[Title to come]

[Sub-Title to come]

The Report Card

H123: September 2022
Date Strictly for Intended Recipients Only
* DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class
Disclaimer Regarding Forward-Looking Statements

This content contains forecasts, projections, goals, plans, and other forward-looking
statements regarding Company's financial results and other data provided from time to
time through AGM/ conference calls transcript, webcasts, presentations, investor
conferences, newsletters and similar events and communications. Such forward-looking
statements are based on the Company's assumptions, estimates, outlook, and other
judgments made in light of information available at the time of preparation of such
statements and involve both known and unknown risks and uncertainties.

Accordingly, plans, goals, and other statements may not be realized as described, and actual
financial results, success/failure or progress of development, and other projections may
differ materially from those presented herein.
Even when subsequent changes in conditions or other circumstances make it preferable to
update or revise forecasts, plans, or other forward-looking statements, the Company
disclaims any obligation to update or revise this content.

2
H123: OPERATING METRICS DETERIORATING

 The Return on Equity (ROE) is currently lower than its peak in FY22. Except for metals and healthcare, the return on equity (ROE)
in most industries is lower than it was prior to the pandemic.

 EBITDA margins are currently trending below FY19 levels for most sectors.

 The overall net debt increased by >40% from FY19, and the net debt-to-equity ratio also deteriorated. Overall debt servicing
capacity, represented by net debt to EBITDA, remained healthy.

 Working capital cycles have been extended and capex has increased sharply impacting the free cashflow generation.

Sector Revenue CAGR EBITDA Margins Net Debt to Equity ROE

(FY19-23) FY19 FY23* Chg FY19 FY23* Chg FY19 FY23* Chg
IT 11% 21% 20% -1% -37 -26 11 25% 26% 1%
Energy 10% 11% 8% -3% 47 42 -4 14% 11% -3%
Energy (ex RIL) 10% 10% 6% -4% 45 64 20 18% 15% -3%
Staples 14% 20% 16% -3% -10 -8 2 24% 20% -4%
Staple (ex ITC) 16% 18% 16% -2% 6 -2 -8 30% 20% -9%
Comm Services 10% 23% 41% 19% 137 871 734 -5% -11% -6%
Materials 14% 17% 17% -1% 65 45 -19 11% 17% 6%
Cons Dis 5% 8% 10% 2% 44 60 16 5% 11% 6%
Cons Dis (ex
7% 14% 12% -2% 34 38 4 19% 15% -4%
TTMT)
Industrials 9% 14% 11% -2% 58 51 -8 14% 12% -2%
Utilities 13% 26% 25% -1% 125 119 -5 12% 14% 2%
Health Care 9% 18% 17% -1% 16 -0 -16 11% 11% 0%
Real Estate 3% 26% 21% -5% 50 29 -21 7% 7% 0%
Overall 10% 14% 14% -1% 51 51 -0 13% 14% 1%
The analysis has been done of NSE-500 universe and data is sourced from Capitaline. *FY23 is Trailing twelve months

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or 3
may not have any future position in these sector(s)/stock(s)/issuer(s).
 OPERATING MARGINS: BACK TO BELOW PRE-PANDEMIC LEVELS

Except for communication services and consumer discretionary, operating margins were below pre-covid levels for most sectors.

EBITDA MARGIN (%) now below pre-covid levels

Q223 VS FY23 vs
FY19 FY20 FY21 Q321 Q421 Q122 Q222 FY22 Q322 Q422 Q123 Q223 FY23
FY19 FY19

IT 21% 21% 22% 23% 23% 22% 22% 22% 21% 20% 19% 20% 20% -1% -1%
Energy 11% 8% 13% 12% 13% 12% 11% 12% 11% 11% 7% 6% 8% -5% -3%
Energy (ex RIL) 10% 5% 11% 10% 12% 10% 10% 10% 9% 10% 4% 4% 6% -6% -4%
Staples 20% 20% 19% 19% 18% 17% 17% 18% 17% 17% 16% 16% 16% -3% -3%
Staple (ex ITC) 18% 19% 19% 18% 17% 17% 17% 17% 16% 16% 16% 15% 16% -3% -2%
Comm Services 23% -9% 20% 31% 41% 41% 42% 39% 42% 44% 41% 40% 41% 17% 19%
Materials 17% 14% 21% 23% 24% 25% 23% 24% 21% 19% 19% 12% 17% -6% -1%
Cons Dis 8% 10% 9% 14% 8% 8% 11% 10% 12% 11% 10% 10% 10% 2% 2%
Cons Dis (ex TTMT) 14% 13% 12% 21% 13% 9% 14% 14% 14% 13% 12% 12% 12% -2% -2%
Industrials 14% 12% 12% 14% 12% 10% 11% 12% 13% 12% 10% 11% 11% -3% -2%
Utilities 26% 32% 34% 35% 31% 35% 32% 33% 29% 28% 25% 24% 25% -2% -1%
Health Care 18% 19% 20% 23% 20% 22% 20% 21% 21% 12% 19% 21% 17% 3% -1%
Real Estate 26% 23% 23% 27% 25% 23% 26% 25% 24% 24% 25% 13% 21% -13% -5%
Overall 14% 12% 17% 18% 17% 18% 17% 17% 16% 16% 13% 12% 14% -2% -1%

The analysis has been done of NSE-500 universe and data is sourced from Capitaline
FY22 and FY23 are TTM numbers

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or 4
may not have any future position in these sector(s)/stock(s)/issuer(s).
 BALANCE SHEET: ROE’s DECLINE FROM FY22 HIGH
 Return on equity (ROE) is now below the peak of FY22. Most sectors except metals and healthcare are now below pre-pandemic
levels.

 Net debt to equity is back to pre-pandemic levels. The net debt of Energy, Communications Services, and Metals has increased sharply

RETURN ON EQUITY ABOVE PRE-COVID LEVELS NET DEBT TO EQUITY (%) IMPROVING

FY23 vs FY23 vs
FY19 FY20 FY21 FY22 FY23* FY19 FY20 FY21 FY22 FY23*
FY19 FY19
h
IT 25% 25% 23% 26% 26% 1% IT -37 -27 -32 -30 -26 11
Energy 14% 8% 11% 13% 11% -3% Energy 47 55 36 34 42 -4
Energy (ex RIL) 18% 8% 17% 20% 15% -3% Energy (ex RIL) 45 69 67 57 64 20
Staples 24% 24% 18% 18% 20% -4% Staples -10 -14 -9 -6 -8 2
Staples (ex ITC) 30% 37% 19% 19% 20% -9% Staples (ex ITC) 6 4 0 1 -2 -8
Comm Services -5% -96% -93% 0% -11% -6% Comm Services 137 222 709 607 871 734
Materials 11% 9% 13% 21% 17% 6% Materials 65 62 49 33 45 -19
Cons Dis 5% 7% 1% 8% 11% 6% Cons Dis 44 54 49 53 60 16
Cons Disc (ex TAMO) 19% 12% 6% 13% 15% -4% Cons Disc (ex TAMO) 34 43 33 36 38 4
Industrials 14% 9% 9% 10% 12% -2% Industrials 58 65 56 44 51 -8
Utilities 12% 13% 13% 15% 14% 2% Utilities 125 129 128 123 119 -5
Health Care 11% 12% 14% 13% 11% 0% Health Care 16 9 4 -3 -0 -16
Real Estate 7% 2% 5% 6% 7% 0% Real Estate 50 33 45 31 29 -21
Overall 13% 8% 11% 15% 14% 1% Overall 51 56 49 43 51 0

The analysis has been done of NSE-500 universe and data is sourced from Capitaline
FY23 numbers are for Trailing twelve months

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 5
not have any future position in these sector(s)/stock(s)/issuer(s).
BALANCE SHEET: WORKING CAPITAL CYCLE WORSENS

 Debt servicing ability, as measured by net debt to EBITDA, deteriorates from FY22, but remains below pre-pandemic levels.

 The working capital cycle deteriorates in several sectors, including energy, communications, consumer discretionary, utilities, and
healthcare

NET DEBT TO EBITDA (%) HAS IMPROVED WORKING CAPITAL DAYS*

FY23 vs FY23 vs
FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23
FY19 FY19

IT -114 -79 -91 -83 -73 40 IT 55 57 52 53 56 1

Energy 158 291 184 152 198 39 Energy 14 19 31 19 21 7

Energy (ex RIL) 125 356 222 167 233 108 Energy (ex RIL) 21 26 43 30 27 6

Staples -29 -42 -35 -23 -29 0 Staples 40 35 36 34 37 -3

Staples (ex ITC) 13 9 1 5 -6 -19 Staples (ex ITC) 34 30 30 30 33 -1

Comm Services 536 -1449 942 403 456 -80 Comm Services -47 -31 -39 -19 -26 21

Materials 216 277 156 85 132 -84 Materials 52 51 41 39 46 -6

Cons Dis 185 215 262 209 202 17 Cons Dis 16 20 15 24 26 10

Cons Disc (ex
Cons Disc (ex TAMO) 102 155 154 155 141 39 24 30 22 29 29 5
TAMO)
Industrials 203 253 280 199 217 14 Industrials 50 49 44 37 35 -15
Utilities 502 427 452 407 403 -99 Utilities 38 51 65 49 57 19
Health Care 78 43 17 -14 0 -78 Health Care 110 110 109 110 113 3
Real Estate 370 303 583 344 347 -23 Real Estate 714 960 1146 939 900 185
Overall 183 243 198 147 177 -5 Overall 35 40 42 36 38 4
The analysis has been done of NSE-500 universe. Source Capitaline * Working Capital Days = (Debtors + Inventory – Payables)/Revenue x 365
FY23 numbers are for Trailing twelve months

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or 6
may not have any future position in these sector(s)/stock(s)/issuer(s).
NET DEBT: AGGREGATE NET DEBT INCREASES BY >40%
NET DEBT UP 42% in H123 FROM FY19
150 128

100 75
45 42 43
50 31 27
3
0
-6 -11
-50

-100
-101
-150
Comm Cons Disc Energy Cons Staples Utilities Industrials Materials IT Real Estate Health Care Overall
Services

% CONTRIBUTORS AND DETRACTORS TO CHANGES IN AGGREGATE NET DEBT H123 vs FY19

45
39
40
35
30 25
25
20 18
14
15
10 6
5 2 1
0
-5 0 -1
-4
-10
Comm Energy Utilities Cons Disc Industrials Materials IT Real Estate Cons Staples Health Care
Services
The analysis has been done of NSE-500 universe and data is sourced from Capitaline
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or 7
may not have any future position in these sector(s)/stock(s)/issuer(s).
 CASHFLOWS: OVERALL CASH CONVERSION DETERIORATES

 Higher working capital results in a deterioration of cash flows

 The cash conversion ratio reflected by the CFO to EBITDA deteriorates except for staples and industrials.

OCF before W-Cap / OCF before W-Cap (%) CFO/EBITDA (%)

120.0 120.0
FY23 FY20 FY23 FY20
100.0 100.0

80.0 80.0

60.0
60.0
40.0
40.0
20.0
20.0
-
-

Utilities

Health Care

Info Tech

Cons Staples
Materials

Cons Disc

Energy

Industrials

Overall
Utilities
Materials

Energy

Cons Disc

Industrials

Overall
Health

Info Tech

Staples
Care

Cons

OCF: Operating cashflow; CFO: Cashflow from operations

FY23 and FY20 are TTM numbers

Lower working capital lock up Improvement in cash conversion

Cashflow analysis based on sample set of 319 companies for which cashflow statements are available. Source Capitaline
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 8
not have any future position in these sector(s)/stock(s)/issuer(s).
 CASHFLOWS: CAPEX INTENSITY PICKS UP

 Free cash flow to EBITDA for FY23 is below pre-covid.

 Double-digit growth in capex in FY23 (TTM) is impacting free cashflow generation.

Free Cash Flow/EBITDA (%) CFO and Capex Change FY23 vs FY20
100.0
CFO Capex

50.0 ENERGY -1.6 23.0

- HEALTH CARE 5.7 49.6

MATERIALS 17.0 46.0

-50.0
UTILITIES 26.2 19.0
-100.0
CONS DISC 26.5 73.1

-150.0 INFO TECH 28.6 -10.1

Utilities
Health Care
Materials

Cons Disc

Energy

Cons Staples

Industrials
Info Tech

Overall
Comm Services

CONS STAPLES 55.7 46.6

INDUSTRIALS 77.0 -7.4

COMM SER 126.7 15.8

2022 2020
25.1 24.4

Cashflow analysis based on sample set of 319 companies out of NSE-500 for which cashflow statements are available.
Source Capitaline
FY23 and FY20 are TTM numbers

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 9
not have any future position in these sector(s)/stock(s)/issuer(s).
MARKET CAPS vs OPERATING PROFITS

Market Cap CAGR < Operating profits CAGR : Healthcare, Consumer, Real Estate, Oil and Gas, Banks, Metal, Auto and Cons Durable

M-Cap vs Operating Profits

70.0

60.0

50.0

40.0
BSE-200 Returns
30.0

20.0

10.0

Real Estate
Utilities

Metals

NBFC
Chemicals

Healthcare

Banks-Private
Telecom

Cons Dur
Banks-PSU

Cement

Auto

Consumer
Technology
Cap Goods

Oil & Gas

-10.0

-20.0

Market Cap - CAGR Operating Profit (FY20-22) Operating Profit (FY22-24) BSE-200

1. The exercise is based on BSE-200 companies

2. For Banks and NBFC’s the operating profits is pre-provisioning operating profits (PPOP).
3. M-cap CAGR is Nov 19 to Nov 22
4. Operating profits CAGR is FY20-22 actuals and FY24 based on Bloomberg consensus estimates
5. Source: Capitaline and Bloomberg
Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. These figures
pertain to performance of the index/Model and do not in any manner indicate the returns/performance of the Scheme. It is not possible to invest
directly in an index.
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 10
not have any future position in these sector(s)/stock(s)/issuer(s).
PRE COVID AND POST COVID VALUATIONS

Premium/Discount to pre –covid 5/10-year average multiples

120.0
100.0
80.0
60.0
40.0
20.0
-
-20.0
-40.0
-60.0
-80.0

Healthcare
Metals

NBFCs

Oil & Gas

Chemicals

Consumer

Cement

Real Estate

Banks - Public

Utilities

Telecom
Technology

Automobile
Capital Goods

Banks - Private
10 Yr 5 Yr

Sectors at discount to pre-pandemic

multiples

1. 5 yr and 10 yr Pre covid multiples are from Jan-15 to Jan-20 and Jan-10 to Jan-20 respectively
2. Price to book multiples are used for NBFC, Banks, Metals, Oil and Gas, Real Estate, Telecom and utilities
3. Price to Earnings is used for Technology
4. EV/EBITDA is used for Auto, Capital goods, Cement, Chemicals, Consumer and Healthcare
5. Source: Bloomberg. The universe is BSE-200

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 11
not have any future position in these sector(s)/stock(s)/issuer(s).
HITS and MISSES: 2Q23 EARNINGS SURPRISES

Capital goods, Banks (both PSU and Pvt) and Chemicals had the highest number of positive surprises

Number of companies reporting positive and negative surprises vs expectations in Q223

100%

80%

60%

40%

45% 43%
20%
36%

0%

Metals
PSU Banks

Chemicals

Consumer
Cement

Technology
Auto

Utilities
NBFC
Pvt Banks

Oil & Gas

Healthcare
Capital Goods

Positive In-line Negative

Variance at calculated at operating profit levels

Source : Bloomberg,
Positive Variation > 5%, In-line -5% to +5%, Negative Variation <5%
.

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 12
not have any future position in these sector(s)/stock(s)/issuer(s).
EARNINGS MOMENTUM: REVISION TO FY23 ESTIMATES

PSU banks, chemical and Autos had highest number of upgrades and Metals and Oil and gas had highest downgrades

% of companies reporting upgrades and downgrades

100%

90%

80%

70%

60%

50% 100%

40%

30%
50%
20% 43% 40%

10%

0%

Metals
PSU Banks

Chemicals

Utilities
NBFCs
Auto

Capital Goods

Healthcare

Oil & Gas

Consumer

Cement

Telecom
Pvt Banks
Real Estate

Technology
Upgrade Inline Downgrade

Source: Bloomberg. Based on the BSE-200 sample set for which estimates are available
Downgrades > 5%, No Change -5% to +5%, Upgrades <5% over the past 6 months

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 13
not have any future position in these sector(s)/stock(s)/issuer(s).
 AUTOMOBILES: CYCICAL RECOVERY IN PV AND CV

 Volume Trends (3-Year CAGR): CVs grew at 12% on a low base due to improving freight availability, government infrastructure
spending, and replacement demand. PVs grew by 18% due to a high order book and production ramp-up. Strong urban demand,
an early start to the festive season, and increased credit availability resulted in an increase in 2W volumes, but they have
remained flat over the last three years. The early festive season increased tractor sales by 10%.

 Margins: Original Equipment Manufacturers (excluding Tata motors) gross margin expanded 90bps on yoy basis due to
premiumization, price increases and softening of commodity prices. EBITDA margins for OEM (excluding Tata Motors) improved
by 220bps on yoy basis supported by better gross margin and scale.

3-YR CAGR Volumes: CV and PV report double digit growth Margins improve with easing commodity pressures
30.0% 36 Gross Margins (%)

20.0% 34
18.2%

10.0% 11.5%
32
9.8%
2.5% 31
0.0%
-0.1% 30

-10.0%
28
27
-20.0%
26

-30.0%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 24
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
OEM including Tata Motors Gross margin (%)
Tractors CVs PVs 2Ws Total
OEMs excluding Tata Motors Gross margin (%)
PV: Passenger vehicles. CV: Commercial vehicles and 2W: Two Wheelers

Based on representative sample of 29 companies 14

AUTO ANCILIARIES: OUTPACING AUTO OEMs

 Revenue Trends (3-Year CAGR): Ancillaries revenue increased by 36%; 1) tyre companies increased by 18% due to higher
volume growth in OEM and aftermarket segments, as well as price increases. 2) Battery companies' growth of 14% was due to
growth in the auto and industrial segments. 3) Forging companies' growth at 20% was led by growth in the underlying industry,
price hikes, and new orders.

 Gross margins of the ancillary companies contracted by 110-370 bps due to a lag in the pass through of the commodity price
inflation.

3-YR CAGR Revenues: Strong double digit growth Gross Margins decline by 110-370 bps
60% 70
50%
40% 60

30%
50
20%
10%
40
0%
-10% 30
-20%
-30% 20
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

Total Ancilliaries Tyres Forging Battery Others Total Ancilliaries Tyres Forging Battery Others

Based on representative sample of 29 companies

15
 BANKS: ASSET QUALITY CONTINUES TO IMPROVE
 Q223, NII/PPOP 3 Year CAGR is ~15/11% resp. The same is ~13/9% resp. for PSBs and 17/13% resp. for Pvt Banks
Loan Growth (YoY (%) : Is accelerating Net Interest Income (NII) growth (%) :
Loan Growth (YoY; %) Loans - PSU Loans - Pvt NII Growth (YoY; %) NII - PSU NII - Pvt
25 30
21 24
25
20 20
20 15 21
15 12
15 11
10
10
5
5 5 5
2
- -
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

Asset quality: remains above pre-covid levels Cost Income (%) and ROAs (%)
Asset Quality GNPA PSU (%) GNPA Pvt (%)
NNPA PSU (%) NNPA Pvt (%) Credit Cost - PSU Credit Cost - Pvt RoA - PSU RoA - Pvt
12.0 3.5 3.0 2.0
1.8 1.7
3.0 1.6 1.8
10.0 2.5
2.8 2.8 1.6
1.3 1.4
2.5 1.2 1.4
8.0 2.0 1.2
1.1 1.2
2.0
6.0 1.5 0.8 1.0
1.3 1.7
1.5 0.6 0.8
1.0 0.6 0.6
4.0 1.0 0.5 0.5
0.8 1.0 0.4 0.6
0.3
0.4 0.4
2.0 0.5
0.5
2.2
2.0

1.2
2.0

1.3
0.9
0.2
9.5
3.9

8.7
4.0

6.3
3.0

- 0.0 0.0 0.0

Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

GNPA Gross Non-Performing Asset, NNPA Net Non-performing asset, NII: Net Interest Income, PPOP: Pre-provisioning operating profits . ROA Return on Assets
Source Company Disclosures based on a representative set of 28 banks.
The
*
sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or 16
may not have any future position in these sector(s)/stock(s)/issuer(s).
 CAPITAL GOODS: ORDER INFLOW IS ACCELRATING
 Order inflow was up 25% YoY for Q223. Orderbook's three-year CAGR was 5%. Public spending was significantly higher YTD than the
previous year, led by the center and PSUs. State capex is still lagging. Private orders were 29% vs. 22% last year, showing increased
capex activity. L&T commented that the award-to-tender ratio for 1H23 increased to 49% from 40% in 1H22 and 51% in FY22. The
short-cycle order continues to be solid, suggesting a strong undercurrent in demand.

 Key industries performing well: data center, electronics, warehousing & logistics, automotive, food & beverages, pharma & health
care, railroads & metro, renewables, water & wastewater, metals & steel, chemicals, refinery & petrochemicals.
Order book growth remains healthy (3- Year CAGR) Inflection in the order inflow momentum (TTM) – 3- Year CAGR
5.5% 8.0%
5.0% 6.0% 6.5%
4.9%
4.5%
4.0%
4.0%
2.0%
3.5%
3.0% 0.0%
2.8%
2.5% -2.0% -2.4%
2.0% -4.0%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

Revenue growth (3-Yr CAGR) EBITDA Margins above 5 year averages

10.0% 15.0%
EBITDA Margins (%) 5- Year Avg
14.0%
8.0% 7.9%
13.0%
6.0% 12.0%
4.0% 11.0% 11.1%
10.5%
10.0%
2.0%
1.6% 9.0%
0.0% 8.0%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

* Orderbook and Order inflow based on 12 companies and Sales and EBITDA margins is based on 22 companies 17
 CEMENT: MULTI YEAR LOW PROFITABILITY
 EBITDA has declined 45% YoY and QoQ owing to a double whammy of high-cost fuel inventory and monsoon-led seasonality. As a
result, blended EBITDA/ton fell 50% year on year and 41% quarter on quarter to a multi-quarter low of Rs 600. Vols. have been strong,
with growth of 8.5% YoY (3-yr CAGR: 7%). In H123, FCF is at negative Rs40bn post w/cap blockage (Rs53bn) and 40% YoY increase in
capex of Rs56bn.

 Profitability is expected to recover from Q3 due to a peaking of costs, a higher exit cement prices, and an increase in construction
activity. The 35% drop in fuel prices since the peak on April 22 is expected to save ~Rs 200 per tonne. Pan-India spot cement prices are
~1-1.5% higher than average prices in 2Q23.
Volumes: increased ~9% YoY; declined 7% QoQ led by seasonality Realisation/ton: declined 3% QoQ owing to 4-7%
Volumes (mt) (LHS) YoY (%) 3yr CAGR: 3% Blended realisation (Rs/ton) 5 Yr- Avg
70 50 5,500
60 55
40
50 5,250
30
40
20 5,000
30
10
20 4,750
10 -
- (10) 4,500
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

Cost/ton: Impact of high input prices and –ve operating leverage EBITDA/ton: Likely to bottom-out in 2Q and expected to recover
EBITDA (Rs/ton) 5 Yr- Avg
Total cost (Rs/ton) 5 Yr- Avg
1,500
4,500
1,300
4,250
1,100
4,000

3,750 900

3,500 700
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
500
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

* Representative set of eight cement companies 18

CONSUMER DURABLES: INFLATION OF INPUT COST DENTS MARGINS

 Despite volatility in quarterly growth, industry has witnessed double-digit growth (3-year CAGR) in the last 5-6 quarters, except
Q122, wherein industry got impacted due to the pandemic.

 Gross margin continues to see pressure, mainly because of raw material (RM) volatility (industry was not able to pass on the RM
price increase). However, at the operating level, the industry managed to maintain margins through cost rationalization, lower ad
spends, etc. However, over the last 2 quarters, some of these costs have normalized, which has impacted the margins by 100-200
bps.

Revenue Growth (%): 3 Yr CAGR Gross and EBITDA Margins change (%)

25% 400
300 238 248
207
20% 164
200
100 63
14.0% 22
15%
0

10% -100 -168

-202 -206 -201
-200 -163
5% -300 -218 -243 -248
-400 -333 -352
0%
-500 -445 -425
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
-5%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Industry Gross margins chg (yoy) Industry EBITDA margins chg (yoy)

Based on representative sample of 15 companies

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 19
not have any future position in these sector(s)/stock(s)/issuer(s).
 CONSUMER DURABLE: REVENUE AND MARGINS BY SEGMENT

Fans and Appliances: Double digit revenue growth Lighting : Single digit revenue growth
30% 20%
26% 15.0% 16%
25% 8.5% 9.2% 8.4% 14%
16% 10.0%
19% 5.9% 5.8% 12%
20% 18% 17% 17%
12% 5.0% 1.6% 1.8% 10%
14% -0.2%
15% 13%
0.0% 8%
11%
8%
10% 6%
-5.0%
-9.3% 4%
4%
5% -10.0%
1% 2%
16% 15% 13% 8% 13% 11% 12% 10% 10% 13% 15% 14% 10% 14% 13% 12% 12% 11%
0% 0% -15.0% 0%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
EBIT Margin (%) RHS 3 Yr Revenue CAGR EBIT Margin (%) RHS 3 Yr Revenue CAGR

Wires and Cables: Commodity pass through driving revenues Durables : Highest competitive intensity
60.0% 20.0%
35.0% 29.6% 12%
49.6% 18.0%
50.0% 30.0% 24.6%
43.8% 16.0% 10%
40.8% 25.0% 20.1%
14.0% 20.0% 15.3% 14.7% 14.4%
40.0% 8%
12.0% 15.0%
30.0% 10.0% 7.7%
10.0% 10.8%6%
8.0% 5.0%
20.0% 16.0% 16.4% 17.8% 4%
13.8% 14.6% 6.0% 0.0%
4.0% -5.0% 2%
10.0%
2.4% -10.0% -8.6%
2.0% 8% 8% 11% 5% 6% 5% 7% 5% 2%
17.2% 15.2% 16.6% 12.6% 12.6% 13.0% 13.5% 12.9% 12.2%
0.0% 0.0% -15.0% 0%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
EBIT Margin (%) RHS 3 Yr Revenue CAGR EBIT Margin (%) RHS 3 Yr Revenue CAGR

Based on representative sample of 15 companies

20
 CONSUMER STAPLES: SUBDUED VOLUME GROWTH
 FMCG companies' three-year revenue and volume growth rates increased by 100-150 basis points (bps) compared to Q123, as volume
growth rates increased marginally, and further price increases were implemented.

 Rural trends continue to be weak; recovery is likely to be pushed out by a couple of quarters.

 Gross margin decline is reducing given the base effect but remains at life lows (average 48.4%) .

 3 Yr EBITDA CAGR of 6.9% has been ahead of Q1 levels but remains weak despite ad spend cuts and cost rationalisation

3-Yr Revenue CAGR of 8.5% driven by price growth 3 year vol CAGR low at 5%
11.0% 10.5% 7.0% Volume Growth Price Growth
Revenue CAGR - 3Y

9.7%
10.0% 6.0%
9.1% 9.0% 5.9%
CAGR

9.0%
5.0% 4.9%
8.0%

7.0% 4.0%

6.0% 3.0%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

Gross margin contraction has moderated 3 year EBITDA CAGR reduced to 7% led by margin pressure
54% 0.5% 16%
14.0%
Gross margin YoY change - bp (RHS)
Gross margins yoy change

0.0% 14%
52% 15 bp 11.8%
(0.5%)
EBITDA 3 yr CAGR

12%
(1.0%)
Gross margins

50% 10%
(1.5%) 8% 6.9%
48% (2.0%) 5.4%
6%
-261 bp -157 bp
(2.5%) 4%
46%
(3.0%)
-114 bp 2%
44% (3.5%)
0%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
Based representative set of 11 consumer staple companies Source: Company Disclosures 21
ENERGY: WINDFALL TAXES IMPACTS CRUDE REALISATION
Upstream:
Brent crude is higher than the 5-yr average of US$70/barrel, and the net realisation for upstream producers has fallen from a peak of
US$110/barrel to US$75/barrel with the introduction of an export duty (windfall tax).
The domestic gas realization (APM gas) at US$ 9.5/mmbtu (effective 1 Oct 2022) has been highest since introduction of new formula in
2014. A new committee has been formed to review gas pricing formula and the outcome is expected by end Nov-22 which could reduce
the gas prices benefiting the end consumers.

Refining and Marketing

Refining margins have been strong, exceeding the 5-year average of US$ 5/barrel, while marketing margins have been impacted because
pump prices have not increased. The refining gains has been more than offset by weakness in the marketing segment.

Brent and APM Gas Price Integrated Margins and Refining GRMs (US$/bbl)
Domestic Natural Gas Prices (RHS) ONGC's crude realisation (LHS)

120.0 8.0 40.0 13.8 15.0

7.0 30.0
100.0
6.0 10.0
20.0
80.0 5.9
US$/mmbtu

5.0 10.0
US$/bbl

5.0
60.0 4.0
-
3.0 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
40.0 (10.0)
-
2.0 (2.5)
(20.0)
20.0
1.0
(30.0) GRMs (US$/bbl) Marketing Margins (US$/bbl) (5.0)
- - Integrated Margins (US$/bbl) - RHS
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

Source: Company disclosure Based representative set of 3 Oil marketing companies

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 22
not have any future position in these sector(s)/stock(s)/issuer(s).
GAS UTILITY: LNG PRICES MODERATE
Despite lower discounts compared to alternative fuels, the market for CNG-fueled vehicles continues to grow rapidly. However,
the industrial volumes have been impacted by higher LNG prices.
Spot LNG prices have peaked and started to fall given an oversupply in the market, curtailed Chinese demand, and lower EU
regasification capacity.

Volumes: Industrial volumes declines EBITDA/SCM: Margin holding up

30.0 12.0
25.0 10.0
8.3 8.7
20.0 7.2
13.2 11.0 8.0
9.1

Rs/scm
15.0
11.7 6.0
10.0
5.0 10.5 12.1 12.1 4.0
7.1
- 2.0
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223
-
CNG Volumes PNG Volumes Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

LNG: LNG prices starting to cool off CNG vs Petrol: Differential vs alternate fuel reduces
50.0 46.9 20.0 0%
Spot RLNG Prices RasGas Prices

Jan-20

Jan-21

Jan-22
May-20

May-21

Nov-21

May-22
Mar-20

Nov-20

Mar-21

Mar-22
Sep-20
Jul-20

Jul-21
Sep-21

Jul-22
Sep-22
40.0 -20%
15.0
US$/mmbtu
US$/mmbtu

27.4
30.0 -30%
-40%
10.0
20.0 13.8 -48%
-60%
5.0 -60%
10.0
-80% -71%
- -
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Petrol Diesel

Source: Company disclosures Based representative set of 4 CGD companies

SCM: Standard Cubic Meter, RSP: Retail Selling price 23

LIFE INSURANCE: HEALTHY VALUE OF NEW BUSINESS (VNB) GROWTH

 Annualized Premium Equivalent (APE) growth for listed players during the quarter was modest impacted by ULIPs.

 Non-par savings, annuities, and group protection continue to have robust growth. These high-margin products contributed to
VNB's 30% YoY growth in H123 and 22% 3Y CAGR, significantly outpacing overall APE growth.

 While retail protection offtake has remained tepid in recent quarters due to higher base and supply side constraints, it is expected
to turn-around in H223. However, insurers have significantly diversified their VNB mix over the last two years, resulting in
continued strong VNB growth even in the absence of retail protection contribution.

 The Embedded Value (EV) growth of the listed players continues to be in the high teens, which is supported by the continued
growth of VNB.

VNB and EV continue to maintain robust momentum... ... driven by higher margin products - non-par savings/annuities

3Y CAGR 3Y CAGR in APE

30%
120% 106%
24% 100%
25% 22% 81%
19% 80%
20%
16% 16%15% 16% 60% 51%
43%
15% 40%
20% 23% 23%
8% 9% 20%
10% 1% 3%
0%
5%
-20% -2% -4%-2%
0% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23
Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23
Annuity Non par savings Retail Protection ULIP
APE VNB EV

Based on IPRU Life, SBI Life, Max Life and HDFC Life

24
IT: NO SIGNS OF SLOW DOWN YET
 Despite the tough environment, the Top 10 IT companies reported better-than-expected growth with resilient order intake.

 Hiring continued to remain high which indicates near/medium term growth visibility.

 With lower attrition, the EBIT margin started bottoming out. Troubled sectors, like, Manufacturing, Hi-tech, Retail are still reporting
better growth. Adjusting for the currency impact, Europe's growth was also strong in Q223
 . Cross Currency headwinds impacts reported growth Net hiring > Revenue growth

1.20 25.0 25.0 1.90

1.10 1.70
20.0 20.0
1.50
1.00
15.0 15.0 1.30
0.90

%
%
x

10.0 10.0 1.10

0.80
0.90
0.70 5.0 5.0
0.70
0.60 - - 0.50
Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23

Total Book to Bill ratio (LHS) Total $ Revenue YoY growth (RHS) Total Headcount YoY (LHS) Hiring growth /Revenue growth (RHS)

Margins bottoming out No signs of stress in vulnerable sectors yet

24 24
18.2% 19.9%

% Revenue Share
23 22
16.8% 13.0%
22 20
10.0% 11.2%
21 18 12.9% 13.2%
%

20 16 18.1% 18.0%
19 14
26.1% 26.9%
18 12
17 10 Pre - Covid Q2'20 Q2'21 Q2'22 Q2'23
Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23
BFSI Hi-tech/Communication
Retail & CPG Life Science & Healthcare
EBIT Margin (LHS) Attrition (RHS)
Manufacturing Others
Source: Company disclosures Based on representative sample of Top-10 IT companies
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 25
not have any future position in these sector(s)/stock(s)/issuer(s).
METALS: REALISATIONS DECLINE SHARPLY
 Average realisations (Industry) fell sharply by 15% qoq and 4% yoy. While production costs peaked (coking coal and energy costs),
EBITDA/t contracted by more than 50% year over year and quarter over quarter.The only silver lining was the average volume growth
of c.25% qoq for top players. The strain on cash flows, combined with increases in capex and WC, has resulted in an increase in debt
for most of the companies (except JSPL).

 Despite some increase in net debt across companies, Enterprise Value/debt were sequentially flattish at 32% in 2QFY22 but
deteriorated on yoy basis (28% in 2QFY22), implying equity value is now lower than last year.

 In 3QFY23, EBITDA/t is likely to improve sharply, aided by lower coking coal and iron ore costs, while realisation falls will be
moderate at 2-3%. Non-integrated companies, such as JSW and JSPL, benefit more than Tata and SAIL.

Enterprise value (indexed to 2Q21) and Net debt Realisation and EBITDA (Rs/ton)

160 90,000 30,000

143 138
132 80,000
140 25,000
117 115 117 118 70,000
120 108
60,000 20,000
100 93
50,000
80 15,000
61 40,000
60 49 30,000 10,000
39 38
40 28 29 28 31 32
20,000
5,000
20 10,000

- - -
2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23
2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23

EV Net Debt as % of EV
Blended realisations EBITDA/t - RHS
Enterprise value = Market Cap + Net debt
Based representative set of 4 steel companies 26
NBFC: IMPROVING OPERATING PERFORMANCE

Steady operating performance (except Gold Finance (GF)) AUM growth above pre-covid

FY17-FY20 34.7
10.5 18.7 14.4 12.1 27.6 22.5 16.4 13.6 FY17-FY20 14.9 17.8 15.4
CAGR % CAGR % 4

300
250 10
200 8
Rs bn

150

Rs trillion
100 6
50
4
-
HF GF VF BAF HF GF VF BAF 2
-
NII PPoP
HF GF VF BAF

Considered TTM numbers 1HFY21 1HFY22 1HFY23 FY21 FY22 1HFY23

GF witnessed moderation in ROA Continued improvement in stress pool (Stage 2+3)

ROA % Total stress %

7.0 2.6
30 3.0
25.3
6.0
2.0
5.0 0.6 0.8
20 1.0
4.0 17.2 14.7
-
%

%
3.0 9.8
2.0 10 7.3 6.96.0 6.6 -1.0
5.0 4.2
3.6 2.6
1.0 -2.0
0.0 0 -3.0
3-year pre-Covid FY21 FY22 1HFY23 1QFY22 4QFY22 2QFY23
avg
HF GF VF BAF Overall Credit costs %
HF GF VF BAF

Representative set of 15 NBFCs, HFs: Housing finance companies, VF Vehicle Finance, GF: Gold Finance and BAF Bajaj Finance Source Company Disclosures
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 27
not have any future position in these sector(s)/stock(s)/issuer(s).
 PHARMACEUTICALS: GROSS MARGINS IMPROVE

 The formulations market in India expanded at a healthy rate. Sustained traction across therapies in both chronic and acute segments
as well as price increases of 5-7% supported the overall growth. H223 could be softer vs H123 due to seasonality and heightened
competition as most industry leaders have augmented their medical representative base by 5-10%.

 The generics market in the United States increased after several quarters of decline.The price erosion moderated to low single digits
in Q2 vs early teens in Q1. The recovery was fueled by strong Revlimid sales, while the US generic base business remained subpar.

 The gross margins improved due to softening input costs, INR depreciation and price increases in the domestic formulation market

3 year revenue CAGR (%) : India Business* 3 year revenue CAGR (%): US Generic Business**

16% 4.0%

14% 3.0%

12% 2.0%

10% 1.0% 0.8%

9%
8% 0.0%

6% -1.0%

4% -2.0%

2% -3.0%

0% -4.0%
Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223

*Representative set of 18 Pharma companies **Representative set of 13 Pharma companies

Source Company Disclosures

The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and may or may 28
not have any future position in these sector(s)/stock(s)/issuer(s).
SUMMING UP…

KEY HIGHLIGHTS

 ROE and operating margins are deteriorating at the margin

 Balance sheet weakens marginally with rising debt

 Free cashflow generation is impacted with higher capex.

 Working capital cycle is getting extended

SECTORAL TRENDS

 Financials deliver robust earnings with an improving yield and benign credit costs.

 Capital goods witnessed record order inflows, but the earnings growth expectation and valuation appear lofty.

 IT delivered better than expected earnings, and the downgrade cycle seems to be ebbing.

 Metals, healthcare, and energy continue to see downgrades.

 Consumption led sectors deliver revenue growth, but the delayed pass through of commodity inflation is hurting
margins.

 The valuations overall appear extended, with only a few sectors like energy, telecom, healthcare, and banks trading at
or below pre-covid averages.

29
Disclaimer

This document is for information purposes only. In this document DSP Investment Managers Private Limited (the AMC) has used
information that is publicly available, including information developed in-house. Information gathered and used in this document is
believed to be from reliable sources. While utmost care has been exercised while preparing this document, the AMC nor any person
connected does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising
out of the use of this information. The statements contained herein may include statements of future expectations and other
forward looking statements that are based on prevailing market conditions / various other factors 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.

The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate professional
advice. Past performance may or may not be sustained in the future and should not be used as a basis for comparison with other
investments. The sector(s)/stock(s)/issuer(s) mentioned in this Document do not constitute any research report/recommendation of
the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s). All opinions, figures,
charts/graphs and data included in this Document are as on date and are subject to change without notice.

This Document is generic in nature and doesn’t solicit to invest in any Scheme of DSP Mutual Fund or construe as investment advice.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

30