Net Asset Value(s)

RNS Number : 7137P

India Capital Growth Fund Limited

06 October 2011

 



India Capital Growth Fund Limited

06 October 2011

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

30 September 2011 NAV Statement

Net Asset Values

The Company announces its net asset value per share as at 30 September 2011 was 49.85 pence

Portfolio Update

During September the Net Asset Value (NAV) of India Capital Growth Fund Limited fell 1.2% in Rupee terms, as against the BSE Midcap Index which fell by 2.3%. In Sterling terms the NAV fell 2.7% as over the period the Rupee weakened against Sterling. The intense volatility that pervades developed markets continues to affect riskier asset classes across the globe. India was no exception in September, particularly in currency terms, as the Rupee depreciated 6.25% versus the US Dollar. In spite of this the Indian equity market outperformed the regional and emerging markets peer group, as India's defensive qualities came to the fore.

Foreign investor outflows moderated during the month bringing the net outflow for the year to USD213m. Indian domestic pension funds and mutual funds continue to provide support investing a net USD320m in September. Headline inflation remains above the comfort levels of the Reserve Bank of India, rising to 9.78%. The issue for investors now is that any weakness in global commodity prices, a big plus for India, is being offset by the fall in the Rupee. Growth is moderating somewhat faster than expected on the back of tight monetary policy as well as the deterioration in the global outlook, but the all clear on inflation has not yet been signalled. The Reserve Bank has a tough balancing act to negotiate in the months to come.

The portfolio's exposure to the financial sector contributed the majority of the positive attribution for the month. Manappuram Finance (offering loans against gold collateral) rose 4.4%, whilst Indusind Bank (a new private sector bank) rose 6.3%. In other areas the recent purchase of Eicher Motors continues to work well rising 19.5%, and in the industrial sector the portfolio also benefitted from the strong performance of Elecon up 10.6% and Hindustan Dorr which rose 11.6%. We are using the recent strength in the latter to exit the position completely.

The negative contribution to the funds' performance was stock specific and spread across various sectors. Sintex Industries (a manufacturer of plastics and composites) fell 12% over concerns about its exposure to the developed markets through its subsidiaries and the mark to market losses it will have take on accounts of its US Dollar debt. Jain Irrigation System (a manufacturer of micro-irrigation systems) fell 11%, whilst United Phosphorus (manufacturer of off-patent agrochemicals) was down 5.4%. Elsewhere SKNL fell 10%, and Rain Commodities (a manufacturer of calcined petroleum coke, for the aluminium sector) fell 8.9%. The portfolio continues to maintain a high level of cash and we continue to use the weakness in the market to buy high quality mid cap stocks at attractive prices for the medium term. The liquidity position is closely monitored to ensure that additional cash can be raised to protect capital should global macro conditions deteriorate further from here.

Analysis of holdings at 30 September 2011

Sector Summary	No. of Companies	% of Portfolio
Financials	10	22.6%
Industrials	9	16.9%
Materials	7	10.8%
Consumer Discretionary	4	9.0%
Health Care	3	6.0%
IT	3	4.5%
Energy	2	4.4%
Consumer Staples	2	2.3%
Utilities	1	2.1%
Telecom Services	1	1.6%
Total Equity Investment	42	80.2%
Net Cash		19.8%
Total Portfolio		100.0%

Top 10 equity holdings at 30 September 2011

Holding	Sector	% of Portfolio
Prime Focus	Consumer Discretionary	4.8%
Manappuram Gen Fin & Leasing	Financials	3.7%
United Phosphorus	Materials	3.7%
Bilcare	Health Care	3.6%
Federal Bank	Financials	3.6%
Eicher Motors	Industrials	3.5%
Jain Irrigation	Industrials	3.3%
Sintex Industries	Industrials	3.2%
Indian Bank	Financials	2.5%
J&K Bank	Financials	2.5%

Portfolio breakdown by size at 30 September 2011

Size	No. of Companies	% of Portfolio
Small Cap (M/Cap <INR 15bn)	14	24.1%
Mid Cap (INR 15bn <M/Cap<INR 100bn)	19	43.6%
Large Cap (M/Cap > INR 100bn)	8	12.5%
Unlisted	1	0.0%
Cash/Cash Equivalent		19.8%
Total	42	100.0%

 

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