AMBIT ASSET MANAGEMENT

Ambit Coffee Can Portfolio

February 2021

PRIVATE & CONFIDENTIAL. NOT FOR CIRCULATION

Ambit Coffee Can Portfolio – Performance Track Record

CALENDAR YEAR RETURNS

Ambit Coffee Can Portfolio Nifty 50 MF Peer Avg
28.6%

22.1%
19.5% 20.1%
18.6%
17.5%
14.5% 14.9%14.5%
12.0% 11.3%
9.3%
7.1%
3.2%
0.6%

-2.5%
-3.1%
-4.7%

CY17 CY18 CY19 CY20 CY21TD Since Inception (CAGR)

QUARTERLY TRACK RECORD

30% 24%
Ambit Coffee Can Portfolio Nifty 50 22%
20%
20% 13% 15%
11% 9%
6%4% 8% 7% 8%
10% 4%2% 3%3%
6%
3%2% 1% 2% 1% 4%6% 6%

0%
-1% -1% -2% -3% -2%
-10% -4% -5%
-20% -13%

-30%
-29%
-40%
Mar-17 Dec-17 Sep-18 Jun-19 Mar-20 Dec-20
Ambit Coffee Can Portfolio inception date is Mar 06, 2017; Returns as on 31st January, 2021; Returns are net of all fees and expenses; Regular growth schemes
considered for MF peer group comparison;

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 2

How did we deliver this?

Good risk adjusted returns is an outcome of Good Processes characterized by:

1 2
Stringent quantitative filters Experienced team
& deep-dive research

 Each offering is based on deeply researched and  Dedicated and experienced research team
back tested framework to generate the investment  Research processes inspired by IE Research
universe  Investment Committee to approve all investment
 High threshold for performance over long spans of decisions
time, greatly minimize chances of poor performers or  Part of larger Ambit group lends advantages
poor quality companies entering into the investment  Focus on what is knowable and what is important
universe
 High quality of accounts and corporate governance is
uncompromised

3 4
Focus on earnings growth + earnings Risk management
quality

 Lower obsession with timing when one is investing  Concentrated Portfolios deliver best returns as
in a superior calibre of companies returns do not get average out
 Companies with a consistent track record and  Lower drawdowns due to consistent performers in
leadership traits are preferred secular sectors
 Past track record + Future sector potential +  Long term orientation with low churn realize the
Current management capabilities = Comfort on power of compounding
delivering quality earnings

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 3

Origins of Ambit’s Coffee Can Portfolio

1 Stringent quantitative filters

ROBERT G KIRBY’S
PAPER
The Journal of Portfolio Institutional Equities Asset Management
Management Research Team

1984 2014 2017

Ambit Asset Management

launches Coffee Can Portfolio
on PMS platform in March 2017

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 4

Our Time tested Framework

Coverage universe = Stocks with 10+ years of historical track record of consistency
> 10% YoY Revenue growth + > 15% ROCE

Our competitive advantage = Deep understanding of organizational DNA

Will the firm sustain CONSISTENCY of growth in future (more than a decade)?

Marry valuations with longevity

Concentrated portfolio of 10-15 stocks

Monitor earnings potential of companies in portfolio

Churn (if required) = <1 stock per year on average

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 5

Answering the obvious questions

‘Timing’ = Futile when earnings is consistent + strong Which company’s stock should I buy?

Total Shareholder Earnings Change Type 1: Type 2:

Returns Growth in P/E
Consistent earnings Volatile earnings (could
be due to external or
Scenarios A B C D internal factors)

Starting P/E (x) - trailing 55 55 55 55

Ending P/E (x) - trailing 40 30 40 30

Number of years 10 10 3 3 For how long should I hold this stock?

EPS CAGR 25% 25% 25% 25%

Price CAGR 21% 18% 12% 2%

Type 1: Type 2:
Forever (as long its Time it well
competitive
strengths sustain)

Focus on sustainable earnings to create long term wealth

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 6

Coffee Can Portfolio Philosophy

Consistent Track Long Term Wealth Low/Negligible Churn Do not “TIME” the Market Leaders in B2C
Record Creation market Sectors
Coffee Can Portfolio is a
Companies having Coffee Can Portfolio highly concentrated Do not attempt to time the Most companies in Coffee
excellent financial track intends to provide portfolio with 10-15 stocks market on the basis of Can Portfolio dominate
record of revenue growth 20-25% Earnings CAGR and intended churn of speculation surrounding their markets and
and earnings for over 10- over long term holding less than 1 stock per year oil price, exchange rates, possess unassailable
20 years with identifiable periods with volatility of on average. This allows politics or other competitive advantages in
DNA portfolio similar to Govt. the portfolio to benefit non-fundamental factors their core industries.
bonds (holding period>3 from “Power of
years) Compounding”

DNA to deliver consistent growth decade after decade

Talent

IT = Backbone Professional
empowerment

Focus on core Evolving Truly

business competitive Independent Bubbles refer to individual companies in Coffee Can Portfolio
Size of the bubble indicates Model Portfolio Weights
advantages Board

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 7

Asset Management Team

2 Experienced team & deep-dive research

Sales
Investment Process

Fund Management • Investment Universe is

researched by Sector
analysts

• Sector Analyst
recommends to the
Investment Committee

• Investment Committee
approves all entry and
exits from Portfolios

Investment Committee
• Senior Ambit Delegate
Operations Customer Service • Group Head – Risk
• Sushant Bhansali
• Manish Jain
• Aishvarya Dadheech

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 8

Ambit’s proprietary Good & Clean research methodology

Ambit’s ‘greatness’ framework identifies efficient capital Ambit’s forensic accounting model helps steer clear
allocators in the country firms with questionable accounts

Accounting checks
a. Investment P&L Mis-statement
(gross block)
• Abysmally low CFO/EBITDA ratio over a long run
• High volatility in Depreciation Rates
• Boasting earning through lower debtor provisioning
e. Cash b. Conversion of B/S Mis-statement
Generation investment to sales
(CFO) (asset turnover, sales) • Low Cash yield implying balance sheet misstatement
• Writing-off losses directly through balance sheet
• High contingent liability
Pilferage Checks
• High Miscellaneous expenses
• Unsubstantiated capex or delay in plant commissioning
d. Balance sheet c. Pricing • Historically generating negative free cash flows
discipline discipline
(D/E, cash ratio) (PBIT margin) • Increasing advances to related party
Auditor Quality
• High auditor remuneration
Our greatness framework looks at holistic and consistent growth
as the hallmarks of efficient capital allocation- a self sufficient The bottom three
growth engine without the need of tapping external capital deciles i.e. the worst
frequently is key to long term wealth creation. quality stocks on
accounting quality,
have underperformed

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 9

Earnings growth is the only driver of share prices…

3 Focus on earnings growth + earnings quality

4,500
4,000
Sensex Index Sensex EPS
3,500
3,000
2,500
2,000
1,500
1,000
500
-
Jan-01
Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19
Source: BSE, Ambit Capital
Sensex Price and EPS are based to 100 on Jan 1991

Page Industries Mkt Cap (Rs cr) Trailing EPS Trailing P/E (x)
Apr-10 920 27 31

Apr-20 20,271 334 54

CAGR 36% 29% 6%

Source: Ambit Capital Earnings contributed to ~80% of the share price growth

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 10

Ambit Coffee Can Portfolio Earnings vs. Nifty Earnings

FY11-FY20 CAGR Coffee Can Portfolio 18% vs. Nifty 5%

Coffee Can Portfolio EPS Growth Nifty EPS Growth
60% 55%

50%

40%
30%
30% 28%
21% 23% 23%
20% 21%
20% 16%
10% 10% 11%
10% 6% 7% 7% 6%
2% 3%
0%

-4% -2%
-10%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

Quality always comes at a price: Higher EPS growth trajectory = Multiple Expansion

60 Coffee Can Portfolio TTM P/E (x) Nifty TTM P/E (x)
51
50 47 46
41
40 36 38

30 24 25 24
22 22 20 22 22
19 18
20 19 17
15 15
10

0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 11
EPS Variance (Estimated vs. Actual)

Nifty Returns have been non-linear to the Nifty EPS performance (Estimated vs. Actual)
75%
Nifty EPS Difference( Est vs. Actual)
55%
Nifty Returns
35% 27%
18% 19% 15%
11% 7% 10%
15%

-5%
-2% -9% -9% -9%
-9% -8%
-25% -13% -14% -13%
-18%
-27% -25% -26%
-45%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

Coffee Can Portfolio have lower variance than Nifty every year
10% Coffee Can Portfolio EPS Difference( Est vs. Actual)
4% Nifty EPS Difference( Est vs. Actual)
5% 2%
0%
-5% -2% -2% -1% -1%
-5% -5%
-10% -8%
-9% -9% -9%
-15% -13% -13% -13%
-14%
-20% -18% -18%
-25%
-27% -25%
-30%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 12

Coffee Can Model Portfolio allocation

4 Risk Management

Sector Allocation
Financials 25%
Building Material 22%
Consumer Staples 21%
Cons Disc 10%
Information Technology 9%
Retail 7%
Retail Diagnostics 5%
Cash/Equivalent 1%

Segment Allocation
Large Cap 78%
Mid Cap 21%
Small Cap 0%
Cash/Equivalent 1%

Risk Ratios
Beta 0.59
Sharpe Ratio 0.81
Max Drawdown: Portfolio -17%
Max Drawdown: Benchmark Index -29%

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 13

Coffee Can Portfolio exhibits superior risk adjusted returns

Historical Coffee Can Portfolio vs Sensex vs Govt. Bond Coffee Can Stocks’ resilience vs Sensex
Dark Green reflects positive stock return in a year when Index was negative
Dark Red reflects negative stock return when Index return was positive
Coffee Can Stocks
Year Sensex Asian Paints Berger Paints HDFC Bank

FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
Historically Coffee Can Portfolio has provided capital protection FY08
for 3 yrs or longer holding period FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 14

Deep dive research presented through our Disruption series…

Oct 2019 Nov 2019 Jan 2020 May 2020

Jun 2020 July 2020 Oct 2020 Nov 2020

 Besides thinking about the immediate

next steps for your portfolio and in
keeping with our long term
investment thesis we like to stay adept
with long term disruptions your
companies can face in the future.
Dec 2020 Jan 2021
 We regularly come out with our
thoughts on disruptions in our portfolio
companies/ sectors.

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 15

Key Terms

Fund Type SEBI Registered PMS

Fund Tenure Open Ended
Structure Discretionary PMS
Minimum investment INR 50 lacs

Investible universe is stocks that perform well on the framework noted earlier. A further
Stock selection
subjective assessment then leads to a more concentrated stock portfolio

Number of stocks 10 – 15
33% per sector, 15% per stock
Large cap biased with Nifty 50 as the benchmark

The investment horizon is 3-5 years and longer; turnover therefore should not exceed an
Time horizon and turnover
average of 5-10%

Not to take aggressive cash calls; this is keeping in mind the longer term investment
Cash calls
horizon of the fund and is suitable from a taxation standpoint

Custodian & Fund Accountant ICICI Bank Limited.

Brokers Ambit Capital, Motilal Oswal, Kotak Securities

Depository Participant
Ambit Capital (Central Depository Services Limited)

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 16

Ambit Asset Management Overview

1400
AUM (in Cr. Rs)
1200 1160

1000
806
800 734
600
491
409
400 338
200 218
123
19 25 35 46
0
Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20
Ambit Good & Clean Portfolio Ambit Emerging Giants Portfolio Ambit Coffee Can Portfolio
Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 17
Ambit Overview

Pre-eminent full-service India focused Investment Bank

 Innovative solutions that reduce complexity CORPORATE FINANCE

 Mergers & Acquisitions (M&A) and Divestitures
 Deep understanding of prevalent regulatory framework  Equity Capital Markets (ECM)

 Broad range of tailor-made solutions for Business Owners,

Corporates, Institutional Investors, Family Offices and High Net
Worth Individuals (HNWIs) CREDIT (AMBIT FINVEST)
Experienced and Professional pan-India Team  Structured Finance
 SME Finance
 Team of 450+

 20 Offices in India, Singapore and USA

Successful Partnerships INSTITUTIONAL EQUITIES
 Differentiated and path breaking Research
 Strategic partnership with QInvest, Qatar
 Equities Trading
 Strategic business alliance with Daiwa, Japan for M&A
Proven Track Record
 Consistently ranked amongst the top 10 M&A advisory firms. ASSET MANAGEMENT
Advised 175+ transactions with announced deal value of USD 20  Portfolio Management
bn+  Offshore Advisory

 Increasingly a top 3 broker for top investors locally and globally.

Consistently ranked in the top 3 Best Local Broker category in
the ASiAMONEY Brokers Polls. GLOBAL PRIVATE CLIENT
 Investment Advisory
 In-depth and fundamental Research (Economy/strategy/sectoral)  Asset Allocation
 Tax and Estate Planning
 Manages wealth of 1800+ HNI families. Ambit Private Wealth
adjudged Best Private Bank in India in the ASIAMONEY Private
Banking Polls for four consecutive years from 2013 - 2016
Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 18
Ambit Executive Committee

ASHOK WADHWA SANJAY SAKHUJA GAUTAM GUPTE

Group CEO Executive Chairman Group COO
Ambit Finvest

Experience: 36 years Experience: 36 years Experience: 27 years

Ambit: 22 years Ambit: >17 years Ambit: >19 years
Formerly Managing Partner – Arthur Andersen Formerly with Lazard, Arthur Andersen, Citibank Formerly with SBI Capital Markets

SUSHANT BHANSALI
VIKAS KHATTAR AUSANG SHUKLA
CEO
Managing Director and Head of Managing Director and Head of
Asset Management
Equity Capital Markets & Corporate Finance
Financial Sponsors Group

Experience: 22 years Experience: 17 years Experience: 18 years

Ambit: >2 year Ambit: >4 years Ambit: >12 years
Formerly with Jefferies, DSP Merrill Lynch, Formerly with Macquarie Capital, Lehman Formerly with MSCI and PwC
Citigroup, Morgan Stanley and HSBC Brothers, Nomura and PricewaterhouseCoopers

SANJAY AGARWAL VIKRANT NARANG

DHIRAJ AGARWAL
CEO Dy CEO
Co-Head of Institutional Equities
Ambit Finvest Ambit Finvest
and Head of Equity Sales

Experience: 23 years Experience: 18 years Experience: 27 years

Ambit: ~2 years Ambit: >3 years Ambit: >1 year
Formerly with Finmax, Yes Bank, Centurion Formerly with KKR, Barclays, ABN Amro Formerly with Standard Chartered Securities,
Bank of Punjab and SBI Commercial & and PwC Sharekhan/SSKI, CLSA, Boyer Allan
International Bank Ltd

SANJIT CHOWDHRY AMRITA FARMAHAN NITIN BHASIN

Managing Director CEO Co-Head of Institutional Equities
Risk, Strategy, Corporate Global Private Client and Head of Equity Research
Communications

Experience: 25+ years Experience: 20 years Experience: 17 years

Ambit: 6 months Ambit: >9 months Ambit: >9 years
Formerly with BanyanTree Bank Ltd., RBL Bank, Formerly with Avendus, Reliance Private Formerly with SRF Limited, Emkay, Kotak
Barclays, Standard Chartered, ANZ Grindlays Client, Citibank (Citigold Private Client) Institutional Equities and Execution Noble

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 19

Risk Disclosure and Disclaimer

 Ambit Investment Advisors Private Limited (“Ambit”), is a registered Portfolio Manager with Securities and Exchange Board of India vide registration
number INP000005059.
 This presentation / newsletter / report is strictly for information and illustrative purposes only and should not be considered to be an offer, or
solicitation of an offer, to buy or sell any securities or to enter into any Portfolio Management agreements. This presentation / newsletter / report is
prepared by Ambit strictly for the specified audience and is not intended for distribution to public and is not to be disseminated or circulated to any
other party outside of the intended purpose. This presentation / newsletter / report may contain confidential or proprietary information and no part of
this presentation / newsletter / report may be reproduced in any form without its prior written consent to Ambit. If you receive a copy of this
presentation / newsletter / report and you are not the intended recipient, you should destroy this immediately. Any dissemination, copying or
circulation of this communication in any form is strictly prohibited. This material should not be circulated in countries where restrictions exist on
soliciting business from potential clients residing in such countries. Recipients of this material should inform themselves about and observe any such
restrictions. Recipients shall be solely liable for any liability incurred by them in this regard and will indemnify Ambit for any liability it may incur in this
respect.
 Neither Ambit nor any of their respective affiliates or representatives make any express or implied representation or warranty as to the adequacy or
accuracy of the statistical data or factual statement concerning India or its economy or make any representation as to the accuracy, completeness,
reasonableness or sufficiency of any of the information contained in the presentation / newsletter / report herein, or in the case of projections, as to
their attainability or the accuracy or completeness of the assumptions from which they are derived, and it is expected each prospective investor will
pursue its own independent due diligence. In preparing this presentation / newsletter / report, Ambit has relied upon and assumed, without
independent verification, the accuracy and completeness of information available from public sources. Accordingly, neither Ambit nor any of its
affiliates, shareholders, directors, employees, agents or advisors shall be liable for any loss or damage (direct or indirect) suffered as a result of
reliance upon any statements contained in, or any omission from this presentation / newsletter / report and any such liability is expressly disclaimed.
 You are expected to take into consideration all the risk factors including financial conditions, Risk-Return profile, tax consequences, etc. You
understand that the past performance or name of the portfolio or any similar product do not in any manner indicate surety of performance of such
product or portfolio in future. You further understand that all such products are subject to various Market Risks, Settlement Risks, Economical Risks,
Political Risks, Business Risks, and Financial Risks etc. You are expected to thoroughly go through the terms of the arrangements / agreements and
understand in detail the Risk-Return profile of any security or product of Ambit or any other service provider before making any investment. You
should also take professional / legal /tax advice before making any decision of investing or disinvesting. Ambit or Ambit associates may have
financial or other business interests that may adversely affect the objectivity of the views contained in this presentation / newsletter / report.
 Ambit does not guarantee the future performance or any level of performance relating to any products of Ambit or any other third party service
provider. Investment in any product including mutual fund or in the product of third party service provider does not provide any assurance or
guarantee that the objectives of the product are specifically achieved. Ambit shall not be liable for any losses that you may suffer on account of any
investment or disinvestment decision based on the communication or information or recommendation received from Ambit on any product. Further
Ambit shall not be liable for any loss which may have arisen by wrong or misleading instructions given by you whether orally or in writing.
 The product ‘Ambit Good & Clean Portfolio’ and ‘Ambit Coffee Can” have been migrated from Ambit Capital Private Limited to Ambit Investments
Advisors Private Limited. Hence some of the information in this presentation may belong to the period when this product was managed by Ambit
Capital Private Limited.
 You may contact your Relationship Manager for any queries.

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 20

THANK YOU & STAY SAFE