Net Asset Value(s)

RNS Number : 8047N

India Capital Growth Fund Limited

07 September 2011

 



India Capital Growth Fund Limited

07 September 2011

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

31 Aug 2011 NAV Statement

Net Asset Values

The Company announces its net asset value per share as at 31 Aug 2011 was 51.21 pence

Portfolio Update

During August the Net Asset Value (NAV) of India Capital Growth Fund Limited was down 16.6% in Sterling terms and 12.8% in local currency terms. Over the period the BSE Midcap Index was down 9.3% in INR terms, whilst the main board, the BSE Sensex, was down 8.4%. 

The poor performance of the portfolio over the month can be attributed to the increased market volatility. In India the selloff on increased volumes was triggered by a surprise 50 basis point increase in the base rate by the Reserve Bank of India to 8% on the 26th July, which was compounded by Standard and Poor's downgrade to the United States' Triple A rating. This global uncertainty led to FII's selling out a net USD 2.4bn in August compared to an inflow USD 1.8bn in July.

The talk of the nation during August was the Anti-Corruption Bill, with social activist Anna Hazare sitting on a hunger strike that ran for 12 days and tested the resilience of India's Parliamentary democracy. Ultimately the politicians did succumb to the might of the common man and an unchanged Lokpal Bill was formally tabled and debated in the Parliament. However, this meant that some crucial time of the Monsoon session of Parliament was again lost which further impacted the Industrial sector.

The only positive came from rainfall which picked up again in August, and compensated for the 14% shortfall in July. Cumulative rainfall for 2011 to date has been recorded at normal.

Positive contribution to the portfolio came from Rallis India (manufacturer of fertilisers and pesticides) which rose 3.5% over the period and Eicher Motors (manufacturer of light commercial vehicles) rose 1.8%. Elsewhere outperformance came from Jain Irrigation (crop irrigation) and Redington India (distributor of IT hardware).

Negative attribution towards the funds' performance came from Prime Focus down 22.9%, gave back most of the gains made in July. The rise in the stock was predicated on the expectation of an IPO of its US business which now looks unlikely. Fortunately the fund had reduced its holding by 20% into the rally which reduced the negative attribution. As at the end of August the stock's weighting in the portfolio was below 5%, which has helped to reduce the beta in the portfolio but will ensure we benefit from the continuing strength of the company's operations. Elsewhere for the period IVRCL was down 43.7%, Bilcare was down 18.3%, SKNL was down 15.6% and Gujarat NRE Coke was down 36.9%.

As announced on 26 August 2011, the whole of the holding in the unlisted Marwadi Shares and Finance has been sold, releasing cash for future investment in the listed markets and at a time when some market valuations are beginning to look particularly attractive.

Analysis of holdings at 31 Aug 2011

Sector Summary	No. of Companies	% of Portfolio
Financials	10	20.2%
Industrials	9	17.1%
Materials	4	10.0%
Consumer Discretionary	3	8.3%
Health Care	3	5.8%
IT	3	4.6%
Energy	2	4.2%
Utilities	1	2.3%
Consumer Staples	1	1.8%
Telecom Services	1	1.2%
Total Equity Investment	37	75.5%
Net Cash		24.5%
Total Portfolio		100.0%

Top 10 equity holdings at 31 Aug 2011

Holding	Sector	% of Portfolio
Prime Focus	Consumer Discretionary	4.9%
United Phosphorus	Materials	4.5%
Jain Irrigation	Industrials	3.7%
Bilcare	Health Care	3.7%
Sintex Industries	Industrials	3.5%
Federal Bank	Financials	3.1%
Manappuram Gen Fin & Leasing	Financials	3.1%
Eicher Motors	Industrials	2.9%
S. Kumars Nationwide	Consumer Discretionary	2.6%
Redington India	IT	2.5%

Portfolio breakdown by size at 31 Aug 2011

Size	No. of Companies	% of Portfolio
Small Cap  (M/Cap <INR 15bn)	14	24.8%
Mid Cap (INR 15bn <M/Cap<INR 100bn)	16	40.4%
Large Cap (M/Cap > INR 100bn)	6	10.3%
Unlisted	1	0.0%
Cash/Cash Equivalent		24.5%
Total	37	100.0%

 

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