Net Asset Value(s)

RNS Number : 0965G

India Capital Growth Fund Limited

06 May 2011

 



India Capital Growth Fund Limited

06 May 2011

India Capital Growth Fund Limited (the "Company" or "ICGF")

30 April 2011 NAV Statement

Net Asset Values

The Company announces its net asset values per share as at 30 April 2011:

Net asset value per share - undiluted: 61.43 pence

Net asset value per share - fully diluted: 61.43 pence

Portfolio Update

Indian midcaps performed well in April rising 3.2% in their local currency, strongly outperforming the main board index which fell 1.6%. Volumes however continue to be uninspiring and investors remain cautious near term on renewed inflation and interest rate concerns. Against this backdrop the net asset value of the India Capital Growth Fund rose 3.6% in Rupee terms, which when taking into account a 2.7% fall in the Rupee against Sterling, amounted to a rise of 0.9% in Sterling terms.

The portfolio's out performance versus the BSE Midcap came from the consumer discretionary and IT sectors. Prime Focus continues to recover from weakness earlier in the year rising 15% whilst SKNL, energised by the renewed expectation of the Reid and Taylor listing, rose 25%. In the IT sector the portfolio benefitted from a bounce in OnMobile's shares, up 15%, continuing the rally initiated in March. There are various M&A rumours circulating around the company which we can neither substantiate nor really rationalise and whilst we continue to see good operating momentum particularly in its overseas markets, we have taken the opportunity to book some profits. Also within this sector the portfolio benefited from new holding Redington India, which rose 10% for the month. Redington is the country's leading distributor of IT hardware and mobile phone handsets and is seeing huge consumer demand for smartphones alongside the Indian Government's ever increasing demand for IT hardware at State and Central level.

Elsewhere the portfolio's performance was adversely affected in the financials, in particular J&K Bank down 7.6% and IDFC down 6%. The sector came under pressure mid-way through the month as the market agonised over persistently poor inflation data and the likely response from the Reserve Bank of India. In addition, as the month concluded, initial quarterly results were indicating that the recent increase in the cost of deposits has not yet been fully recovered in higher lending rates, although overall asset quality has improved. Elsewhere Jyothi Labs fell 6% as the market awaits the outcome of the company's planned takeover of Henkel's assets in India, whilst Bilcare fell 4% on low volumes and a lack of news.

In conclusion, the short term mood of the market continues to be focussed on whether the Reserve Bank of India is winning the war on inflation, and if in doing so, to what extent it has put the brakes on the near term growth. Although this question remains unanswered market valuations have substantially corrected since late last year, whilst the fundamental investment case for India remains intact. This is a good opportunity to build exposure to the long term story.

Analysis of holdings at 30 April 2011

Sector Summary	No. of Companies	% of Portfolio
Financials	12	32.3%
Industrials	8	16.7%
Consumer Discretionary	3	13.7%
Materials	6	12.3%
Health Care	2	7.4%
Telecom Services	2	4.0%
Energy	2	4.0%
IT	3	3.6%
Consumer Staples	2	2.2%
Total Equity Investment	40	96.2%
Net Cash		3.8%
Total Portfolio		100.0%

Top 10 equity holdings at 30 April 2011

Holding	Sector	% of Portfolio
Marwadi Shares and Finance	Financials	9.4%
Prime Focus	Consumer Discretionary	7.6%
S. Kumars Nationwide	Consumer Discretionary	5.5%
Bilcare	Health Care	4.3%
United Phosphorus	Materials	4.0%
Indian Bank	Financials	3.1%
Opto Circuits	Health Care	3.1%
Federal Bank	Financials	2.8%
Sintex Industries	Industrial	2.8%
Yes Bank	Financials	2.8%

Portfolio breakdown by size at 30 April 2011

Size	No. of Companies	% of Portfolio
Small Cap  (M/Cap <INR 15bn)	13	33.0%
Mid Cap (INR 15bn <M/Cap<INR 100bn)	16	35.6%
Large Cap (M/Cap > INR 100bn)	9	18.2%
Unlisted	2	9.4%
Cash/Cash Equivalent		3.8%
Total	40	100.0%

 

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