Axis Technology ETF

[Pages:26]Axis Technology ETF

(An Open Ended Exchange Traded Fund tracking NIFTY IT Index)

Invest in the brightest names in IT at your pace

NFO Opens 18th March 2021

NFO Closes 23rd March 2021

Why Technology Sector?

Global Technology Demand

While many industries are slowing, demand for Global IT services has grown significantly

Demand for Global IT services

Annual Contracts Issued/ Renewed

(In USD Billion)

1,400 1,200 1,000

800 600 400 200

0

(In USD Billion)

80

70

60

50

40

30

25

20

10

CY15-20

68 CY21-23

CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21E CY22E CY23E CY24E

Source: Gartner, HDFC Sec, Axis MF Research. Data as on 28th February 2021. E- Estimates

Past performance may or may not be sustained in the future. Sector(s) mentioned above are for the purpose of illustration and should not be

construed as recommendation. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).

3

Changing Frontiers

New age technologies driving incremental growth. Covid a significant trigger

? Technology platforms like cloud computing, enterprise solutions & AI are driving incremental growth for the sector ? Use of Software as a Service and other machine driven services (Hyperscalers) has grown exponentially. ? Indian companies which have invested extensively in capabilities have seen larger client additions/order wins

(USD bn)

Growing cloud ecosystem drivers - Hyperscalers & SaaS revenue trend

100

90

80

AWS Salesforce Adobe SAP Cloud ServiceNow Workday

4.2

3.6

8.9

70

60

50

40

30

20

1.2

10

2.5 4.8

0

6.7

7.8

12.4

2.8

11.2

2.1

5.9

20.3

9.0

17.1

4.3

1.6

7.3

13.3

53..93

10.5

35.0

42.6

17.5

25.7

8.4

CY15 CY16 CY17 CY18 CY19 TTM

Source: Company annual reports, HDFC Sec, Axis MF Research. Data as on 28th February 2021. TTM- Trailing Twelve Months

Past performance may or may not be sustained in the future. Sector(s) mentioned above are for the purpose of illustration and should not be

construed as recommendation. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).

4

How do Indian Players Stack Up?

Pivot from traditional services paying off

Infosys and TCS have helped with large scale transformation of companies.

Enabled clients to effectively manage disruptions like the Covid-19 pandemic.

TCS: % of Revenue from Digital

40%

35%

31%

33%

30%

25% 20%

15% 13%

16%

20%

10%

5%

0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21

Infosys: % of Revenue from Digital

50% 45% 40% 35% 30%

25% 24%

20% 15% 10%

5% 0%

28%

36%

45%

Source: Goldman Sachs, Motilal, Bloomberg, Axis AMC Research. Data as on 28th February 2021.

Past performance may or may not be sustained in future. The sector(s)/stock(s)/issuer(s) mentioned in this presentation should not be

construed as any research report/recommendation to buy / sell / hold.

5

Recognizing Indian Capability

Good Execution = Happy Customers

Rank

Overall HFS Top 10 position

1

Infosys

2

HCL Tech

3

Accenture

4

IBM

5

Cognizant

6

Wipro

7

TCS

8

NTT Data

9

Tech Mahindra

10

Capgemini

Indian IT Scores High on most project execution parameters

Methodology & Approach

Accenture IBM

HCL Tech NTT Data Cognizant Mindtree Infosys Capgemini

TCS Mphasis

Partnerships

Accenture Capgemini

TCS Infosys HCL Tech NTT Data

IBM Cognizant

Atos DXC Technologies

Scale & Breadth

IBM Accenture Capgemini

TCS Infosys Wipro Cognizant HCL Tech DXC Technologies Atos

Client Results

HCL Tech Infosys Tech Mahindra Accenture

TCS IBM Wipro Virtuse NTT Data Mindtree

Commercial Models & Price

Mindtree HCL Tech Virtuse Cognizant Infosys L&T Infotech Mphasis NIIT Tech Zensar Tech Wipro

Overall Execution

HCL Tech Infosys

TCS Accenture

IBM Wipro Cognizant Capgemini NTT Data Tech Mahindra

Companies in bold are Indian listed IT companies

Source: HDFC Sec, HFS Research, Axis AMC Research. Data as on 28th February 2021.

Past performance may or may not be sustained in future. The sector(s)/stock(s)/issuer(s) mentioned in this presentation should not be

construed as any research report/recommendation to buy / sell / hold. The fund's exposure will be determined by the weight of underlying

companies in the NIFTY IT Index.

6

The Result

Indian companies gaining market share

Consistent Market-share Gains By Indian IT

5%

11%

20%

26%

95% 89% 80% 74%

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

International Players % of total

Indian Players % of total

Source: HDFC Sec, Axis AMC Research. Data as on 28th February 2021.

Past performance may or may not be sustained in future. The sector(s)/stock(s)/issuer(s) mentioned in this presentation should not be

construed as any research report/recommendation to buy / sell / hold.

7

To Summarize

Indian IT has significant long term tailwinds for growth & is attractively valued

Revenue growth momentum is strong Deal pipeline is trending above pre-pandemic levels; Digitization theme likely to remain dominant 5G rollout by global telecom companies, likely to see significant deal opportunities Covid has reemphasized cost optimization. Indian companies known for efficient cost solutions

Capital return remains an attractive theme Indian IT companies continue to return significant capital by way of dividends & buybacks to optimize capital use Despite investments & M&A activity, Indian IT companies generate significant cash flows and low debt

Valuations factoring in higher growth prospects PEG for NIFTY IT Index at 1.9x v/s 10 year average of 1.5x Higher PEG reflects resilient business models, return of growth & scale of operations

Under-ownership by institutional investors (FII + DIIs) Significant under ownership as compared to global peers

Source: HDFC Sec, NSDL, CLSA, Axis AMC Research. Data as on 28th February 2021. The sector(s)/stock(s)/issuer(s) mentioned in this presentation should not be construed as any research report/recommendation to buy/ sell / hold.

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