DSP Bharat Nirman Fund

Question 1

About AMC

Answer 1

About DSP Asset Managers
DSP Asset Managers has been in existence since more than 25 years, with the launch of its first mutual fund scheme in 1996. It has established itself in the asset management industry with mutual fund schemes across different categories with an aggregate AUM of ~ Rs 1.5 lakh crore

About Fund Manager
Mr. Natraj Sankaranarayanan has more than 22 years of experience in Portfolio Management and Equity Research. He joined Equities Investment team of DSP Asset Managers in November 2023.
In his last stint at Quantum Advisors, he was managing Emerging Market Value strategy and headed ESG vertical. Additionally, he was also managing AUM of US$ 2.5 Bn for global asset allocators along with managing long-only value mandates from global offshore clients.

Question 2

The Strategy

Answer 2

Investment Strategy
The strategy adopts a bottom-up approach focused on high-quality, fast growing businesses across market capitalization.
The fund aims to capture capex opportunity arising from growth in investment cycle by investing in sectors including but not limited to Infrastructure sector.
The fund aims to keep target weightage of top 10 holdings in the range of ~40-50%
Aims to hold 30-35 stocks with likely higher exposure in mid and small cap stocks by leveraging DSP’s experience in small and midcap space

Three Broad Pillars of Investment Opportunity
1. India Export Opportunity
2. Infrastructure Build Out
3. New Capex Areas

Preferred Sectors: Power, Cement, Industrial Manufacturing / Engineering, Metals, Oil & Gas, Telecom, Pharma value chain, Auto value chain and Development Finance / Financial inclusion based NBFCs

Investment Framework
Identification of themes/business based on:
Lower cyclicality and ability to grow even in low industrial growth
Simple businesses from sectors with secular growth potential
Focus on execution and not on narratives
Leadership in the industry or among the top 3 players
Innovation led by access to technology

Financial Metrics : Stable margin, Focus on cash flows, Low leverage, Superior ROCE/ROE over cycles

Management : Credible, Capable & Passionate with past track record, Prudent capital allocation decision

Valuations : Reasonable valuations in conjunction with fundamentals

Question 3

Portfolio Composition

Answer 3

1. Shri Digvijay Cement - 6.7%
2. Voltamp Transformers - 4.6%
3. Kirloskar Oil Engines - 4.4%
4. Welspun Corp - 4.2%
5. Indus Towers - 4.2%
6. L&T - 4%
7. IPCA Lab - 3.9%
8. Lemon Tree Hotels - 3.8%
9. Century Plyboards India - 3.8%
10. Triveni Engineering & Industries - 3.7%

Question 4

Sector & Market Cap Break Up

Answer 4

Top 5 Sectors
1. Materials - 20.3%
2. Capital Goods - 17%
3. Auto & Ancillaries - 7.1%
4. Consumer Services - 6.4%
5. Food & Beverages - 5.3%

Theme
Manufacturing - 25.1%
Infrastructure - 34.6%
Consumption - 17.5%

Market Cap Break Up

Large Cap - 15%
Mid Cap - 8%
Small Cap - 54.2%
Cash - 22.8%

Answer 5

Nature of the Scheme Open-ended AIF Category III
Fund Manager Mr. Natraj Sankaranarayanan
Minimum Commitment Amount Rs 1 Crore
Additional Top-up Rs 25 Lakhs and above
NRI Eligibility NRIs on a case-to-case basis in consultation with fund house. US & Canada based investors are not allowed to invest.
Management Fee* Share Class
C1 : 2.25% (1-5 Cr)
C2 : 2% (5Cr- 10 Cr)
C3 : 1.75% (10Cr +)
NAV Reporting Frequency Fortnightly (Applicable for Subscription and Redemption)
Operational Fund Expenses At actuals (Capped at 0.15% p.a)
Exit Load 2% upto 1 year