SBI Funds Management Limited · NSE:SBIFUNDS
SBI Funds Management — SBI Funds Management Private — Investor Presentation (May 2010)
43 slides from SBI Funds Management's investor presentation, May 2010
Slide 1: SBI PSU Fund NFO
NFO OPENS: 17.05.10 and NFO CLOSES: 14.06.10 SBI MUTUAL FUND SBI Funds Management Private Limited (A joint venture between SBI and Société Générale Asset Management). A PARTNER FOR LIFE
Slide 2: Size, Divestment, Corporate Governance, Fundamentals, Resilience, Valuations
Size Divestment Corporate Governance Strong Fundamentals Resilience Wealth Creation Valuations
Slide 3: Bigger is Better
Bigger is Better PST: AN OPEN ENDED EQUITY SCHEME fo SBIMUTUAL FUND SBI Funds Management Private Limited (A joint venture between SBI and Société Générale Asset Management). A PARTNER FOR LIFE
Slide 4: Bigger is Better!
Bigger THE BIGGER is Better! BETTER 77% of India’s oil production comes from ONGC. It also contributes 81% of India’s natural gas. India’s largest gas transportation company is GAIL with an LPG pipeline network of 1900 km across India. NTPC produces more than 28% of India’s electricity. SAIL contrib
Slide 5: Bigger is Better!
Bigger is Better! HP, BP and IOC account for 88% of the auto fuel throughput across India. Coal India Ltd. has a 75% market share, supplying fuel to 76 out of total 78 thermal power plants in India. Container Corporation of India (Concor) is a market leader with 85% market share in moving containeri
Slide 6: The Leverage Effect in SAIL
The Leverage Effect in SAIL… 165,000 11500 9500 155,000 7500 EBITDA/Ton 145,000 Employees 5500 135,000 3500 125,000 1500 115,000 -500 Average no. of employees EBITDA/Tonne (RHS) Past performance may or may not be sustainable in future
Slide 7: … And, in SBI!
… And, in SBI! 6,000 2.4 2.3 5,000 2.2 4,000 2.1 2.0 3,000 1.9 2,000 1.8 1.7 1,000 1.6 0 1.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Advances (Rs Bn, LHS) Employees (RHS, lacs) Past performance may or may not be sustainable in future
Slide 8: Divestment: Unlocking Potential
Divestment : Unlocking Potential
Slide 9: The Government is clearly acting now
The Government is clearly acting now… Source: Department of Public Enterprises
Slide 10: Unlocking Potential
Unlocking Potential CMP BSE100 Out Date of Offer (14th May Company Listing Price BSE100 ‘10) Abs Return CAGR CAGR performance REC Ltd 03/12/2008 105 8612 271 159% 55% 2% 52% Power Finance 2/22/2007 85 7036 288 238% 46% 8% 38% Power Grid Corporation 10/04/2007 52 9244 106 104% 31% -1% 32% Punjab Nati
Slide 11: Pre and Post Divestment: Maruti Suzuki
Pre and Post Divestment Maruti Suzuki 30 25 20 15 RoE (%) 10 5 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 -5 -10 -15 Source: Bloomberg Past performance may or may not be sustainable in future
Slide 12: Pre and Post Divestment: Hindustan Zinc
Pre and Post Divestment 600000 Hindustan Zinc 80 70 500000 60 400000 50 300000 40 30 200000 20 100000 9% CAGR 18 % CAGR 10 0 0 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Source: Bloomberg Turnover (in MT) EBITDA Margin Past performance may or may n
Slide 13: The Global Experience
The Global Experience Past performance may or may not be sustainable in future
Slide 14: Corporate Governance
Corporate Governance PSUZ AN OPEN ENDED EQUITY SCHEME _y a fo SBI MUTUAL FUND SBI Funds Management Private Limited (A joint venture between SBI and Société Générale Asset Management). A PARTNER FOR LIFE
Slide 15: More Important than Ever!
More Important than Ever! “At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country’s business and banks… This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions of dollars. It also varies in size wi
Slide 16: Transparency & Accountability
No Ownership - Management Conflict Corporate Governance High Operating Stacks Up Better for PSUs Cash Flows PSUs Focus on Core Business Transparency & Accountability High Audit Standards
Slide 17: Strong Fundamentals
SBS Strong Fundamentals PSUZ AN OPEN ENDED EQUITY SCHEME do SBI MUTUAL FUND PARTNER FOR LIFE SBI Funds Management Private Limited (A joint venture between SBI and Société Générale Asset Management). A
Slide 18: Reliable Cash Flows…
Reliable Cash Flows… 35% 30% 32% 25% 27% 20% 24% 20% 15% 10% 5% 0% Tax Rate Payout Ratio Source: Capitaline, SBIMF, BSE 100 Universe PSU Private Data as on FY 2009 Past performance may or may not be sustainable in future
Slide 19: … Better Dividend Payouts…
… Better Dividend Payouts… 35% 0.34 0.34 0.34 30% 0.29 0.31 25% 0.26 0.25 0.25 0.23 20% 0.22 15% 10% 5% 0% 2005 2006 2007 2008 2009 PSUs Non-PSUs BSE 500 Universe Past performance may or may not be sustainable in future
Slide 20: … And, Lower Leverage
… And, Lower Leverage Debt Equity Ratio 0.9 0.8 0.87 0.84 0.81 0.7 0.6 0.65 0.65 0.5 0.53 0.54 0.55 0.4 0.3 0.2 0.1 0.0 2006 2007 2008 2009 PSU Private Source: CMIE, IIFL, BSE 500 Universe Data: As on 31st March, 2010 Past performance may or may not be sustainable in future
Slide 21: Resilience
Resilience Pett Ts AN OPEN ENDED EQUITY SCHEME BI MUTUAL FUND SBI Funds Management Private Limited (A joint venture between SBI and Société Générale Asset Management). PARTNER FOR LIFE
Slide 22: Better Returns…
Better Returns… BSE PSU Index and the Sensex 1,100 1,000 900 800 700 600 500 400 300 200 100 0 Source: Bloomberg Sensex BSE PSU Index Past performance may or may not be sustainable in future
Slide 23: SBI vs Bankex during the crisis period
SBI vs Bankex during the crisis period 120 100 80 60 40 20 0 SBI Bankex Index Source: Bloomberg Past performance may or may not be sustainable in future
Slide 24: SBI Mutual Fund
SBI MUTUAL FUND SBI Funds Management Private Limited (A joint venture between SBI and Société Générale Asset Management). A A PARTNER F 0 R LIFE
Slide 25: BHEL vs Sensex
BHEL vs Sensex 300.00 250.00 200.00 150.00 100.00 50.00 0.00 Source: Bloomberg Sensex BHEL Past performance may or may not be sustainable in future
Slide 26: SAIL vs Sensex
SAIL vs Sensex 300.00 250.00 200.00 150.00 100.00 50.00 0.00 Sensex BHEL Source: Bloomberg Past performance may or may not be sustainable in future
Slide 27: GAIL vs Sensex
GAIL vs Sensex 300.00 250.00 200.00 150.00 100.00 50.00 0.00 Source: Bloomberg Sensex GAIL Past performance may or may not be sustainable in future
Slide 28: Valuations
SBIa PSU2 AN OPEN ENDED EQUITY SCHEME Valuations , A 7 a 08. x seed Soe ot oo fo SBI MUTUAL FUND > z= = = ER FOR LIFE
Slide 29: Potential from Top Down…
Potential from Top Down… Data as on April 2010. Past performance may or may not be sustainable in future
Slide 30: … To Benefit PSUs?
… To Benefit PSUs? On Free Float On Market Cap PSUs 17% 33% Non PSUs 83% 67% * As a % of BSE 100 BSE PSU BSE100 * Dividend Yield 1.5 1.1 Price to Earnings Ratio (PE) 17.0 23.2 Estimated Price to Earnings Ratio (PE) 13.2 16.0 Price to Book (PBV) 2.8 3.2 Price to Sales 1.6 1.9 * Including PSUs (17% fr
Slide 31: The Valuation Gap - Banks
The Valuation Gap - Banks Share of Advances Share of Market Cap 74% 26% 53% 47% Private Banks PSU Banks Source: Capitaline, Marketcap as on 11th May Past performance may or may not be sustainable in future
Slide 32: The Valuation Gap - Utilities
The Valuation Gap - Utilities Utilities 4.5 4.5 4.3 4 3.8 3.5 Price to Book 3 2.7 2.7 2.5 2 1.5 Adani Power JSPL JSW Energy Power Grid NTPC Source: Bloomberg, Data 2011e Past performance may or may not be sustainable in future
Slide 33: The Valuation Gap - Upstream
The Valuation Gap - Upstream ONGC Cairn US$43/bbl $74/bbl Source: SBIFM, Anand Rathi Research as on April 2010. Past performance may or may not be sustainable in future
Slide 34: Asset Allocation Shift
Asset Allocation Shift The India Story! A Riskier World! • A Strong Domestic • Substantial Increase in Economy Public Debt • Demographics & • The Euro Crisis Infrastructure • Deleveraging • Incremental Flows Better Risk-Return Trade Off PSUs
Slide 35: Presenting
ene> SBIMUTUAL FUND . Ld Ld SBI Funds Management Private Limited (A joint venture between SBI and Société Générale Asset Management). A A PARTNER FOR LIFE
Slide 36: Scheme details
Scheme details Type of Scheme An open- ended equity scheme Investment Objective To provide opportunities for long-term growth in capital along with the liquidity of an open-ended scheme through an active management of investments in a diversified basket of equity stocks of domestic Public Sector Und
Slide 37: Asset Allocation
Asset Allocation Instruments As % of Net Asset Min- Risk Profile Max Equity and equity related 65-100% Medium to High instruments covered under the under the universe of listed PSU Companies including derivatives Debt and Money Market 0-35% Low to Medium Securities Exposure to derivatives instrument
Slide 38: Diversified Portfolio
Diversified Portfolio Investment Universe Source: Bloomberg
Slide 39: The Investment Process
The Investment Process INVESTMENT PROCESS IDENTIFY RESEARCH EXECUTE VALUE ADD MONITOR In-house Research Business Outlook Market Network Active Role Maintenance Research Sell-Side Management Technical Factors Leverage Experience Sell Discipline Valuations Risk Management
Slide 40: SBIFM: Best of Two Worlds
SBIFM: Best of Two Worlds Exclusive Joint Venture • India’s premier & largest bank, The State Bank of India (Dec 2004) – A 200 years old bank, – Close to 15,600 branches across India, – More than 147 Mln customers, – 17% of the domestic fixed deposits. 63% • A global and leading asset management com
Slide 41: SBI Funds Management Overview
SBI Funds Management Overview SBI Funds management has been expert in managing assets since 1987. At the end of March 2010, SBIFM: – is managing more than INR 43000 crore through mutual funds, PMS & offshore businesses – has won the trust of more that 60 lakh investors – has a 33 member experienced
Slide 42: Extensive Reach…
Extensive Reach… Extensive Coverage in India • 15 regions • 29 Investor Service Centres • 55 Investor Service Desks • 45 District Organizers • 8 Investor Service Points dedicated for big metros opened in 2008 • 1 Overseas office in Dubai Source: SBI Funds Management Pvt. Ltd., as on 31/08/2009 SBI F
Slide 43: Disclaimer
Disclaimer Name of Scheme: SBI PSU Fund Type of Scheme: An open ended Equity scheme Investment Objective: The objective of the scheme would be to provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme through an active management of inve
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