Nuvama

Equities
eXpansion
Target
Small and mid cap focused equities
portfolio
Accelerating to the NEXT level of growth

Nuvama Asset Management Limited is registered with Securities and Exchange Board of India as a
Portfolio Manager vide Registration Number INP000007207
We provide an option for clients to be on-boarded directly, without intermediation of persons engaged in distribution services

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 Why NEXT?

NEXT Wealth Opportunity NEXT Investment Themes NEXT Selection Rigor

Small and Mid caps (SMID)

India’s प्रगति story driven by Bottom-up, primary research
• Premiumization of consumption patterns
Higher earnings growth expectations and ability to via direct connects with 100+ corporates within
• Globalization: India's time in global trade
invest in emerging sectors chosen universe
• Transformation of nation’s infra

NEXT Growth Portfolio NEXT Level Managers

30-35 high conviction, quality companies Experienced equity investment team

with the potential to multiply 2x over next 3-5 delivering top notch returns in existing equity
years schemes

Strictly private and confidential and not for public circulation

NEXT: Performance overview
Since
Strategy /
1M 3M 6M 12M Inception
Benchmark
(CAGR)

NEXT 6.9% -16.0% -19.3% 7.3% 15.7%

BSE 5 0 0 TRI 7.3% -4.4% -11.8% 6.0% 16.5%

Our प्रगति portfolio

Composition Top sectors Top holdings

Small Cap, Cash/ equivalents,

23% 0% ▪ Orient
Consumer Discretionary 44% ▪ CEAT Ltd ▪ Pokarna
Cement

Materials 18% ▪ Arvind

▪ Chennai Petro ▪ Varroc Engg.
▪ Fashions
Financials 14%
▪ IFB Industries ▪ Wockhardt ▪ Cosmo First
Health Care 8%

Information Technology 7% ▪ Credit Access ▪ Ramkrishna

▪ Mastek
Grameen Forgings
Mid Cap, 77%

Portfolio inception date: 10th Jul’23. Returns are net of fees & expenses basis TWRR against gross benchmark as of March’25
Current portfolio holdings may or may not be part of future portfolio holdings and may or may not be part of all client portfolios
3
For relative performance of this above Investment Approach to other Portfolio Managers within the selected strategy, please click here
Dawn of the mid and
small cap era

4
Frontline indices unable to effectively capture emerging themes
Increasingly innovative, investible themes and sectors providing unique growth opportunities

Chemicals Hospitals Construction/ Building

materials

Global clamp downs on Increasing health insurance Demand for ancillary materials like
pollution and diversification of penetration and consolidation in sanitaryware/ pipes/ cables expected to
global supply chains creating tertiary healthcare improving shoot up with real estate recovery and
business flows for India profitability of hospitals. housing demand

Discretionary retail Electronic Manufacturing Capital Goods

Services

Strong government focus in Revival in industrial capex. Strong

Rising GDP per capita and higher
indigenizing durables manufacturing tailwinds in manufacturing sector with
discretionary spends creating new
and components ecosystem + PLI highest ever capex budget outlay
growth waves for this sector
benefitting rapid growth leading to a strong runway for growth

Source: Nuvama research

Strictly private and confidential and not for public circulation

SMID: only way to access emerging themes
Multiple examples of high-quality earnings growth reflecting in price performance
PAT (Rs. Cr.) Price performance

Sector Stock FY19 FY24 % CAGR FY19 FY24 % CAGR

SUDARSHAN CHEMICAL 135 357 21% 344 610 12%

Chemicals
DEEPAK NITRITE 174 811 36% 274 2,126 51%

APOLLO HOSPITALS 236 899 31% 1,228 6,357 39%

Hospitals
NARAYANA HRUDAYA 59 789 68% 213 1,284 43%

TATA ELXSI LTD 290 792 22% 963 7,785 52%

IT PERSISTENT SYSTEMS 352 1,093 25% 315 3,985 66%

COFORGE 403 808 15% 1,326 5,502 33%

APL APOLLO TUBES 148 732 38% 144 1,496 60%

Building materials ASTRAL 196 546 23% 523 1,991 31%

KEI INDUSTRIES 181 581 26% 425 3,460 52%

Nifty 50 477 966 15% 181 581 26%

Source: Nuvama research, Bloomberg, Data as of FY24 6

Strictly private and confidential and not for public circulation

SMID seeing higher earnings expectations over large caps

Nifty 50 SMID

Earnings growth Performance Earnings growth Performance

5Y CAGR
15% 14% 21% 20%
(FY19-FY24)

3Y CAGR Expected
12% ? 19% ?
(FY24-FY27E)

Making SMID a compelling proposition for the next 3-5 years

Source: Bloomberg 7

Strictly private and confidential and not for public circulation

Accelerate your
investments to
the NEXT level
The Big Picture

9
India’s $4+ trn प्रगति story

प्रगति

Premiumization Globalisation Transformation

Rising aspirations of India taking centre stage Structural overhaul of the country’s
the Indian consumer in global trade infrastructure

Domestic consumption, which Every 0.5% market share increase Long runway to catchup to global
powers ~60% of GDP, is expected in global trade adds 3.5% / standards, India’s GFCF at 29%, vs
to grow into a US$5 trn opportunity U$110 bn to the GDP 42% for China - a massive
by 2030 opportunity and critical focus for
the government and private
sectors

Source: Nuvama research 10

Strictly private and confidential and not for public circulation

Premiumization: Crossing over from ‘needs’ to ‘wants’
Birth of a young India, on the move, aspiring for a materially better life, backed by the ability to spend
and make it a reality

From To
India gets younger, With a working age
as US, China age majority
77% 19%
Share of Millennials and Gen. Z in India’s India's share in global working age
population in 2030, with median age of population remains broadly constant,
31, compared to US: 40, China: 42 steady decline in China's contribution

Everyone steps up Basics covered, ‘wants’

activated
1 out of 2 Having grown up with better education/
employment opportunities, and having
Households from upper middle and high higher incomes, young India will break
income segments by 2030 from 1 in 4 away from the frugal attitudes of the
today preceding generations

Sectors likely to benefit

Retail & Clothing Alcohol &

Hospitality Durables Real Estate
brands Beverages
Source: Kotak Institutional Equities, World Economic Forum, Future of
Consumption in Fast-Growth Consumer Markets: INDIA 11
Logos have been used for illustrative purposes
Strictly private and confidential and not for public circulation
Globalisation: India’s time in global trade
IT services and Chemicals have been the PLI pushing manufacturing to centre stage
frontrunners in India’s exports so far
~2x increase in manufacturing value in next 5 years
Indian IT market share (%)
13.2
10.2 Current GDP INR 275 trn

Contribution of manufacturing 15%/ INR 43 trn

2.8 PLI additions over next 5 years
Capex* INR 2.3 trn
2006 2008 2010 2012 2014 2016 2018 2020 2022E
Production value ~INR 30 trn (10 x)

India chemical exports (INR bn) Advance

3680 Telecom
Mobile Auto Chemistry Pharma
infra
Cells
1902 INR 10 trn INR 6.8 trn INR 2.5 trn INR 2 trn INR 1.8 trn

FY17 FY18 FY19 FY20 FY21 FY22

Sectors likely to benefit

Textiles Engineering goods Auto Ancillary Pharma/API

Source: Kotak Institutional Equities, IIFL

12
* Export driven sectors
Strictly private and confidential and not for public circulation
Transformation: Multifold development across the board
Parameter 2014 2022 2030E

Roads Km constructed per day 11.7 28.6 41.1

Railways Kms electrified 21,614 50,394 80,000

Ports Volumes (in mmt) 972 1,250 1,600

Airports # of airports 74 133 175

Renewables capacity
Power 32 110 500
(gw)

Annual capacity
Data centres 28 118 268
addition (mw)

Sectors likely to benefit

Cap Goods EPC Equipment Mfrs Logistics

Source: Nuvama Research, Kotak Institutional Equities, Citi Research 13

Strictly private and confidential and not for public circulation

Capex: Back with a bang
14
Growing flows, led by GOI, private sector lagging Meaningful deployment across the board
12
12 11
10 10 Total Projected
9 Tenure of
8 Sector Government Capex
8 Scheme
7 Outlay (INR bn) (INR bn)
Semi Conductor 760 FY23-28 1,538
Electronics 386 FY21-26 110
Automobiles 259 FY23-27 749
Solar modules 240 FY22-27 1,112
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 ACC Battery 181 FY23-28 450
Government capex PSU capex (BSE-500) Private capex (BSE-500) Pharma drugs 150 FY22-28 150
Even with a reasonable 10% growth, private capex doubles Telecom 122 FY21-27 33
70 7.0
Food products 109 FY22-27 61
5.8
60 6.0
Textile 149 FY23-29 191
4.8
50 5.0
3.8
IT Hardware Products 73 FY22-25 25
40 4.0
Pharma APIs 69 FY21-30 37
30 2.3 2.4 60 3.0
50
55 Specialty Steel 63 FY24-31 396
20 2.0
31 White Goods 62 FY22-29 46
26
10 1.0
Medical devices 34 FY21-28 11
- -
FY2015-22 average FY2022 10% CAGR 12% CAGR 14% CAGR Drones 1 FY22-25 50
7% CAGR Scenario analysis - 5-year CAGR Total 2,660 4,958
Private gross fixed assets base of BSE-500 companies (LHS, Rs tn)
Implied average annual capex (RHS, Rs tn)

Source: RBI, Capitaline, Kotak Institutional Equities, Phillip Capital, Jefferies India 14
Resulting in broad based growth across key infrastructure vectors
INR bn FY13 FY15 FY17 FY19 FY21 FY22 FY23
Infra
Railways 241 292 452 521 290 1,069 1,176
Power 1,784 1,829 1,560 1,640 1,477 1,878 1,854 5x
Road 615 338 495 823 807 987 1,108
Irrigation 251 277 335 406 397 456 525
Railway DFC - 29 119 200 224 269 291
Smart Cities - 9 32 50 50 63 78
Metro 88 171 311 304 377 552 614 7-9x
Total 2,979 2,945 3,305 3,945 3,621 5,274 5,646

Industrials
Oil & Gas 855 1,166 1,081 1,179 805 1,335 1,402
Auto 117 104 115 153 72 119 125
Metals 416 433 295 322 151 355 418
Cement 105 121 51 189 56 140 151
Data Centres 57 77
PLI 154 793
Total 1,494 1,824 1,542 1,813 1,154 2,159 2,966
Grand Total 4,475 4,769 4,848 5,757 4,775 7,433 8,612
Growth (%YoY) 11.7 -2.2 -0.1 13.2 -23.4 55.7 15.9

Railways, smart cities, metros saw impressive growth over the last 10 years benefitting several SMID companies.
New-age avenues like data centers creating further growth opportunities

Source: Jefferies India 15

NEXT
Portfolio
Construction

16
Disciplined fundamental approach to selection of winners within defined
themes
Quantitative filters

3Y Forward PAT CAGR Forward looking ROE Debt/ EBITDA#

> 25% > 18% < 2x

Free Cash Flow trends Promoter Ownership*

Positive > 50%

Additional filters

Sustainable business moats Pricing power and profitability Management quality

Industry dynamics Earnings growth visibility Valuation comparable

#Except Commodities companies *Excluding Financials sector 17

This is an indicative framework which the portfolio manager shall endeavor to
follow while making portfolio investments Strictly private and confidential and not for public circulation
While bringing the rigour of private markets into public market investing

Strong networks enabling on-ground checks with 100+ companies within defined universe

Company / Channel checks In depth business analysis of catalysts

Management interactions Visibility of multiplying current PAT by

Active monitoring and review, site 2x over next 3-5 years
visits to gauge quality of enterprise,
efficient use of capital and
governance standards Rerating driven by deleveraging in
specific sectors
Peer, supplier, distributor feedback
Holistic checks via multiple Rerating as a result of increasing
touchpoints with key stakeholders institutional ownership and coverage

Business specific factors have a much higher impact than macro factors for under-covered SMID.
Building an independent view is key to generating returns, and more importantly managing drawdowns

18
This is an indicative framework which the portfolio manager shall endeavor to
follow while making portfolio investments Strictly private and confidential and not for public circulation
Our offering in a nutshell

Sector agnostic, risk-adjusted portfolio with a bias towards mid and small caps

Objective Portfolio Selection and risk mitigation Key themes

To deliver superior returns by Sector and benchmark

investing in high-growth Well-diversified with 30 - 35 o Premiumization: ~70
high-conviction, quality agnostic focusing on o Globalization: ~30
companies across SMID bottom-up stock selection,
companies across SMID o Transformation: ~40-50
benefiting from the India’s grounded in research # of stocks in universe covering
$4 trn+ प्रगति chosen themes
Market Cap Allocation
Mid caps 80-100% Leverage primary connects Focus on reasonably valued
20-25% CAGR over 3-5 years*
with 100+ companies emerging themes
Small caps Up to 20%

Ideal for investors seeking to multiply their returns over a long term investment horizon of 3-5 years

This is an indicative framework which the portfolio manager shall endeavor to

follow while making portfolio investments 19
* Illustrative returns
Strictly private and confidential and not for public circulation
NEXT
Investing
Equities expertise, track
record, risk management and
product terms
 Managed by team with the ability to deliver

Ajay Vora Nikhil Ranka

Executive Vice President and Head, Senior Vice President, and CIO, Equity
Equities, Alternatives
Nuvama Asset Management Nuvama Asset Management
19+ years experience 19+ years experience

▪ Extensive experience in fundamental research and fund ▪ Over 19 years of experience in fund management, research
management and investments
▪ Proven track record in Indian equities, delivering top notch ▪ Last experience at Reliance Industries’ Treasury: instrumental
returns across different market conditions in scaling equity AUM to US$1 bn
▪ As Head of Equity at Reliance Industries’ Treasury, scaled ▪ In-depth knowledge of business fundamentals across
AUM from US$200 mn to US$1 bn over a period of 5 years sectors
▪ Prior work experience includes Head of Research at ENAM ▪ Prior associations: Lloyd George Management, Future
AMC Capital, ICICI Sec, Kotak Securities

Strictly private and confidential and not for public circulation

Proven equities track record with the ability to generate returns across
market conditions
~18% (CAGR) returned since inception

~25% absolute alpha over the benchmark since inception

with superior risk-reward, Sharpe ratio of 1.4 vs 0.8 for benchmark

CAGR Abs return

Fund / Benchmark 6M 12M Since Since
Inception Inception
EDGE* -9.7% 10.8% 17.9% 93.1%
Nifty 5 0 TRI -8.5% 6.7% 14.0% 68.4%

Cushioned downfall during corrections Captured up move during rallies

Oct’21 – Jun’22 EDGE Nifty 50 TRI BSE 200 NSE 100 Jul’22 – March’25 EDGE Nifty 50 TRI BSE 200 NSE 100

Performance -4.7% -9.5% -10.6% -10.7% Performance 73.4% 53.6% 55.7% 51.0%

Alpha 4.8% 5.9% 6.0% Alpha 19.8% 17.7% 22.3%

*EDGE represents Nuvama Enhanced Dynamic Growth Equity Fund A1 shareclass. 365-day convention used for risk ratios.
ITD Performance from inception date: 05-Apr-21 till March’25. 22
Source: BSE, NSE
Strictly private and confidential and not for public circulation
Prudent risk management to mitigate volatility in SMID
1Y rolling returns: Large caps (RHS) vs. mid and small caps
▪ Well defined risk framework, overseen by an 160% 100%
140%
(LHS)
institutionalized, three-tier risk governance structure 120%
80%
Also recover quickly as
100% economy revives 60%
Diversified portfolio 30-35 stocks 80%
40%
60%
Single Stock Weight 7% 40%
20%
20%
Single Sector Weight 30%
0% 0%

-20%
Days to liquidate 100% portfolio, 5-7 days -20%
-40%
Mid/small caps tend to witness greater
drawdowns during contractions
-60% -40%
▪ Portfolio built over a period for definitive returns over 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

immediate returns, with low churn

Nifty Index NSE Midcap Index NSE Smallcap Index
▪ Clearly defined red flags to be avoided
▪ Active and close monitoring through primary checks
FY11 – FY23* Nifty 50 NSE Midcap NSE Smallcap
▪ Disciplined exit strategy: Lock in profits at euphoric
Max. drawdown -31% -38% -48%
valuations
Peak return 88% 139% 146%
▪ Ability to hedge and rebalance portfolio using Volatility 18% 30% 37%
derivatives

Source: Bloomberg, returns from FY11- FY23 YTD (15th Jan’23) 23

Strictly private and confidential and not for public circulation

Key terms
Strategy details Fees and expenses

Nuvama Equities eXpansion Target Fixed fee structure Performance fee structure
Name
(NEXT)
Investment Amount 50 lacs- 25 cr & 50 lacs- 25 cr &
Actively managed, Discretionary 10-25 cr 10-25 cr
Strategy/ Nature (INR) 10 cr above 10 cr above
Portfolio Management Services
Management Fees
(p.a. on average 2.50% 2.25% 2.00% 2.00% 1.75% 1. 50%
Portfolio Manager Nuvama Asset Management Limited AUM)

Performance Fees
NA 15% 15% 15%
(No catch up)
Custodian ICICI Bank Limited
12% p.a. pre-tax, post
Hurdle Rate NA expenses
Benchmark BSE 500 TRI With high water mark
For investment upto 10 cr:
2% up to 12 months
Min. investment INR 50 lacs Exit Load
1% from 13-24 months
For investment of INR 10 cr and above: Nil

Taxation In the hands of investors Expenses At actuals, capped at 25 bps p.a.

Strictly private and confidential and not for public circulation

Disclaimer
Securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Investment Approach will be achieved. As with any securities
investment, the value of a portfolio can go up or down depending on the factors and forces affecting the capital markets. Past performance of the Portfolio Manager/Investment
Approach may not be indicative of the performance in the future and no representation or warranty expressed or implied is made regarding future performance.

This document is for informational purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy the securities or other investments mentioned in it.
Investors are advised to refer to the Disclosure Document for detailed risk factors/disclaimers. Securities referred to in this document are not an endorsement of their soundness or a
recommendation to buy or sell. The same may or may not be a part of the PMS approach in future or any other PMS approaches launched from time to time.

The document is prepared on the basis publicly available information, internally developed data and other sources believed to be reliable. All opinions, figures, charts/graphs,
estimates and data included in this document are as on date and are subject to change without notice. Nuvama Asset Management Limited (formerly known as “ESL Securities
Limited”) (“NAML”, “Portfolio Manager”), it’s Holding Company, associate concerns or affiliates or any of their respective directors, employees or representatives do not assume any
responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information or any direct, indirect, special, incidental, consequential, punitive or exemplary
damages, including lost profits arising in any way from the information contained in this material. Whilst no action has been solicited based upon the information provided herein, due
care has been taken to ensure that the facts are accurate, and opinions given are fair and reasonable.

The views provided herein are general in nature and do not consider risk appetite or investment objective of any particular investor; readers are requested to take independent
professional advice before investing.

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