Model Portfolio Methodology
The BofAML Indian Model Portfolio represents the best research ideas in our Indian research universe recommended by BofAML Asia-Pacific research analysts. It is designed to contain 10-30 Indian stocks at any given time. Each stock in the Model Portfolio is chosen by the India strategy team. In order to qualify, the stock must have a market capitalization of US$1Bn and must be rated by BofAML. The aim is to construct an Indian model portfolio that they believe will deliver significant positive price appreciation and reflect the general themes being promoted by BofAML Research department at the time. The process is both top-down and bottom up and is largely influenced by sector and macro themes, but sometimes also by individual stock performances. Each stock will be assigned a weight and remains on the list until the strategy team, at its discretion, removes the stock. The team regularly monitors the market and the performance of current stocks on the list, as well as to consider the addition of new stocks or the deletion of existing stocks.
| India Strategy | ||||||
| 12 July 2012 | ||||||
| Table 1: Model Portfolio | Model portfolio | |||||
| Symbol | Rating | Price | MSCI Wt | Recommended BofAML Wt. | ||
| Pharma | 5.4% | 10.0% | ||||
| : Lupin | LPMCF | C-1-7 | 552 | 5.0% | ||
| : Dr Reddy | DRYBF | C-1-7 | 1650 | 5.0% | ||
| Consumer Discretionary | 7.4% | 10.7% | ||||
| : Maruti | MUDGF | C-1-7 | 1196 | 7.0% | ||
| : Hero Motocorp | HRHDF | C-1-7 | 2063 | 3.7% | ||
| Financials | 27.3% | 22.0% | ||||
| : ICICI Bank | ICIJF/IBN | C-1-7/C-1-7 | 928 | 12.0% | ||
| : HDFC Bank | XHDFF | C-1-7 | 580 | 10.0% | ||
| : SBI | SBINF/SBKFF | C-1-7/C-1-7 | 2221 | 7.0% | ||
| Software | 15.0% | 11.2% | ||||
| : HCL Tech | XHCLF | C-1-7 | 481 | 6.7% | ||
| : TCS | TACSF | C-1-7 | 1236 | 4.5% | ||
| : Wipro | WIPRF/WIT | C-2-7/C-2-7 | 359 | 4.0% | ||
| Industrials/Cement | 7.9% | 8.0% | ||||
| : JPA | JPRKF | C-1-7 | 78 | 5.0% | ||
| : L&T | LTOUF/LTORF | C-2-7/C-2-7 | 1408 | 3.0% | ||
| Telecom | 2.4% | 2.5% | ||||
| : Bharti Tele | BHTIF | C-2-7 | 306 | 2.5% | ||
| Real Estate | 1.0% | 1.0% | ||||
| : DLF | XVDUF | C-1-8 | 211 | 1.0% | ||
| Metals | 7.2% | 6.0% | ||||
| Consumer Staples | 10.6% | 8.6% | ||||
| : ITC | ITCTF | C-1-7 | 252 | 8.6% | ||
| Energy | 11.1% | 9.0% | ||||
| : Reliance Inds. | XRELF/RLNIY | B-3-7/B-3-7 | 721 | 9.0% | ||
| Utilities | 4.7% | 0.0% | ||||
| Source: BofA Merrill Lynch Global Research | ||||||
Top Buys
Table 2: Top Buys
| BofAML | Mkt Cap | Average Daily | PE | EPS CAGR | RoE (%) | P/BV | ||||||
| Company | Symbol | Reco | QRQ | (US$mn) | Turnover (US$mn) | FY12 | FY13E | FY14E | 12-14E | FY13E | FY13E | |
| Top Buys | ||||||||||||
| Dr Reddy’s | DRYBF | 1 – Buy | C-1-7 | 4,998 | 9.1 | 19.6 | 17.6 | 16.0 | 11% | 24.8 | 3.9 | |
| HCL Tech | XHCLF | 1 – Buy | C-1-7 | 5,957 | 11.6 | 14.6 | 11.5 | 10.2 | 19% | 22.5 | 2.4 | |
| ICICI Bk | ICIJF | 1 – Buy | C-1-7 | 19,044 | 69.3 | 16.5 | 13.4 | 11.1 | 22% | 12.6 | 1.6 | |
| JPA | JPRKF | 1 – Buy | C-1-7 | 2,979 | 23.6 | 17.1 | 18.8 | 14.2 | 10% | 7.4 | 1.4 | |
| Maruti Suzuki India | MUDGF | 1 – Buy | C-1-7 | 6,168 | 17.5 | 20.5 | 17.2 | 11.5 | 33% | 20.9 | 3.3 | |
| Top Midcap Buys | ||||||||||||
| Apollo Tyres Ltd | XAPYF | 1 – Buy | B-1-8 | 750 | 5.1 | 9.6 | 6.2 | 5.2 | 35% | 21.4 | 1.2 | |
| Exide Indus Ltd | XEDRF | 1 – Buy | C-1-7 | 2,109 | 2.7 | 25.6 | 17.4 | 14.8 | 32% | 23.3 | 3.8 | |
| Havells | HVLIF | 1 – Buy | C-1-7 | 1,285 | 2.9 | 19.5 | 14.5 | 11.9 | 28% | 43.4 | 5.4 | |
| Yes Bank | YESBF | 1 – Buy | C-1-7 | 2,235 | 19.7 | 12.7 | 10.1 | 8.1 | 25% | 23.8 | 2.2 | |
| Source: BofA Merrill Lynch Global Research | ||||||||||||
Model Portfolio & Top Buys From BoAML
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