Net Asset Value(s)

RNS Number : 9268H

India Capital Growth Fund Limited

06 June 2011

 



India Capital Growth Fund Limited

06 June 2011

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

31 May 2011 NAV Statement

Net Asset Values

The Company announces its net asset value per share as at 31 May 2011 was 59.33 pence

Portfolio Update

Indian equities fell in May in line with global markets and with it the Rupee which finished the month 0.7% weaker in Sterling terms. Once again the midcaps fared better than the larger stocks falling 2.6% in local currency terms, whilst the main board stocks fell 3.3%. Against this the net asset value of the portfolio fell 2.7%, which when adjusted for the Rupee's fall amounts to a fall of 3.4% in Sterling terms.

Traded volumes continue to be weak. The domestic liquidity situation remains tight, interest rates are rising and the economy is still growing in nominal terms close to 16%. This situation suggests that liquid assets available for stock market investing will be subdued, and that, combined with the appetite for risk globally remaining "in check", suggests lower volumes will persist for the time being. Some stability has returned though after the terrible start to the year and the better performance of the midcaps in the last two months suggests that investors perceive that value exists.

The positive attribution in May arose from the fund's holdings in materials and financials, and in particular agro chemical producer United Phosphorus which rose 7.2% and South Indian based Federal Bank which finished 5.7% higher. Elsewhere Sintex, a manufacturer of monolithic and prefabricated structures for low cost housing, rose 11%. Finally recent newcomer to the portfolio Eicher Motors, a manufacturer of commercial vehicles and high tonnage trucks for the mining sector rose 7% following the announcement of some encouraging quarterly numbers.

Elsewhere the portfolio suffered from a 24% collapse in the share price of Hindustan Dorr, (a 1.8% position). It is a company principally involved in metal and mineral beneficiation. We had expected the results to be weak but were surprised by the collapse in the order book and some write offs owing to cost over runs.   The consumer discretionary sector was also disappointing particularly Prime Focus which gave back much of its recent gains, falling 8.2%. Finally, Bilcare (a 4% position) continues to struggle on the back of disappointing numbers and frustration regarding the long awaited and much promised new order flow.

In our view, a great deal of the negative sentiment has now been priced in to the market. Earnings in various sectors may still disappoint in the near term, but while the market remains in the doldrums we are becoming more optimistic.

Analysis of holdings at 31 May 2011

Sector Summary	No. of Companies	% of Portfolio
Financials	12	32.3%
Industrials	8	17.1%
Consumer Discretionary	3	13.6%
Materials	5	11.3%
Health Care	2	6.2%
IT	3	4.1%
Telecom Services	2	3.9%
Consumer Staples	2	2.6%
Energy	1	2.2%
Total Equity Investment	38	93.3%
Net Cash		6.7%
Total Portfolio		100.0%

Top 10 equity holdings at 31 May 2011

Holding	Sector	% of Portfolio
Marwadi Shares and Finance	Financials	9.7%
Prime Focus	Consumer Discretionary	7.3%
S. Kumars Nationwide	Consumer Discretionary	5.7%
United Phosphorus	Materials	4.4%
Bilcare	Health Care	4.1%
Sintex Industries	Industrial	3.2%
Federal Bank	Financials	3.0%
Indian Bank	Financials	2.9%
Yes Bank	Financials	2.8%
KPIT Cummins Infosystems	IT	2.6%

Portfolio breakdown by size at 31 May 2011

Size	No. of Companies	% of Portfolio
Small Cap  (M/Cap <INR 15bn)	14	33.6%
Mid Cap (INR 15bn <M/Cap<INR 100bn)	17	39.6%
Large Cap (M/Cap > INR 100bn)	5	10.4%
Unlisted	2	9.7%
Cash/Cash Equivalent		6.7%
Total	38	100.0%

 

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