26 July 2017 | 6:50PM SGT

India Mutual Funds: Ongoing financialization of savings bodes well

for equity flows; Introducing MFs most OW/UW stocks

Domestic MF trends: record AUMs, sticky inflows, rising retail participation Nitin Chanduka, CFA
+65-6654-5445 |
Over the past 3 years, domestic MFs have emerged as a key source of equity nitin.chanduka@gs.com
Goldman Sachs (Singapore) Pte
demand in India with about US$30 bn buying since 2H14. As of June17, equity MFs
Sunil Koul
assets have surged to record highs of US$110 bn (up ~50% yoy). We see a few +852-2978-0924 | sunil.koul@gs.com
Goldman Sachs (Asia) L.L.C.
encouraging trends: MFs buying in equities has accelerated to US$1.2bn/month Timothy Moe, CFA
since de-monetization (70% higher since June14); recent inflows have been more +852-2978-1328 | timothy.moe@gs.com
Goldman Sachs (Asia) L.L.C.
sticky, driven by a strong rise in SIP flows. (55% of monthly inflows ytd have
come through SIPs vs. 25-30% in 2014/15); record high investor accounts (~58mn),
faster growth in equity assets from Tier 2/3 cities & trending SIP searches suggests
rising retail participation, notably from semi-urban/rural areas. Strong equity buying
by MFs has acted as a stabilizing force during periods of weak FII flows recently.

Financialization of savings to continue; expect US$60 bn incremental flows by FY20

Since FY12, Indias households savings have been re-allocating out of physical
towards financial assets with share of financial savings rising to 41% in FY16 from
31% in FY12. We expect financialization of savings to continue with share of fin.
savings to rise to 45% by FY20. Amid this shift, we estimate share of equities (as
% of fin. savings) to slowly rise to 10% by FY20E (from 8% in FY16) driven by low
bond yields and rising retail participation. Our estimates suggest this could lead to
incremental equity inflows from households of ~US$60 bn by FY20E.

MFs dialing down portfolio cyclicality by buying defensives & pharma; we expect
re-allocations towards domestic cyclicals as recovery gathers pace
Based on the holdings data, we note that mutual funds remain OW domestic
cyclicals and UW defensives. However, recent allocation data shows that MFs have
been dialing down their overall portfolio cyclicality by raising exposure in defensives
and pharma. MFs also currently prefer PSU over private banks. As markets digest
recent gains and the cyclical recovery gathers pace, we expect further allocations
towards domestic cyclicals and private banks over defensives and exporters.

Stock ideas: Introducing MFs OW/UW screens to track favored/out-of-favor stocks

We introduce the most OW and UW stocks in MFs portfolios which will be useful to
track crowded positions or locate contrarian opportunities. GS Buy-rated stocks with
UW allocations include Reliance Industries, HDFC Bank, Kotak and Airtel.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result,
investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this
report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC
certification and other important disclosures, see the Disclosure Appendix, or go to
www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research
analysts with FINRA in the U.S.
Goldman Sachs India Mutual Funds

Domestic MF trends: record equity assets, more sticky and accelerating

inflows, rising retail participation

Over the past 3 years, domestic mutual funds in India have emerged as a key source of
equity demand with net equity buying of US$30 bn in the past 3 years. Domestic equity
MF schemes (including equity-linked savings scheme (ELSS) & balanced funds) have
seen assets surging to record highs of US$110 bn (up almost 50% yoy) as of
June-end 2017. We see a few encouraging recent trends in the Indian MF industry:

n More sticky inflows: The nature of inflows in mutual funds has turned more
sticky over the past year, driven by a strong rise in flows from Systematic
Investment Plans (SIPs). Year-to-date, average monthly inflows through SIPs are
US$665 mn per month (3x of avg. inflows in 2014) with 55% of monthly inflows in
equity (inc. ELSS) schemes ytd coming through SIPs (vs 25-30% in 2014/15).
n Larger retail participation: We see evidence of rising retail interest in equities,
notably from under-penetrated semi-urban and rural regions of India as detailed
below:
o The number of investor accounts (folios) has grown to record highs of
~58mn (from ~40 mn 3-years ago, rising at 15% CAGR) suggesting
broadening retail participation towards financial assets. This is partly helped by
increased spending on investor awareness campaigns (SEBI mandates MFs to
spend 0.02% of assets on investor education).
o In addition, retail participation in equities is also increasing within Tier 2/3
cities of India: Over the past 1 year, equity assets from B15 locations (beyond
the top 15) have grown by 58% yoy vs growth of 51% yoy from T15 locations
(top 15 locations in India).
o Google trends data for key-word searches such as SIP shows that search
interest has been rising and is currently the highest since the past 5 years
with some of the smaller states ranking the most popular in terms of interest
by sub-regions.
n Accelerated buying in equities post de-monetization: While Indian households
asset re-allocation towards equities started almost 3 years ago, the pace has
accelerated post de-monetization. Net equity buying by domestic MFs has
accelerated post de-monetization (in early Nov16), with average net monthly inflows
of US$1.2 bn (70% higher than avg. monthly inflows of US$690 mn since June 14).
n Strong offset to weak FII flows: Strong DII flows have partly offset FII selling in the
last few years (during 2H 2015 and 4Q last year amid de-monetization) and provided
support to the markets. Cumulatively, since de-monetization, domestic MFs have
bought US$9.7 bn in equities, which is almost twice the amount of net buying by
FIIs (US$4.8 bn). While domestic mutual fund ownership in Indian equities is still
relatively small (~5%) compared to FIIs (about 20%), domestic mutual funds have
acted as a strong offset and stabilizing force during periods of relatively weak and
volatile FII flows recently.

26 July 2017 2
Goldman Sachs India Mutual Funds

Exhibit 1: Domestic equity MFs AUM has surged to record highs of Exhibit 2: Post demontization, pace of average monthly inflows in
~US$110 bn and grew 48% yoy, as of June17 equities from domestic MFs has accelerated to US$1.2 bn per
month (70% higher vs US$0.7 bn/month avg. since June14)
Domestic equity MFs: assets under management
(includes equity, balanced & ELSS schemes' AUM, US$ bn) Monthly net flows in equities from domestic MFs
(US$mn)
$ 120 109 Avg. monthly inflows
2500
US$1170 mn
$ 100 AUM CAGR (since 2014): ~40% 2000 Avg monthly inflows: US$690 mn
48 1500
$ 80 % 1000
500
$ 60
0
$ 40 -500
-1000 Post demonetization,
MFs buying in equities
$ 20 -1500 has accelerated further
-2000
$0

Oct-15

Aug-16
Aug-14
Oct-14

Aug-15
Dec-14

Oct-16

Feb-17
Jun-14

Feb-15

Jun-15

Dec-15
Feb-16
Apr-16
Jun-16

Dec-16

Jun-17
Apr-15

Apr-17
Jun-03

Jun-05

Jun-06

Jun-07

Jun-08

Jun-09

Jun-10

Jun-11

Jun-12

Jun-14

Jun-15

Jun-16

Jun-17
Jun-04

Jun-13

Source: AMFI Source: Bloomberg

Exhibit 3: Domestic MFs shareholding in equities has almost Exhibit 4: Strong equity buying by domestic MFs has acted as a
doubled since 2013 but still remains low at 5% vs. about 20% strong offset and stabilizing force during periods of relatively weak
ownership by FIIs and volatile FII flows
Domestic MFs' : Holdings in Indian equities
(US$ bn) Cumulative net flows in Indian equities
6% $35 (since past 3 years, US$bn)
5.3%
$30
5% 4.8% Domestic mutual funds
4.2% $25

4% $20 FIIs
3.2% 3.2%
3.1% $15
3% 2.8% Fund Flows (US$bn)
$10
2015 2016 YTD
2% $5 FII 3.3 2.9 8.7
$0 Domestic MFs 10.9 7.0 6.8

1%
-$5
Aug-14

Aug-15

Aug-16
Oct-15

Oct-16
Jun-14

Oct-14

Jun-15

Jun-16

Jun-17
Feb-15

Feb-16

Feb-17
Apr-15
Apr-14

Apr-16

Apr-17
Dec-14

Dec-15

Dec-16
0%
Current
2011

2012

2013

2014

2015

2016

Source: NSDL, SEBI Source: Bloomberg, Goldman Sachs Global Investment Research

Exhibit 5: The nature of inflows in MFs has turned more sticky over the past year, driven by a strong rise in SIP flows: average monthly
SIP inflows have almost tripled since 14 to US$665 mn/month with 55% of avg. monthly inflows in equity (inc. ELSS) schemes this year
coming via SIPs (vs. 25-30% in 2014/15)
Monthly flows in equities through Systematic Average monthly
Average monthly Share of
Year MFs inflows
Investment Plans (SIP) SIP inflows SIP flows
(since Mar'16, US$ mn) (Calendar) (Equity + ELSS,
800 (US$ mn) (%)
US$mn)
750 725 735
700 2014 $196 $677 29%
650 Accelerating monthly SIP flows
600
2015 $317 CAGR: $1182 27%
50%
550 Since
485 demonetization
$644 $1270 51%
500
450 YTD $665 $1221 55%
400
Mar-16

Apr-16

May-16

Mar-17

Apr-17

May-17
Oct-16
Jul-16

Aug-16

Sep-16

Feb-17

Jun-17
Jun-16

Nov-16

Dec-16

Jan-17

Average monthly SIP inflows have almost tripled since 2014 ; ~55% of
average monthly inflows YTD are coming from SIPs

Source: AMFI, Livemint, Economic Times, Other Media Articles, Goldman Sachs Global Investment Research

26 July 2017 3
Goldman Sachs India Mutual Funds

Exhibit 6: The number of investor accounts (folios) has grown to Exhibit 7: Stronger growth in equity AUMs from tier2/3 cities
record highs of ~58mn from ~40mn in Sep14 (CAGR: 15%), (beyond the Top 15 cities) suggests a larger participation from the
suggesting rising retail participation towards financial assets semi-urban and rural areas of India

Total number of investor accounts Equity AUM growth by T15/B15 locations

(mn) (based on Equity+balanced scheme AUMs)
60
58.2 60% 58%
55 55%
51%
55.4
50%
T15 B15
50
50.6 45%
39% 40%
45 47.6 48 47.7
47.2 46.5 40% 37%
44.4 33%
40 42.8 35%
41.7
39.5 30%
35
25%
Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17
Dec-14

Dec-15

Dec-16
Sep-09

Sep-10

Sep-11

Sep-12

Sep-13

Sep-14

Sep-15

Sep-16
Jun-15

Jun-16

Jun-17
Past 3 Years Past 2 Years Past 1 Year
CAGR growth (%)
Account refers to a folio. An investor may have multiple accounts in a single fund or
across funds. This is therefore not a count of number of investors, but # of accounts T15 refers to the top 15 cities in India while B15 referes to the rest

Source: AMFI Source: AMFI

Exhibit 8: Google trends data for key-word searches such as SIP shows that search interest has been rising and is currently the highest
since the past 5 years with some of the smaller states ranking the most popular in terms of interest by sub-regions

Word-search sentiment from Google trends

120

100 "SIP"

80

60

40

20 "best mutual funds"

0
Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17

Uptrending 'SIP' search interest, notably from Tier 2/3

regions of India, alludes towards rising investor interest in
equities
'SIP' interest by sub-region
(over the past 2 yrs)

Highest
to

Lowest

Source: Google trends, Goldman Sachs Global Investment Research

26 July 2017 4
Goldman Sachs India Mutual Funds

Financialization of savings to continue; we expect incremental equity

inflows from households of almost US$60 bn by FY20E

Over the past 3-4 years, Indias households savings have been re-allocating out of
physical assets towards financial assets as reflected in the rising share of financial
savings within total household savings (31% in FY12 to 41% in FY16, ~2.7% rise per
annum). Within financial savings, share of equities (including debentures), albeit low, has
also been increasing steadily to 8% in FY16 from low levels of 3% in FY12.

Looking forward, we expect the trend of increasing financialization of household

savings to continue given fading appeal of physical assets (including gold) and positive
real rates (given RBIs commitment to contain inflation) which should bode well for
savings into financial assets. While de-monetization has already helped accelerate
mutual fund inflows, the ongoing efforts by the incumbent government to arrest
corruption, curb cash transactions (real-estate accounts for a substantial portion of
unaccounted funds) and direct transfer of subsidies into bank accounts will further force
savings towards financial assets, in our view. We expect financial savings (as % of
total household savings) to rise to 45% over the next 3 years, representing a
modest rise of 1% per annum.

Amid this shift, we expect share of equities (as % of financial savings) to slowly rise
to 10% by FY20 (from low 8% levels in FY16). Our expectations of structurally higher
retail equity allocations is driven by 1) low households penetration of equities, 2)
rising retail investor participation (notably from under-penetrated Tier 2/3 towns), 3)
increasing investor awareness as reflected by surging SIP flows , 4) falling bond
yields (which makes deposits less attractive compared to equities), 5) digitization and
6) growing financial inclusion.

Even under these conservative estimates, we estimate that incremental equity inflows
from households could reach around US$60 bn by FY20E. Even then, households
equity exposure (as % of total financial assets) will remain around 5% levels vs average
households equity holdings of 15% across major Asian countries. We expect a large
part of the households equity inflows will continue to be channeled through mutual
funds and hence mutual funds will likely remain a key source of equity demand in India
going forward, in our view. Equity MFs (including balanced & ELSS schemes) have
already received inflows of ~US$8 bn in the first 3 months of FY18, implying a
run-rate of US$2.6 bn inflows/month.

26 July 2017 5
Goldman Sachs India Mutual Funds

Exhibit 9: We expect the trend of increasing financialization of household savings to bode well for equity inflows; we envisage
incremental equity inflows from households of almost US$60 bn by FY20E
FY16 FY17E FY18E FY19E FY20E Comments/ Assumptions

Nominal GDP (US$ bn) $2090 $2265 $2500 $2766 $3139 Nominal GDP growth estimates is based on GS
--Nominal GDP growth (%yoy) 8% 10% 11% 13% economists' expectations

Household savings (US$ bn) $399 $432 $471 $514 $583 Households' savings is assumed to remain constant at
Household savings (as % GDP) 19% 19% 19% 19% 19% ~19% of GDP

Total Financial savings (US$ bn) $165 $184 $205 $229 $265 Financial savings (as % of households' savings) is
forecasted to increase at the rate of 1% per year.
Financial savings (During the 2002-2007 bull cycle, financial savings (as % of
41% 42% 43% 44% 45%
(as % Households' savings) household savings) rose @ 1pp/per annum)

Share of Equity (inc. debentures)

8% 9% 9% 10% 10% Share of equities (as % of total financial savings) is
(as % financial savings)
conservatively assumed to grow to 10% by FY20.
Annual households' equity flows (US$ bn) $14 $17 $19 $22 $25
We expect incremental equity inflows from households
Equity Assets (US$ bn) $85 $103 $122 $144 $170 of almost US$60 bn by FY20 (equity MFs (inc. balanced
funds) have received inflows of US$8 bn in first 3 months of
Financial liability is assumed to remain constant at
Equity as % financial assets 4% 4% 4.6% 4.9% 5.1%
25% of financial assets.

Source: CEIC, RBI, Goldman Sachs Global Investment Research

Exhibit 10: We expect financial savings (as % of total household Exhibit 11: Within financial assets, we expect share of equities (as
savings) to rise to 45% over the next 3 years, representing a modest % of financial savings) to slowly rise to 10% by FY20E (from low 8%
rise of 1% per annum levels in FY16)

80% India's distribution of households' savings Share of equity (inc. debentures) as % of total financial
savings
Households'equity flows (US$bn, RHS)
69% GS estimate GS estimate
70% Equities as % fin. Savings (%)
63% $30
59% 13% 13%
12%
60% Physical Savings
55% 10% $25
10%
52% 8%
50% $20
45% 8%
41% $15
40% 6% 6%
Financial Savings 4% $10
30% 31%
Total household' 2% $5
savings: US$0.4 trn
20% (FY16) 0% $0
FY90

FY92

FY94

FY96

FY98

FY00

FY02

FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18E

FY20E

FY90

FY92

FY94

FY96

FY98

FY00

FY02

FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18E

FY20E
Source: CEIC, Goldman Sachs Global Investment Research Source: CEIC, Goldman Sachs Global Investment Research

Exhibit 12: Household equity exposure (as % of total financial Exhibit 13: ...but will remain low compared to other major markets,
assets) is likely to rise modestly by 1pp over the next three years, suggesting ample room for more asset re-allocation towards
as per our estimates... equities
India Household equity assets as % of financial assets Households' investment in equities
45% (as % of Financial Assets)
8% $ 200 39%
7% 40%
7% $ 180 35%
$ 160
6% 5% 30%
5% $ 140
5% 25% 21% Asian countries average:15%
$ 120
4% 20% 17% 17%
4%
4% $ 100 14%
15%
$ 80 10%
3% 9%
$ 60 10%
2%
Households' equity assets 4%
(US$ bn, RHS) $ 40 5%
1% $ 20 0%
0% $0
US TW AU KR SG JP CN India
FY83
FY85

FY89

FY93
FY95

FY99
FY01

FY05

FY09
FY11

FY15
FY81

FY87

FY91

FY97

FY03

FY07

FY13

FY17E
FY19E

India data as of Mar'16, China: Aug'16, US, Australia, Singapore: 1Q'17, Taiwan, Korea:
4Q'15, Japan: 3Q'15

Source: CEIC, Goldman Sachs Global Investment Research Source: Haver, CEIC, OECD, WIND, Goldman Sachs Global Investment Research

26 July 2017 6
Goldman Sachs India Mutual Funds

MFs dialing down portfolio cyclicality by buying defensives & pharma; we

expect re-allocation towards domestic cyclicals as recovery gathers pace

As we expect MFs to increasingly become an important source of equity demand,

remaining cognizant of what they are buying and selling becomes important. Based on
the holdings analysis of the top 350 equity-focused MF schemes (US$90 bn AUM,
c.85% of total MFs AUM (Equity, Balanced & ELSS-equity schemes)) and positioning
analysis (vs benchmarks) of top 200 pure-equity schemes (ex-sector/balanced funds,
AUM of US$70 bn), we note that mutual funds remain OW domestic cyclicals
(industrials, durables, autos notably in mid-caps) and UW defensives. However, since
de-monetization, funds have been dialing down their overall portfolio cyclicality by raising
exposure in defensives (largely Staples/Utilities) and pharma. Funds also currently
prefer PSU banks over private ones and are gradually raising allocations towards
rural consumption beneficiaries. As markets digest recent gains and cyclical recovery
gathers pace, we expect further allocations towards domestic cyclicals and private
banks over defensives (largely staples) and exporters.

Our key findings are illustrated below:

n Funds reducing OW allocations in Investment cyclicals (notably cement):

Domestic mutual funds continue to remain OW government capex beneficiaries such
as capital goods and cement. However, post de-monetization, cement sector has
seen net outflows by MFs. Consequently, OW allocations in cement have also
been pared down by almost 70% and funds are now OW by only 40 bp (vs 130
bp OW pre demonetization). Industrials remains the most OW sector in overall MFs
portfolio with average OW allocation of 390 bp and almost 75% of the funds in our
sample remaining OW.
n Within Banks, funds are reducing OW allocations in private banks, prefer PSU
banks: Post de-monetization, domestic MFs have significantly reduced their OW
allocations in private banks and are now OW only 35 bp (vs OW allocations of 140
bp in Oct 16 end). This is primarily driven by reduced allocations in HDFC bank &
Axis Bank.
Funds have gradually been raising exposure in PSU banks and are currently OW by
125 bp. SBI and Bank of Baroda are the top OW PSU bank stocks. Within diversified
financials, HDFC remains the most UW stock. Funds have also started to raise
exposure towards housing finance stocks.
n Funds remain UW exporters but notably trimming exposure in Pharma:
Although funds still remain UW on Pharma, UW allocations have been reduced
from -170 bp to -105 bp over the past 1 year. Large-cap pharma stocks (Sun
Pharma, Dr Reddy, Lupin) have seen the largest reduction in UW exposure while
Aurobindo Pharma remains the top OW Pharma holding.
Infotech saw some tactical reshuffling post de-monetization when funds started
buying Tech stocks and consequently, scaled down UW allocations by almost 70bp
(until Feb17); post Feb17, MFs have resumed selling in Tech stocks. Funds are

26 July 2017 7
Goldman Sachs India Mutual Funds

currently UW Tech by 240 bp with TCS, INFY being the top UW stock & HCL Tech the
top OW.
n Funds are raising exposure towards rural consumption beneficiaries: Since
de-monetization, funds have reduced UW positions in rural exposed stocks
(2-wheelers, staples, tractor, rural NBFCs) by almost 60 bp while within urban
consumers (largely cars), UW allocations have increased by roughly 30 bp. Funds
preference towards staples over consumer cyclicals has partly contributed towards
reduction in rural UW allocations.
n Within commodity cyclicals, MFs are strong buyers in Metals & mining sector and
have been selling Energy stocks (Oil E&P, Refining & Marketing). Within other
defensives, utilities has seen strong inflows while flows towards Telcos remains
muted.

Exhibit 14: Post demonetization, Domestic MFs have been dialing down their overall portfolio cyclicality by buying defensives (largely
Staples/Utilities) & Pharma; Cement & Energy have seen outflows
Based on the holdings analysis of the top 350 equity-focused MF schemes (inc. Equity, Balanced & ELSS schemes, AUM: US$90 bn)
$3500
Cumulative domestic MF flows in Cumulative equity MF inflows
Financials (since demonetization in Nov'16, US$ mn)
$3000 equities (since 2016, US$ mn)
$2500 Total flows (US$ mn) Flows as % sector cap (RHS) 2%
$2500 Defensives
$2000
(Staples,Telco,U
$2000 Investment Cyclicals $1500 1%
tilities)
(Industrials,Cement,Chem) $1000
Exporters
$1500
(Tech, Pharma) $500 0%
$1000 $0
Cons. Disc.
-$500 Exporters -1%

Energy
Industrials

Chemicals

Cement
Banks

Metals & Mining

Durables
Defensives

Property
$500

Div. Financials/ Ins.

$0
Commodity Cyc
-$500 (Metals/mining,Energy)
-$1000
Dec-15 Apr-16 Aug-16 Dec-16 Apr-17

Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 15: Domestic MFs are OW Industrials, Media/Durables, Exhibit 16: Since demonetization, MFs positioning has increased in
Chemicals & PSU Banks and UW Staples, Div Financials, Exporters Defensives (Staples, Utilities), Metals/mining, Pharma & PSU
and Energy banks; Private banks, Cement & Energy have seen the largest cuts
Based on sample of top 200 pure-equity schemes (AUM: US$70 bn) Based on sample of top 200 pure-equity schemes (AUM: US$70 bn)

India sector allocation in Domestic equity MFs Change in MFs OW/UW allocations
300 390 (OW/UW vs. respective benchmarks, bp) 100 (bp, since demonetization in Nov'16)
200
50
100
0 0
-100
-200 -50
-300 -100
-400 -400
-150
Metals & Mining
Chemicals

Pharma

Refiners
Oil E&P
Utilities
Autos

Cement
Media/Durables

Coal & Others

Telco

Infotech
PSU Banks

Private Banks

Staples
Industrials

Div. Fin/ Ins.

Infotech

Energy
Pharma

Industrials

Private Banks
PSU Banks

Autos

Cement
Defensives

Metals & Mining

Chem. & Other Mat.

Div. Fin/ Ins.

Media/Durables

Overweight Underweight
Neutral (<-100bp)
(>100bp)

Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

26 July 2017 8
Goldman Sachs India Mutual Funds

Exhibit 17: Within Investment cyclicals, cement sector has seen Exhibit 18: OW allocations in cement have been pared down by
net outflows since demonetization ; fund flows towards Industrials almost 70%; Industrials remain the most OW sector with avg. OW
remain supportive allocation of 390bp

US$ mn Domestic MFs OW/UW allocations

Cumulative MF flows in
1,200 Investment Cyclicals (bps)
Investment cyclicals Overweight
1,000 Industrials 600
800
500
600 Industrials
400
400

200 300
-
200 Chemicals/Other Materials
(200)
(400) Cement 100 Cement
(600) 0
Dec-15

Feb-16

Jun-16

Dec-16

Feb-17

Jun-17
Aug-16
Apr-16

Apr-17
Oct-16

Aug-16

Feb-17
Jun-16

Oct-16

Apr-17

Jun-17
Dec-16
Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 19: Within Banks, MFs prefer SOE banks over private Exhibit 20: MFs have significantly reduced OW allocations in
banks; funds have also started to raise exposure towards housing private banks and are now OW only 35 bp (vs OW allocations of 140
finance stocks bp in Oct 16 end); Funds are OW PSU banks by 125 bp
MFs OW/UW allocations MFs OW/UW allocations
US$ mn PSU banks (bp) Private banks (bp)
Cumulative MF flows in
1,400 150 bp
Financials PSU Banks
60%
1,200

1,000 100 bp 50%

Private Banks
800
50 bp 40%
600
NBFCs
400
0 bp 30%
200
Housing finance
- -50 bp 20%
May-16

Feb-17

May-17
Oct-16

Mar-17
Aug-16
Sep-16

Jan-17

Jun-17
Nov-16
Dec-16

May-16

Feb-17

May-17
Mar-17
Oct-16
Nov-16
Dec-16
Sep-16
Aug-16

Jan-17

Jun-17
(200)
Jun-16

Jun-17
Feb-16
Dec-15

Aug-16

Feb-17
Apr-16

Dec-16
Oct-16

Apr-17

OW/UW vs benchmark (bp) % of funds OW (RHS)

Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 21: MFs have been consistently buying Pharma stocks; Exhibit 22: Although funds still remain UW on Pharma, UW
Tech saw tactical inflows post demonetization but funds have allocations have been reduced from -170 bp to -105 bp over the past
resumed selling since Feb17 1 year; Tech remains UW by 240 bp
MFs OW/UW allocations MFs OW/UW allocations
US$ mn Cumulative MF flows in Exporters Pharma (bp) Tech (bp)
2,000
0 -150
Pharma
1,500 -50 -170

1,000 -100 -190

Infotech -105
500 -150 -210
-170
- -200 -230
MFs have been
(500) -250 -250 Post demonetization, MFs tactically
trimming their UW
-245 reduced UW allocations in Tech but
Pharma allocations
(1,000) -300 -270 have pared it back
Current
May'15

May'16

Feb-17

Mar-17
Oct-16

Nov-16

Dec-16

Apr-17
Jan-17

Jun-17
Dec-15

Feb-16

Jun-16

Dec-16

Feb-17

Jun-17
Aug-16
Apr-16

Apr-17
Oct-16

Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

26 July 2017 9
Goldman Sachs India Mutual Funds

Exhibit 23: Within consumer-demand sensitivities, funds have been Exhibit 24: MFs have been raising exposure towards rural
buying Staples over consumer cyclicals (Autos, Durables etc.) consumption beneficiaries since demonetization

US$ mn Cumulative MF flows in MFs OW/UW allocations in Urban/Rural exposed stocks (bp)
1,400 Consumer demand sensitives 0
1,200
1,000 Staples (50)

800 (100)
600 Media/Durables (108)
(150)
400 (140)
(200)
200
-
Autos (250)
(200) Oct'16 Current (260)
(300)
(400)
(350) (317)
Dec-15

Feb-16

Jun-16

Dec-16

Feb-17

Jun-17
Aug-16
Apr-16

Apr-17
Oct-16

Urban consumption stocks Rural consumption stocks

(Cars, Durables,Media, Urban exposed (Staples, 2-wheelers, rural NBFCs, tractor)
staples)

Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 25: Within commodity cyclicals, MFs are strong buyers in Exhibit 26: Within other defensives, utilities has seen strong
Metals & mining sector and have been selling Energy stocks inflows while flows towards Telcos remains muted

US$ mn Cumulative MF flows in US$ mn Cumulative MF flows in

1,200 Commodity cyclicals 1,000 Other defensives
1,000
800 800
Metals & mining
600
400 600
200
400
-
Utilities
(200) Oil Exploration & 200
(400) Production
(600) -
(800) Oil Refining & Telco
(1,000) Marketing (200)
Feb-16

Feb-17
Jun-16

Feb-17

Jun-17

Feb-16

Jun-16

Jun-17
Apr-17
Apr-16

Aug-16

Apr-17

Apr-16

Aug-16
Oct-16

Oct-16
Dec-15

Dec-16

Dec-15

Dec-16
Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

MFs exposure in mid/small caps significantly higher than large-caps; mid-cap

valuations look in-line relative to growth expectations
Analysis of MFs share-holding pattern (within the top 500 NSE listed stocks) shows that
MFs have significantly higher exposure towards mid/small cap stocks. For
example, within the top 100 largest stocks (ranked on current market cap), MFs hold
only 9% of free-float cap which increases markedly to 16% of free-float cap for rest of
the 400 stocks. Moreover, within the bottom 400 stocks, MFs share-holding has
increased by 7pp over the past 3 years which is almost twice the pace of increase
within the top 100 stocks. This suggests a clear preference of domestic mutual funds
for mid-to-smaller sized stocks.

Although domestic MFs have raised allocations towards mid/small caps leading to rise in
valuations (NIFTY Midcap 100 NTM P/E: 17.3X, 1.8 s.d. above mean since 2004), we
think overall mid-cap valuations are justified relative to underlying earnings growth
expectations. As an illustration, NIFTY Midcap 100 trades at a fwd 12-mo PEG ratio of
0.6X compared to large-cap NIFTY trading at 1X PEG.

26 July 2017 10
Goldman Sachs India Mutual Funds

Within sectors, MFs favor midcap investment cyclicals (cap goods, cement etc),
autos and smaller-sized private banks. Large-cap Staples, Exporters (Pharma, Tech) &
Div. Financials are under-owned. This is further corroborated by relatively high mutual
fund shareholding within the OW sectors.

In the next section, we introduce our most OW/UW stock screen which we believe can
help investors monitor crowded (largely midcaps) and out-of-favor stocks.

Exhibit 27: Domestic equity MFs (including ELSS schemes) have Exhibit 28: A considerable portion of the total inflows has been
received strong retail/HNI inflows of almost US$37 bn over the past invested in mid-to-smaller sized stocks, leading to the significant
3 years out-performance of smaller sized stocks over large-cap stocks
US$mn Redemptions / Repurchase of Domestic
160 NIFTY Midcap 100 vs NIFTY: Relative price perf. $30
2,000 Equity Mutual Funds
Average inflows (rebased to 100, LHS)
150 $25
1,500 US$1bn per
month 140 $20
1,000
130 $15
500
120 $10
0
110
Cum. MF inflows in equities $5
-500 (since 2014, RHS)
100 $0
-1,000
Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17
Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

90 -$5

Dec-13

Dec-14

Dec-15

Dec-16
Jun-14

Jun-15

Jun-16

Jun-17
Flow data is shown only for pure equity and ELSS funds; It excludes flows
in balanced funds and other mandates

Source: AMFI Source: Bloomberg

Exhibit 29: Domestic MFs have consistently raised exposure towards smaller-sized stocks over the past 3 years
Domestic Mutual funds' shareholding 30%
Current MF shareholding (%)
Mutual funds' shareholding (%)

20%
(as % of free-float cap) MF shareholding (3-yrs ago, %)
25%
Dec-13 Dec-14 Dec-15 MFs have raised exposure towards mid/smaller
16% 20%
16% sized stocks over the past 3 yrs
Dec-16 Jun-17
15%
12% MF shareholdings'
9% 9% decreases as the cap of
10% the stock increases
8%
6%
5%
4%
Top 100 stocks 100- 500 stocks 0%
0 5 10 15 20 25
Current Market cap (US$ bn, Top 500 stocks)
Rank of NSE listed stocks (sorted on current market cap) (*stocks with Mcap > US$25 bn are not shown in the chart)

Source: FactSet, Capitaline, Goldman Sachs Global Investment Research

26 July 2017 11
Goldman Sachs India Mutual Funds

Exhibit 30: NIFTY Midcap 100 trades at 17.3X (1.8 s.d. above mean Exhibit 31: We think overall mid-cap valuations are justified
since 2004) relative to underlying earnings growth expectations. (NIFTY
Midcap 100 trades at a fwd 12-mo PEG ratio of 0.6X vs NIFTY
trading at 1X PEG)

NIFTY Midcap 100 NTM P/E (X) NIFTY Midcap 100 vs NIFTY PEG ratio
(fwd 12-mo P/E /1-yr fwd earnings growth)
1.2
22X
1
NIFTY
+1 SD 0.8
16X
0.6
Mean

10X 0.4
-1 SD
0.2 NIFTY MCAP100

4X 0
Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17
Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 32: Midcap Investment cyclicals, Autos & Private banks are OW the most while large-cap Staples, Exporters and Div. Financials are
UW, corroborated further by MFs shareholding data
Based on sample of top 200 pure-equity schemes (AUM: US$70 bn)

Domestic MF allocations by size Domestic MF shareholding

(OW/UW vs benchmark) (as of June '17, %)
Mid-small Mid-small
Largecaps Largecaps Overall
caps Overall caps
Sectors (Mcap> (Mcap> holdings
(Mcap < US$5 OW/UW (Mcap <
US$5 bn) US$5 bn) (%)
bn) US$5 bn)
Industrials -0.3% 4.2% 3.9% 6% 8% 7%
Investment cyc. Chemicals/Other Mat. -0.6% 2.2% 1.6% 4% 7% 6%
Cement -0.3% 0.7% 0.4% 3% 9% 5%
Consumer cyc. Autos/Durables -1.3% 4.1% 2.8% 5% 7% 6%
Private Banks -0.2% 0.6% 0.4% 10% 11% 10%
Financials PSU Banks 1.6% -0.7% 0.9% 10% 3% 7%
Div. Financials/Ins. -4.4% 1.0% -3.4% 4% 6% 5%
Infotech -2.4% 0.0% -2.4% 4% 6% 4%
Exporters
Pharma -1.0% 0.1% -1.0% 6% 6% 6%
Commodity cyc. Energy/Metals&mining -3.5% -0.2% -3.7% 3% 3% 3%
Defensives Staples/Telco/Utilities -4.5% -0.9% -5.4% 3% 4% 4%

Large-cap Staples, Exporters, Div. MFs are OW mid-cap stocks in Investment cyclicals,
Financials are under-owned Autos & private banks

Source: FactSet, Capitaline, Goldman Sachs Global Investment Research

26 July 2017 12
Goldman Sachs India Mutual Funds

Introducing MFs OW/UW screens to track favored/out-of-favor stocks

Based on the bottom-up holdings data of the top 200 pure-equity schemes, we screen
for the most overweight and underweight stocks in overall MFs portfolio. These
screens, in our view, are a useful gauge to identify favored/out-of-favor stock
preferences across domestic MFs. Investors can use the OW screen to assess
crowded trades (largely mid-caps which could come under pressure in case of
redemptions) and UW screen to locate contrarian opportunities (where fund
allocations are light).

Mutual fund OW stocks: Our screen of OW positions comprises of 35 stocks where

mutual funds in aggregate are the most overweight relative to their respective
benchmarks. MF holdings range from 17 bp to 132 bp overweight relative to the
blended benchmarks with average MF shareholding at 15%. The basket has a
small/midcap bias since MFs are positioned more aggressively towards smaller-sized
stocks in India. (Average cap of the stock in the basket is US$8 bn).

Mutual fund UW stocks: Our screen of UW positions comprises of 35 stocks where

mutual funds in aggregate are the most underweight relative to their respective
benchmarks. MF holdings range from 19 bp to 333 bp underweight relative to the
blended benchmarks with average MF shareholding at 3%. The basket has a bias
towards large-caps with average cap of the stock in the basket being US$19 bn.

The stocks in the screens are weighted proportional to their average weight in the MFs
portfolio, with maximum weight of a stock capped at 10%. The baskets are not
sector-neutral. Relative performance of OW vs UW screen is closely correlated to NIFTY
Midcap vs NIFTY performance, in-line with MFs preference towards smaller-sized
stocks.

For stock ideas, we screen for GS Buy-rated stocks where domestic mutual funds are
UW. Large cap stocks include Reliance Industries, HDFC Bank, Kotak Bank and Airtel.

Exhibit 33: Domestic MFs most OW stocks have outperformed UW Exhibit 34: Relative performance of MFs OW vs UW screen is
stocks since 2016 closely correlated to NIFTY Midcap vs NIFTY performance, in-line
with the MF preference for smaller-sized stocks

Domestic MFs' most OW/UW stocks performance Relative price performance

(Indexed to 100, since 2016) (rebased to 100, since 2016)
150 120
NIFTY MCAP100 vs
140 Domestic MFs 115 NIFTY
130 OW screen
110
120
105
110 Domestic MFs'
100 OW vs UW basket
100
Domestic MFs
95
90 UW screen
90
80

70 85
Jul-16
Dec-15

Jan-16

Feb-16

Mar-16

Jun-16

Mar-17
Nov-16

Dec-16

Jan-17

Feb-17

Jun-17
Aug-16

Sep-16
Apr-16

Apr-17
May-16

Oct-16

May-17
Jul-16
Dec-15

Jan-16

Mar-16

Jun-16
Feb-16

Nov-16

Dec-16

Jan-17

Mar-17

Jun-17
Aug-16

Sep-16

Feb-17

Apr-17
Apr-16

Oct-16
May-16

May-17

Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

26 July 2017 13
Goldman Sachs India Mutual Funds

Exhibit 35: Mutual funds overweight positions

Based on sample of Top 200 domestic equity MFs covering an AUM of US$70 bn; holdings as of June17

Domestic equity MFs Overweight stocks

# funds Domestic
Stocks Overall
owning the Mkt MF
weight OW vs.
Sector stock Cap ownership
(%, AUM Benchmark
(sample = (as of
Wgt.) (bps)
Ticker Name 200) ($ bil) June'17, %)
SBIN IS State Bank of India PSU Banks 117 3.1% 132 bp 40 9%
FB IS Federal Bank Private Banks 69 0.8% 52 bp 4 27%
MAXF IS Max Financial Services Div. Financials/ Ins. 46 0.6% 51 bp 2 22%
IIB IS IndusInd Bank Private Banks 104 1.7% 46 bp 14 12%
ICICIBC IS ICICI Bank Private Banks 140 3.8% 44 bp 30 15%
ARBP IS Aurobindo Pharma Pharma 62 0.7% 39 bp 7 14%
KKC IS Cummins India Cap. Goods 54 0.6% 35 bp 4 14%
IOCL IS Indian Oil Corp. Refining & Marketing 83 0.7% 34 bp 28 3%
BIL IS Balkrishna Industries Autos & Components 19 0.4% 34 bp 2 14%
BHE IS Bharat Electronics Cap. Goods 63 0.6% 31 bp 6 12%
BOB IS Bank of Baroda PSU Banks 67 0.6% 31 bp 6 10%
BAF IS Bajaj Finance Div. Financials/ Ins. 46 0.7% 30 bp 14 6%
FAG IS FAG Bearings India Cap. Goods 33 0.3% 29 bp 1 26%
EQUITAS IS Equitas Holdings Div. Financials/ Ins. 35 0.3% 28 bp 1 32%
MSIL IS Maruti Suzuki India Autos & Components 108 2.0% 27 bp 35 6%
PI IS PI Industries Chemicals & Other Mat. 21 0.3% 26 bp 2 15%
CIFC IS Cholamandalam Investment & Fin. Div. Financials/ Ins. 25 0.3% 26 bp 3 13%
HCLT IS HCL Technologies Infotech 84 1.0% 26 bp 20 5%
DIVI IS Divi's Laboratories Pharma 29 0.4% 26 bp 3 16%
MUTH IS Muthoot Finance Div. Financials/ Ins. 25 0.3% 25 bp 3 11%
HWA IS Honeywell Automation India Infotech 13 0.3% 24 bp 2 15%
MSS IS Motherson Sumi Systems Autos & Components 36 0.5% 24 bp 11 6%
CROMPTON IS Crompton Greaves Cons. Elec. Cons. Svcs., Durable 26 0.2% 24 bp 2 10%
SRCM IS Shree Cement Cement 52 0.4% 23 bp 10 4%
ATLP IS Atul Chemicals & Other Mat. 22 0.3% 23 bp 1 21%
SKF IS SKF India Cap. Goods 25 0.3% 22 bp 1 17%
YES IS Yes Bank Private Banks 78 1.1% 22 bp 11 11%
TATA IS Tata Steel Metals & Mining 59 0.9% 22 bp 8 14%
SOIL IS Solar Industries Chemicals & Other Mat. 26 0.2% 21 bp 1 18%
SADE IS Sadbhav Engineering Cap. Goods 25 0.2% 21 bp 1 25%
KECI IS KEC International Cap. Goods 25 0.2% 20 bp 1 22%
FNXC IS Finolex Cables Cap. Goods 20 0.2% 19 bp 1 18%
WHIRL IS Whirlpool Of India Cons. Svcs., Durable 26 0.2% 19 bp 2 8%
REPCO IS Repco Home Finance Div. Financials/ Ins. 21 0.2% 18 bp 1 25%
BLSTR IS Blue Star Cap. Goods 25 0.2% 17 bp 1 20%
Mutual funds overweight basket (average) 49 0.7% 31 bp 8 15%
1RWH$JJUHJDWHEHQFKPDUNZHLJKWLVFRPSXWHGXVLQJ$80ZHLJKWHGDYHUDJHRILQGLYLGXDOIXQGVEHQFKPDUN
How to read the table: Using State bank of India as an example: 117 domestic equity mutual funds own the stock, Average weight in funds = 3.1% which is
132 bp OW vs. the blended benchmark weight

Source: FactSet, Capitaline, Goldman Sachs Global Investment Research

26 July 2017 14
Goldman Sachs India Mutual Funds

Exhibit 36: Mutual funds underweight positions

Based on sample of Top 200 domestic equity MFs covering an AUM of US$70 bn; holdings as of June17

Domestic equity MFs Underweight stocks

# funds Domestic
Stocks Overall
owning the Mkt MF
weight OW vs.
Sector stock Cap ownership
(%, AUM Benchmark
(sample = (as of
Wgt.) (bps)
Ticker Name 200) ($ bil) June'17, %)
HDFC IS HDFC Div. Financials/ Ins. 91 1.4% -333 bp 40 4%
RIL IS Reliance Industries Refining & Marketing 82 1.2% -295 bp 82 2%
ITC IS ITC Staples 106 2.2% -281 bp 55 4%
TCS IS Tata Consultancy Services Infotech 49 0.5% -167 bp 75 1%
HUVR IS Hindustan Unilever Staples 54 0.3% -106 bp 39 2%
HDFCB IS HDFC Bank Private Banks 141 5.1% -94 bp 69 9%
INFO IS Infosys Infotech 122 2.5% -90 bp 35 9%
PIEL IS Piramal Enterprises Pharma 6 0.0% -81 bp 8 0%
APNT IS Asian Paints Chemicals & Other Mat. 46 0.2% -68 bp 17 2%
ONGC IS Oil & Natural Gas Corp. Exploration & Production 42 0.1% -63 bp 33 2%
IHFL IS Indiabulls Housing Finance Div. Financials/ Ins. 19 0.0% -57 bp 8 3%
VKI IS Vakrangee Infotech 1 0.0% -48 bp 4 0%
BJAUT IS Bajaj Auto . Autos & Components 37 0.2% -47 bp 13 2%
COAL IS Coal India Coal & Others 31 0.1% -43 bp 25 2%
JSTL IS JSW Steel Metals & Mining 9 0.0% -39 bp 8 2%
AXSB IS Axis Bank Private Banks 83 1.2% -38 bp 20 7%
RECL IS Rural Electrification Corp. Div. Financials/ Ins. 8 0.1% -34 bp 6 2%
BHARTI IS Bharti Airtel Telco 48 0.6% -31 bp 26 3%
DRRD IS Dr. Reddy's Laboratories Pharma 33 0.3% -31 bp 7 6%
MRF IS MRF Autos & Components 37 0.3% -30 bp 5 7%
HMCL IS Hero Motocorp Autos & Components 54 0.5% -30 bp 11 5%
LICHF IS LIC Housing Finance Div. Financials/ Ins. 24 0.1% -29 bp 6 2%
DLFU IS DLF Property 3 0.0% -29 bp 5 1%
SHTF IS Shriram Transport Finance Co. Div. Financials/ Ins. 7 0.0% -26 bp 3 2%
UTCEM IS UltraTech Cement Cement 58 0.4% -26 bp 18 3%
GCPL IS Godrej Consumer Products Staples 9 0.1% -25 bp 10 1%
HAVL IS Havells India Cap. Goods 15 0.2% -24 bp 4 3%
NMDC IS NMDC Metals & Mining 2 0.0% -24 bp 6 0%
DEWH IS Dewan Housing Finance Div. Financials/ Ins. 6 0.0% -23 bp 2 4%
APHS IS Apollo Hospitals Enterprise Pharma 16 0.1% -22 bp 3 6%
TPWR IS Tata Power Company Utilities 18 0.1% -21 bp 3 5%
POWF IS Power Finance Corporation Div. Financials/ Ins. 10 0.1% -21 bp 5 4%
ACEM IS Ambuja Cements Cement 27 0.2% -21 bp 8 3%
MRCO IS Marico Staples 10 0.1% -21 bp 7 2%
BHEL IS BHEL Cap. Goods 6 0.01% -19 bp 6 1%
Mutual funds underweight basket (average) 37 0.5% -67 bp 19 3%
1RWH$JJUHJDWHEHQFKPDUNZHLJKWLVFRPSXWHGXVLQJ$80ZHLJKWHGDYHUDJHRILQGLYLGXDOIXQGVEHQFKPDUN
How to read the table: Using HDFC as an example: 91 domestic equity mutual funds own the stock, Average weight in funds = 1.4% which is 333 bp UW vs.
the blended benchmark weight

Source: FactSet, Capitaline, Goldman Sachs Global Investment Research

26 July 2017 15
Goldman Sachs India Mutual Funds

Exhibit 37: We screen for GS Buy-rated stocks where domestic MFs are UW. Large cap stocks include Reliance Industries, HDFC Bank,
Kotak Bank and Airtel.
Based on sample of Top 200 domestic equity MFs covering an AUM of US$70 bn; holdings as of June17
# of funds Domestic
Stock Overall
owning the Mcap MF
weight OW/UW vs. GS Quoted
Ticker Name Sector stock (US$ ownership
(%, AUM benchmark Rating Price
(sample = bn) (as of
Wgt.) (bp)
200) June'17, %)

RIL IS Reliance Industries Refining & Marketing 82 1.2% (295) B 1,616 82 2%

HDFCB IS HDFC Bank Private Banks 141 5.1% (94) B* 1,735 69 9%
BHARTI IS Bharti Airtel Telco 48 0.6% (31) B* 420 26 3%
UTCEM IS UltraTech Cement Cement 58 0.4% (26) B 4,185 18 3%
MM IS Mahindra & Mahindra Autos & Components 63 1.0% (15) B 1,389 13 8%
PWGR IS Power Grid Corp. Utilities 65 0.7% (12) B 217 18 6%
TTAN IS Titan Industries Cons. Svcs., Durable 22 0.2% (11) B 537 7 3%
EIM IS Eicher Motors Cap. Goods 57 0.4% (10) B 28,843 12 4%
AL IS Ashok Leyland Cap. Goods 21 0.2% (8) B 104 5 3%
KMB IS Kotak Mahindra Bank Private Banks 102 1.6% (2) B 992 29 6%

B* denotes stock is Conviction Buy; Priced as of 24 July'17

Source: FactSet, Capitaline, Goldman Sachs Global Investment Research

26 July 2017 16
Goldman Sachs India Mutual Funds

Disclosure Appendix
Reg AC
We, Nitin Chanduka, CFA, Sunil Koul and Timothy Moe, CFA, hereby certify that all of the views expressed in this report accurately reflect our personal
views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or
indirectly, related to the specific recommendations or views expressed in this report.
Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs Global Investment Research division.

Disclosures
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Goldman Sachs Investment Research global Equity coverage universe

Rating Distribution Investment Banking Relationships

Buy Hold Sell Buy Hold Sell
Global 32% 54% 14% 65% 56% 49%

As of July 1, 2017, Goldman Sachs Global Investment Research had investment ratings on 2,753 equity securities. Goldman Sachs assigns stocks as
Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for
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26 July 2017 17
Goldman Sachs India Mutual Funds

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Ratings, coverage groups and views and related definitions

Buy (B), Neutral (N), Sell (S) -Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or
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Each regional Investment Review Committee manages various regional Investment Lists to a global guideline of 25%-35% of stocks as Buy and
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Total return potential represents the upside or downside differential between the current share price and the price target, including all paid or
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Not Rated (NR). The investment rating and target price have been removed pursuant to Goldman Sachs policy when Goldman Sachs is acting in an
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price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended
coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information
is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded.

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Goldman Sachs India Mutual Funds

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