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What is Sundaram Business Cycle Fund

Dynamic Thematic Fund investing in long-term emerging mega trends

Themes create business cycles

Lower correlation with sectoral cycles Invests in businesses

driven by medium to
long-term macro themes
Unique concentrated exposure (wider in opportunities)
as opposed to short-term
sectoral cycles
Themes can outperform broader markets (narrow in opportunities)

Themes cut across sectors

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Macro factors create long term business cycles

Macro factors drive medium to long term business cycles

• Self Reliance: Make in India
• Technology
• Climate change & environment
• Demographics: Urbanization, Formalization, Premiumization

Businesses capitalizing on cycles achieve above-average

growth leading to outperformance.

The Sundaram Business Cycle fund aims to capitalize on

emerging themes and businesses entering strong growth
cycles
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Macro Factors and Businesses that benefit

Factors Business that face the favourable cycle

Self-reliance Manufacturing, Indigenization, Infrastructure, Healthcare

Technology E-commerce, Fintech, Food-tech, Edu-tech , Block-chain, AI

Climate change, Environment Renewables, De-carbonization

Demographics Urban Real Estate, Modern Retail

Social Change & Nuclearisation Food, Convenience , Quick-commerce

Formalization Shifting of market share from Unorganized to Organized sector

Premiumization Demand for higher Quality Product and Services

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Cycles driven by themes have created excess returns
Investment themes since 1960

Cumulative % return

1600

Internet boom

1200 Advent of social

China’s media / cloud
Japan as manufacturing registrations /
Market size
emergent leader boom leading to growth of FANG
expansion &
& Technology strong demand for stocks
optimism in US expansion basic goods
800
market

400

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Source: Visual Capitalist, Morgan Stanley, Investment Management, Bloomberg, Factset, Haver
Themes cut across sectors – some examples

Technology & Sustainability Formalization

Technology Transition Gold Retailing
Digitalization Financiers / Lenders
Decarbonisation Paint Industry
Renewable Energy

Self Reliance Premiumization Manufacturing

Railways Logistics
Consumer durables
Defense Capital goods
FMCG
Electronics Pharma
Luxury, Fashion & Tourism
Infrastructure Industrials

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Current Themes

Make in / for India – Urbanisation /Premiumization &

Manufacturing Formalization
Import substitution move Urban Living & Business Space

Private-supporting macros Food & Entertainment Needs

CAPEX uptrend 1 2 Moving up Quality Curve

Technology
Transition & Sustainability
Digitalization 4 3
Rapid sector adoption New tech emerges

Creating disruptive opportunities Multifold industry opportunities

New digital availability Zero net commitment

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Theme 1 - Make in India - Manufacturing

Inflexion of:

Enablers:
Realignment of
Global Supply Chain

Make for India and Make in India

Large skilled and semi-skilled

Favourable
Policies workforce

Demographics

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Make in India - Manufacturing

PLI-Export
India’s electronic exports Thrust

Shift in
Global Improved
Supply Chain EODB
(China+1)

PLI-Import Corporate
Substitution Taxation

Share of Manufacturing on the rise.

Manufacturing is becoming the key growth driver for India

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Source: CMIE
 Make in India
Production Linked Incentive scheme
PLI is aimed at achieving
• Import substitution
• Job creation
• Export orientation

Production Linked Incentives (PLI) schemes span 14 sectors with an expected total outlay of INR 2.47Tn (US$32.9bn).

Advanced chemistry cell batteries

Highlights
Solar PV modules
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Source: GOI, Press Release
 Make in India
China Plus One
Manufacturing opportunities have increased for India as an additional destination for global firms looking to diversify away from China.

Global iPhone shipment share up to 10%, from <1% in 6 yrs

Year Models Global Shipment Share (%)

2017 iPhone SE (1st Gen) <1%

2018 iPhone 6S <1%

2019 iPhone 7 & XR ~1%

2020 iPhone 11, SE (2nd Gen) <2%

2021 iPhone 12 3%

2022 iPhone13,14 7%

2023 iPhone 15 10%

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Source: Apple, Ministry of Commerce, Jefferies
 Theme 2 - Urbanization / Premiumization / Formalization

Increase in purchasing power and

Enablers: Rise of Tier 2 and Tier 3 cities growing appetite for aspirational
brands and quality retail infrastructure

Growing share of organised retail % Diverse Growth Frontiers in Indian retail: From food and
grocery to apparel, jewellery, and luxury (USD Bn)
CAGR 10% 10% 10% 10% 10% 10% 13%

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Source: ICICI Sec, HDFC Sec, Deloitte
 Premiumization
2W and 4W

Changing behavior of younger customers (20-30

years) and improved availability of finance created
demand for Experience-biking

250cc growth (RE) stands out RE was able to create value over Auto index Increasing 4 wheeler UV penetration

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Source is SIAM, NSE. Nifty Auto Index and Eicher Motors Price Rebased to March 2011
 Formalization – Driven mainly by stringent compliance.
Eg: Enforcement of GST
Consolidation across many sectors How benefits of consolidation
played out over the last 5-6 years

Sector Parameter Share FY10 FY17 FY20 FY23

Bank Credit Credit Market Share Top 6 47.30% 48.40% 55.80% 61.80%
Cement Sales Volume Top 5 35.40% 46.60% 53.00% 58.00%
Steel Sales Volume Top 6 57.00% 56.00% 63.00% 64.00%
Building material - Pipes Revenue Top 5 33.00% 36.00% 39.0%^
Gross Box office
Multiplex Top 2 6.00% 24.00% 28.00% 35.00%
collections

Consolidation across many sectors has accelerated in the last three years. Anecdotally, we are witnessing
more consolidation in categories like Electrical Cables, Tiles, Batteries, Luggage and Grocery retail.
Incremental market share in FY23 v/s FY17 garnered by a few players should logically lead to more pricing
power. Ability to hold prices when inflation eases remains a key monitorable.

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^ Corresponds to FY22 numbers
Source: Avendus Spark Research
Theme 3 – Sustainability
Driven by climate change and environmental concerns

TECHNOLOGY SHIFTS CURRENTLY UNDERWAY

Recycling

Mobility: IC to EV

Energy: Renewables
and Decarbonisation

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 Sustainability

Enablers Trends

EV
Mandatory adoption: Global shift towards cleaner fuels with defined roadmaps
for EV adoption. India treading similar path through schemes such as FAME, PLI
Global Investments already underway
and lower GST. towards net zero target
Voluntary adoption: Reducing battery prices making total cost of ownership
attractive.
Increased scale to drive further
Energy improvements in cost of technology and
EV adoption across drive substitution
Policy support to drive to support markets and
Create export scale capacities to manufacture electrolyzers, Solar PV systems decarbonisation
Global experience on energy transition
and Wind turbines
suggests meaningful value creation as
Viability gap funding for 4GwH battery energy storage systems scale sets in
Hydrogen mission for 5Mn TPA green hydrogen capacity and the addition of
125 Gigawatts of renewable energy capacity by 2030
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Source: PIB, News Releases
 Sustainability
Need for cleaner energy sources
2025

APSEZ
Large Indian Corporate’s commitments on Net Zero

2030
Ultratech cement
Increase non-fossil Fulfil 50% energy Reduce projected Reduce carbon Achieve Net Zero
energy capacity to requirements from carbon emission by intensity by 45% emissions by
2035
500GW by 2030 RE sources by 2030 1Bn ton by 2030 by 2030 2070
Reliance Industries
Crompton
2040
Bharat Petroleum Corp
Hindustan Petroleum India Per capita CO2 emissions Global Energy related CO2 Emissions
Dalmia Bharat Ltd. 40
GAIL India
Grasim Industries
Vodafone 1.5t
Mahindra & Mahindra
30
2045
Tata Power
1t

GtCO2
Tata Steel
20
2046
Indian Oil Corp 0.5t
10
2050
Adani Green 0t
Adani Total Gas
1858 1880 1900 1920 1940 1960 1980 2000 2022 1900 1920 1940 1960 1980 2000 2023
JJSW Energy
Source: ourworldindata.org Source: www.mercomindia.com
Hindalco
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 Sustainability
Renewables going up in power generation mix

Rising Mix of Renewables Opportunities across value chain

Total Pipeline of Investments towards RE Innovation and

Manufacturing (INR Bn)

INR 19,623 Bn
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Source: SAMC, Bernstein, JSW Energy
 Sustainability
Electric vehicle adoption is anticipated to increase substantially

Global 4w EV penetration – (in %)

Share of EV sales
India is 4 years behind US and half of the global average

28.0

21.1

17.5

8.7

5.7

2.3

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Source: Bloomberg, IEA, Bernstein, Morgan Stanley, Deloitte
Theme 4 – Technology Transition & Digitalization

TECHNOLOGY SHIFTS CURRENTLY UNDERWAY

Trade
Retail Ecommerce
Supply Chain
B2B Marketplaces

Media &
Entertainment
Digital Advertising
OTT

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 The trends in technology evolve over decades

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Source: Adapted from Hargroves, K. and M. Smith (2005) Natural Advantage of Nations: Business Opportunities, Innovation and Governance for the 21st Century. London: Routledge.,
Transportgeography.org
 Digitalization
Seismic shift in Consumer Adoption opening up new opportunities
35%
Opportunities for B2C
Grocery
30%
2023-30 Growth projections

B2B and B2C Platforms

25% BPC
Platforms 01
and Marketplaces
20% Electronics

15%
D2C brands and consumer
Others Fashion Companies 02 company with drive to
10% increase wallet share
Mobile
5% devices
Online Travel & tourism
03 Non-lending financial
0 5 10 15 20 services
2023 Category Size USD Bn services
Logistics and
Enablers 04 Fulfilment and express
Supply Chain delivery

Access Convenience Choice

Digital
Proliferation of affordable Crossing barriers of time and Wider gamut of brands and
Advertising
05 Intermediaries
smartphones and data plans location offerings

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Source: RedSeer Consulting
 Speedy digital adoption in India
But Headroom Available

Internet Funnel – India eB2B market to grow

In Mn Users, % of total population, 2023, 2030P ~40% CAGR by 2030E

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Source: RedSeer Consulting, Bernstein, IFR September 2022
Past success
stories

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 Past success stories
Urbanization: Housing & Retail lending
Personal Segment Loans share in Systemic Bank Credit

Global
Enablers
Enablers
Financial Crisis

Advent of technology and improving last-mile

reach of financing

Availability of individual risk score for quick

underwriting
Bank Credit to Housing Sector

Low penetration and aspirational needs of

consumers

Value creation
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Source: RBI , Company reports
 Past success stories
Formalization: Paints
Inflexion point 20 years ago

Shift in consumer demand and global trends led to the growth

01 The domestic paint industry is approximately INR 3.75 Lakh crore. Products more customized and guided by the technology support
Fiscal incentives by government - Reduction in GST

The decorative paint category constituting almost 75% of the

02 market.
Market Cap - 2012 Market Cap - 2024
Stock
INR Cr INR Cr

Within the Indian decorative paint segment, Asian Paints and

03 Berger Paints are the two largest players Asian Paints 31,097 2,73,060

The industry's shift towards greener solutions as a response to

04 global environmental concerns and consumer’s demand for
Berger Paints India 3,694 66,806
healthier, safer products.

Digital tools to revolutionized customer experience, allowing for

05 personalized and precise color selection. Continuous innovation to
Kansai Nerolac Paints 4866 21,200
reduce energy costs by reflecting more sunlight and absorbing less
heat.
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Source: Bloomberg
Sundaram Business Cycle
Fund
Investment Process

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Sundaram Mutual Fund - Identifying business cycles

Focus of the fund:

Dynamic themes

Focused allocation to Emerging

Growth

Trends

Strategic Inflection Point

Strategic inflexion points are those points in
Adaptive to Changing
time where a company must make a
fundamental shift to maintain and/or
Environment
capitalise on forward momentum

Benefits of capturing multiple medium-

Time
term trends at inflexion points like
favorable policies, demographics &
realignment of global supply chain

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Source: Avendus Spark
 How will the fund be managed
Dynamic thematic approach cutting across sectors

1 2
Identify emerging medium-
term trends and assess Identify key
Portfolio of stocks Multi Cap portfolio of ~35-45 stocks driving factors enablers required
to sustain trend

Identification of Identify 6-8 medium-term trends, focus stringently

on 4-5 with established growth enablers
trends
5 Process 3
Investment Map businesses
Stock selection Bottom-up in-house research expected to
benefit from
emerging trends

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Reasonable diversification across sectors and stocks
Manage portfolio Ensure adequate portfolio liquidity Overlay stock
risk selection
framework

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Investor advantage & key takeaways

Investor advantage Key takeaways

Focused exposure
Top Down approach Long term approach

Unconstrained by sector definitions

Macro Based Dynamic themes

Alignment with transformational trends

shaping the future No cap on market
Nimble in terms of sector cap/themes/sectors
allocation
Dynamic evaluation of trends: alleviates
allocation risk

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 Benefits of Business Cycle Fund
Focused Sector Approach
Diversified Allocation – Nifty 500 Index Focused Allocation (Illustration)

Theme 5 Theme 1

Realty, 1.3 Theme 4 Theme 2

Textiles, 0.3
Media, Entertainment & Publication, 0.2
Diversified, 0.2
Forest Materials, 0.1

Theme 3

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Source: Bloomberg. Computation Inhouse.
The portfolio of the fund is subject to changes within the provisions of the Scheme Information Document of the Scheme. Nifty 500 Index data is as on April 2024.
Fund facts

Fund Sundaram Business Cycle Fund

Scheme Type An open-ended equity scheme following business cycle based investing theme

To provide long term capital appreciation by investing predominantly in equity and equity related securities with a focus on identifying
Investment Objective medium term cycles which can impact the business fundamentals. This will be done through dynamic allocation between various themes and
stocks at different stages of cycles in the economy.

Benchmark Nifty 500 TRI

Mr. Ratish B Varier & Mr. Bharath S (Equity)Mr. Dwijendra Srivastava & Mr. Sandeep Agarwal. (Fixed Income) Mr. Pathanjali Srinivasan is
Fund Managers
Dedicated Fund Manager for Overseas Investments

Plans & Options Regular & Direct Plan; Growth, Income Distribution cum Capital Withdrawal (Payout, Re-investment and Transfer)

Lumpsum: First Investment: Rs.100/- and multiples of Re.1/- thereafter SIP Dates: Any Day (1st to 31st) for Monthly and Quarterly Frequency;
Minimum Application amount
For Weekly Frequency - Every Wednesday. SIP Top-up facility: Half yearly/Annual Minimum Rs.500 and in multiples of Re.1/-

For redemption or withdrawal by way of SWP within 365 days from the date of allotment: 1%For redemption or withdrawal by way of SWP
Exit Load
after 365 days from the date of allotment: Nil. Exit load will be waived on Intra-scheme and Inter scheme Switch-outs/STP

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 Disclaimer
General Disclaimer: This document is issued by Sundaram Asset Management; an investment manager registered with the Securities and Exchange Board of India and is
produced for information purposes only. It is not a prospectus, scheme information document, offer document, offer and solicitation, to name a few, to buy any securities or
other investment. Information and opinion contained in this document are published for the assistance of the recipient only; they are not to be relied upon as authoritative or
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of the instrument discussed or offer to buy. It is neither a solicitation to sell nor shall it form the basis of or be relied upon in connection with any contract or commitment
whatsoever or be taken as investment advice. The information and opinions contained in this communication have been obtained from sources that Sundaram Asset
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this document for its decision-making purpose and is not bound to disclose the same. Copies of the Statement of Additional Information, Scheme Information Document and
application form with key information memorandum may be obtained from the offices of Sundaram Mutual offices and its authorized distributors or downloaded from
www.sundarammutual.com For scheme specific risk factors, asset allocation, load structure, fund facts and taxation aspects please refer scheme information documents
available online and at branches/Investor Service Centres; also at www.sundarammutual.com

Statutory: Mutual Fund: Sundaram Mutual Fund is a trust under Indian Trusts Act, 1882. Liability for sponsors is limited to Rs 1 lakh. Sponsors: Sundaram Finance Ltd.
Investment Manager: Sundaram Asset Management Company Ltd. Trustee: Sundaram Trustee Company Ltd.

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

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