26.81

20.54

10.13

20.55

107,591

26.65
27.64

17.82
18.68

7.31
7.72

18.03
16.80

82,233
71,984

CNX Nifty Index 1

28.17

19.30

8.72

19.76

98,923

S&P BSE SENSEX 2

24.89

18.68

8.23

18.54

86,931

30.76

15.74

9.03

21.02

113,118

S&P BSE SENSEX 1

26.81

20.54

10.13

20.55

107,591

CNX Nifty Index 2

26.65

17.82

7.31

18.03

82,233

43.85

22.63

1.05

27.44

1,004,396

CNX 500 Index 1

33.56

17.56

5.13

12.86

99,669

CNX Nifty Index 2

HDFC MIP - Short Term Plan*^

26.65
16.13

17.82
8.05

7.31
7.34

N.A
8.30

N.A
24,555

CNX Nifty Index 1

HDFC Premier Multicap Fund#

HDFC Index Fund - SENSEX Plan##

42.986

237.205

S&P BSE SENSEX 1

CNX Nifty Index 2
HDFC Index Fund - Nifty Plan$

HDFC Index Fund - SENSEX Plus Plan##

HDFC TaxSaver$$

74.331

363.798

398.162

24.555

CRISIL MIP Blended Index 1

16.45

6.46

9.06

7.84

23,420

CRISIL 10 Year GILT Index 2

HDFC Multiple Yield Fund*@

14.57
12.06

-0.95
11.02

11.25
5.71

5.03
9.45

17,385
25,910

16.45

6.46

9.06

8.47

23,569

CRISIL MIP Blended Index 1

25.910

CRISIL 10 Year GILT Index 2

8.74
5.79
8.33
5.88
18,261
Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualized (CAGR). The above returns are of growth option. #Performance of the
fund has been calculated based on the assumption that all dividends during the period have been reinvested in the scheme at the then prevailing NAV. ##Since inception returns are calculated on
Rs. 32.1610 (allotment price). $ Since inception returns are calculated on Rs.10.3260 (allotment price). $$ All dividends declared prior to the splitting of the Scheme into Dividend & Growth Options
are assumed to be reinvested in the units of the Scheme at the then prevailing NAV (ex-dividend NAV). ^The Scheme is co-managed by Vinay Kulkarni (Equities) and Shobhit Mehrotra (Debt).
*Scheme performance may not strictly be comparable with that of its Additional Benchmark in view of hybrid nature of the scheme where a portion of scheme's investments are made in equity
instruments. @The Scheme is co-managed by Vinay Kulkarni (Equities) and Shobhit Mehrotra (Debt). Benchmark 2. Additional Benchmark . NAV at Inception for all other schemes mentioned was
Rs 10.

22

Glossary

GDP

Gross Domestic Product

CPI

Consumer Price Index

CAD

Current Account Deficit

CSO

Central Statistics Office

P/E

Price To Earnings Ratio

23

Disclaimer & Risk Factors

The presentation id dated 27th April 2015 and 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 must confirm before relying on them.
The information contained in this document is for general purposes only. The document is given in summary form
and does not purport to be complete. The document does not have regard to specific investment objectives,
financial situation and the particular needs of any specific person who may receive this document. The information/
data herein alone are not sufficient and should not be used for the development or implementation of an
investment strategy. The statements contained herein are based on our current views and involve known and
unknown risks and uncertainties that could cause actual results, performance or events to differ materially from
those expressed or implied in such statements. Past performance may or may not be sustained in future. Neither
HDFC AMC and HDFC Mutual Fund nor any person connected with them, accepts any liability arising from the use of
this document. The recipient(s) before acting on any information herein should make his/her/their own
investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision
taken on the basis of information contained herein.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS
CAREFULLY.

24

Thank You