A Strategic Opportunity

Dear Investors,

We're excited to share an intriguing investment opportunity – the HDFC Manufacturing Fund (NFO). This fund focuses on capturing the phenomenal growth potential of India's manufacturing sector, poised for a remarkable transformation.

India on the Cusp of Manufacturing Supremacy

India's economic landscape is undergoing a significant shift. Over the next seven years, our GDP is expected to double, while the manufacturing sector is projected to witness an even more impressive growth of 2.8 times! This isn't mere speculation. We've witnessed similar narratives unfold in developing economies like Thailand, China, Indonesia, and Vietnam. During their high-growth phases, manufacturing played a pivotal role in propelling their economies forward.

Beyond Growth: The Ripple Effect of Manufacturing

The benefits of a robust manufacturing sector extend far beyond just high returns:

Employment Engine: Manufacturing creates a significant number of jobs, fostering economic stability and individual prosperity.

Macroeconomic Stability: A thriving manufacturing sector strengthens the foundation of our economy, leading to a more balanced and resilient financial system.

Government Winds at Our Back

The Indian government is actively supporting the manufacturing sector, acting as a powerful tailwind for its growth:

Subsidies and Incentives: Attractive government subsidies coupled with streamlined regulations are creating a conducive environment for businesses to establish and expand their manufacturing operations in India.

Infrastructure Revolution: Rapid development of critical infrastructure like roads, railways, and power grids is creating a more robust ecosystem for manufacturing to flourish.

Ease of Doing Business: Streamlined regulations and policies are making it easier for businesses to navigate the system and operate efficiently.

India's Competitive Edge

India boasts a unique set of advantages that position it for dominance in the global manufacturing arena:

Abundant Workforce: India has a vast and skilled labor force, offering a significant cost advantage. On average, manufacturing in India is 15% cheaper compared to the USA.

Export Powerhouse: India's share in global exports is steadily rising, expected to reach a staggering 3.5% by 2031 (from the current 1.8%).

Sectoral Growth Spurt: Several industries like chemicals, pharmaceuticals, industrial machinery, and automotive are projected to witness export growth exceeding 20% annually, further propelling the manufacturing sector.

Focus on Infrastructure: The Indian government's strong commitment to improving roads, railways, ports, and green energy infrastructure will significantly contribute to the growth of the manufacturing sector.

Tax Advantage: India's competitive corporate tax rates offer a significant advantage for businesses to thrive.

Diversification Within Manufacturing

The HDFC Manufacturing Fund (NFO) offers a well-diversified portfolio invested across various sectors within the manufacturing theme. These include capital goods, oil and gas, automobiles, healthcare, consumer durables, FMCG, metals, chemicals, textiles, and construction materials. This diversification helps mitigate risk and maximize potential returns.

Historical Performance as a Benchmark:

Manufacturing sector mutual funds have historically delivered impressive returns: 18.4% CAGR over the last 15 years, with even higher returns in recent years. While past performance doesn't guarantee future results, it paints a promising picture for the potential of this sector.

The Opportunity Awaits

The current market capitalization of Indian manufacturing companies is a staggering ₹154.34 lakh crore. This presents a vast investment landscape brimming with potential. The HDFC Manufacturing Fund offers a compelling opportunity to participate in this exciting growth story from the ground floor.

Next Steps

Carefully consider how the HDFC Manufacturing Fund might align with your investment goals and risk tolerance. The subscription window closes on May 10th, 2024. Please don't hesitate to reach out if you have any questions or would like to discuss this opportunity in more detail.

Sincerely,

Siva Prasad D.