Date: March 2016

How to look through noise and build wealth?

Why Equity?

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3 reasons why you should INVEST… In EQUITY!

India’s growth drivers highlight the potential of equity markets

Prospect of not having to work your entire life – save for early retirement

Opportunity to outperform the ever increasing inflation – higher purchasing capacity

Ability to fulfil your goals in life – future focus

Historically, equity investment has relatively outperformed other asset classes over long term

Equity investment is relatively less explored in India compared to other investments option

3

Globally, equity is the most preferred investment avenue

India has the lowest exposure to equities with an allocation of only 4%

Source: Morgan Stanley, December 2015

Emerging economies, significantly under-exposed to equities compared to developed economies

4

Fixed Deposit returns < increase in cost

of living

Is my traditional saving method giving me enough cushion?

Source: Graph 1 - SBI, World bank. Period: 1980 – 2015

Difference between saving & investing is the ability to provide affordability cushion by beating

inflation on a regular basis

Bank

Fixed

Deposits

(average

returns),

7.22%

5

Equity provides cushion against ever-increasing cost of living Smartest way of wealth creation

Source: BSE India, World Bank. Period: 1980 – 2015

Regular investing in Equity helps you tackle cost of living and also plan for future goals

6

If our expenses are real, our returns should also be real… Post-inflation returns

Savings is not enough; You also have to beat inflation!

Value of today’s INR 100,000 over time Real cost of today’s expense over time

7

What worked yesterday, may not work tomorrow… Which asset class gives higher returns?

^Average of CAGR returns

* XIRR returns

Equities have outperformed other asset classes

8

Equity growth has been 220X in the last 35 years This turns out to a CAGR of 16.15%

Source: BSE India, 1980 – 2015

Trend remains unchanged

9

But the ride was not smooth for anybody… Crisis periods are recurrent, so are growth cycles

Source: RIMES, MSCI, Morgan Stanley Research as of January, 2016

10

Making more by losing less… A consistent, predictable behavior over time

Lowest CAGR = 7.06%

Highest CAGR = 16.10%

Average CAGR = 12.46%

100%

above inflation

& positive

15 year

returns

Lowest CAGR = 2.89%

Highest CAGR = 19.06%

Average CAGR = 12.34%

70%

above inflation

& 100%

positive

10 year

returns

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Short-term volatility has always been a part of Equity investing…

BSE Sensex 3-year rolling

return

5-year rolling

return

7-year rolling

return

10-year rolling

return

15-year rolling

return

Average rolling period return 13.36% 11.67% 11.89% 12.34% 12.46%

Total time periods 23 21 19 16 11

Total number of positive returns* 19 18 18 16 11

Total number of negative returns^ 4 3 1 0 0

Positive investment periods 82% 85% 94% 100% 100%

Longer you stay invested, lower the possibility of negative return

In long term, probability of incurring loss is lower in equities

*Positive returns – Number of investment periods during which returns have been positive. For example, where investment returns have been

computed for 15 years, 10 years offered positive returns (profits), the number of positive returns are 10.

^Negative returns – Number of investment periods during which returns have been negative. For example, where investment returns have

been computed for 15 years, 5 years offered negative returns (losses), the number of negative returns are 5.

Source: MFI & Bloomberg

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If you invest for a far-off goal, you can ride out the downturn…

Recovery time: 2 years 4 months

Maximum loss: -54.4%

Profit if held till 31/12/15: 7.73%

Recovery time: 3 years 11 months

Maximum loss: -56.2%

Profit if held till 31/12/15: 9.77%

Recovery time: 2 years 10 months

Maximum loss: -60.9%

Profit if held till 31/12/15: 2.65%

Losses in

Equity are

transitory with

‘Time in the

market’

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The 2025 mirage scenario… Are you prepared ?

Projected bull M cap:

INR 652 lakh crore

Projected bear M cap:

INR 234 lakh crore

Projected base M cap:

INR 357 lakh crore

Projected GDP growth

^

Source: Bloomberg data with projection data until 2017.

The forecast, projection or target contained in this graph is for illustration purposes only and is not guaranteed in any way. Such forecasts, projections or targets are based on internal analysis and

hence will be different from the actuals.

Wealth creation from 2015 to 2020 could be 3X wealth created in last 5 years (base case)

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To summarise… Equity is a core long term capital growth solution

The future is uncertain; prediction is risky

Preserve and, if possible, grow, capital, in real terms, over the long term

Avoid permanent impairment of capital through risk averse capital allocation

Target outperformance only over a full cycle

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“Someone is sitting in the shade today because someone planted a tree a long time ago” – Warren Buffett

Are you ready to take part in the ‘Equity’ Vision?

Thank You

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