Net Asset Value(s)

RNS Number : 3932J

India Capital Growth Fund Limited

06 August 2012

 



6 August 2012

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

Net Asset Value statement as at 31 July 2012

Net Asset Value

The Company announces its Net Asset Value per share as at 31 July 2012 was 44.83 pence.

Portfolio update

In July, the Net Asset Value (NAV) of the Company rose 1.5% in Sterling terms, outperforming its notional benchmark, the BSE Midcap Index, by 3.8% for the month. The Indian Rupee (INR) remained broadly flat against both Sterling and the US Dollar, whilst the BSE Midcap Index and the BSE Sensex both fell in INR terms, 2.3% and 1.1% respectively.

The positive contribution to the portfolio was broad based but in particular came from the financial, healthcare and industrial sectors. Stock specific performance was attributed to Dish TV (DTH satellite provider, up 8.7%), Lupin (a manufacturer of generic pharmaceuticals, up 11.9%), Divi's Laboratories (a manufacturer of active pharma ingredient, up 7.0%) and Jyothy Labs (a manufacturer of household products, up 5.2%). The significant negative contributors were Prime Focus (a 2D to 3D media content conversion provider, down 21%) and Rallis (a manufacturer of crop protection products, down 9%).

Market and economic update

July has been a busy month in the Indian equity markets. News flow continues to dishearten investors and in spite of renewed hope of positive change, nothing material has emerged yet. Uppermost in the domestic investors' minds is the disappointing monsoon where rainfall levels are currently 20% below seasonal averages, which if not shortly rectified, will result in further downward pressure on the market as earnings expectations are pared. The pain is likely to be felt particularly in the public sector banking sector, which may be obliged to provide credit relief to the agricultural sector at a cost to shareholders. Consumption may also be affected in rural areas as real incomes suffer, leading to downward revisions for the earnings of companies most affected. This sector is highly rated and has performed well, and thus is vulnerable to a correction if the situation does not improve. We have reduced the portfolio's exposure to direct "monsoon risk" companies.

The Reserve Bank of India (RBI) has left interest rates unchanged at 8%, reiterating that inflation continues to be their primary focus in spite of sharply moderating growth. To this end the RBI raised its wholesale inflation forecast for this fiscal year from 6.5% to 7.0%, whilst lowering its forecast for GDP growth from 7.3% to 6.5%. This has brought RBI's expectations more in line with market forecasts.

On the political front, the complete collapse of the energy grid across the entire North and East of India two days in a row, rendering some 600m people without power, must surely cause politicians and bureaucrats to wake up and realise the extent to which the country is in dire need of political and structural reform. Nonetheless, foreign fund flows increased to USD11bn year to date, up over USD1.8bn in July. This far outstrips flows into other Asian markets implying it is not simply a function of a renewed liquidity rush, in expectation of further enhancing measures from the developed market policy makers. Also, strong foreign fund flow normally provokes a positive reaction in the market and in the currency, neither of which has materialised.

Portfolio analysis by sector as at 31 July 2012

Sector	No. of Companies	% of Portfolio
Financials	10	27.6%
Industrials	6	13.6%
Health Care	4	11.2%
Consumer Discretionary	4	9.9%
Consumer Staples	2	6.8%
Materials	3	6.4%
Utilities	2	6.1%
Energy	2	5.4%
Information Technology	3	5.3%
Telecommunication Services	1	1.9%
Total Equity Investment	37	94.2%
Net Cash		5.8%
Total Portfolio		100.0%

Top 10 holdings as at 31 July 2012

Holding	Sector	% of Portfolio
Jyothy Laboratories Ltd	Consumer Staples	4.3%
Dish TV India Ltd	Consumer Discretionary	4.0%
Federal Bank Ltd	Financials	3.9%
Cesc Ltd	Utilities	3.6%
Kpit Cummins Infosystems Ltd	IT	3.6%
Indian Bank	Financials	3.6%
Lupin Ltd	Health Care	3.6%
Yes Bank Ltd	Financials	3.4%
Divi's Laboratories Ltd	Health Care	3.3%
Larsen & Toubro Ltd	Industrials	3.2%

Portfolio analysis by market capitalisation size as at 31 July 2012

Market capitalisation size	No. of Companies	% of Portfolio
Small Cap (M/Cap <INR 15bn)	5	10.6%
Mid Cap (INR 15bn <M/Cap<INR 100bn)	20	52.9%
Large Cap (M/Cap > INR 100bn)	11	30.7%
Unlisted	1	0.0%
Total Equity Investment	37	94.2%
Net Cash		5.8%
Total Portfolio		100.0%

 

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