Net Asset Value(s)

RNS Number : 2950R

India Capital Growth Fund Limited

07 March 2016

 

7 March 2016

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

Net Asset Value statement at 29 February 2016

Net Asset Value

The Company announces its Net Asset Value per share as at 29 February 2016 was 69.00 pence.

In February the Net Asset Value (NAV) was down 8.9% in Sterling terms, whilst the BSE Mid Cap Index was down 5.6%, delivering an under performance against the notional benchmark of 3.3%. Against Ocean Dial's Composite Index, ICGF under performed by 3.0%. In local currency terms, the NAV was down 11.2% for the month.

The Company also announces its fully diluted NAV per share as at 29 February 2016 was 66.34 pence. 

The above fully diluted NAV assumes that the 37,500,710 Subscription Shares rights will be exercised at their subscription price of 61 pence. The Subscription Shares have a subscription date of 6 August 2016. However, if at any time after 6 August 2015 the average middle market quotation for an Ordinary Share for at least 10 consecutive trading days is 5% or more above the subscription price, the Company has the right, (but not the obligation) by an announcement on a RIS to change the subscription date for exercise of the Subscription Shares to an earlier date (being a date not less than 30 days after the Company's announcement) that it is bringing forward the subscription date. In that event an announcement will be made on a RIS and a notice of the revised subscription date will be given to all holders of the Subscription Shares on the register at 5.00pm on the date falling three business days following the announcement of the revised subscription date.

Portfolio update

Positive attribution to the portfolio's performance came from City Union Bank (up 5.5%), Exide Industries (up 6.3%), Finolex Cables (up 2.5%) and Ajanta Pharma (up 2.2%). Negative attribution came from Mahindra CIE (down 32.7%), Dish TV (down 25.8%) and Divis Laboratories (down 16.7%).

Market and economic update

Indian equity markets remained weak in February driven by a mixture of short term domestic uncertainty and ongoing global equity malaise. Thus in local currency terms, the BSE Sensex fell 7.5% whilst the BSE Mid Cap Index was down 8.1% as Foreign Institutions continued to reduce exposure (US$1.2bn for the month), while Domestic Institutions continued to absorb supply, buying US$1.5bn over the period. The Indian Rupee depreciated 0.9% against the US Dollar, whilst doubts around "Brexit" caused the Indian currency to rally 2.6% against Sterling.

The market's caution ahead of the Federal Budget (announced on 29 February) revolved principally around concerns that the Government would allow future fiscal deficit targets to slip in favour of providing additional stimulus to growth. This, alongside fears of potential changes to long term capital gains, proved unfounded, to the relief of markets. Overall the Budget's attention was focused on the rural economy, with announcements of increased expenditure on roads, irrigation projects, agriculture insurance products and unemployment sops, all primarily funded through income raising schemes directed towards higher income categories. Hence the atmosphere felt marginally populist, possibly reflecting the BJP's concerns about recent electoral failures, and important State elections to come. Nevertheless bonds and equities both rallied subsequently, reflecting low expectations and that the Reserve Bank would resume its interest rate cutting path shortly.

Elsewhere the news flow remains poor. Corporate results for third quarter FY16 (ending December 2015) were weak led by the banking sector, driven by ongoing asset quality issues and under pressure from the Reserve Bank to improve transparency. Consumption trends were also weak as was capital goods and infrastructure spending. Bright spots emerged from margin expansion in the automotive sector and strong refining margins in oil and gas. Consumer price inflation rose to 5.7% driven by a pickup in food prices, but nonetheless remains comfortably within expected limits. Industrial production contracted due to one off factors and whilst the three months moving average remains positive at 3.3% for December end, it is down from 3.7% in November. The mood remains despondent but emerging value in some stock prices is promising.

Portfolio analysis by sector as at 29 February 2016
Sector	No. of Companies	% of Portfolio
Financials	10	27.2%
Materials	6	15.9%
Industrials	6	13.2%
Consumer Discretionary	5	12.7%
Consumer Staples	4	10.5%
Healthcare	5	10.3%
IT	3	6.6%
Total Equity Investment	39	96.4%
Net Cash		3.6%
Total Portfolio	39	100.0%
Top 20 holdings as at 29 February 2016
Holding	Sector	% of Portfolio
Federal Bank	Financials	4.9%
Jyothy Laboratories	Consumer Staples	4.3%
Kajaria Ceramics	Industrials	4.2%
Yes Bank	Financials	4.2%
PI Industries	Materials	4.0%
Divis Laboratories	Healthcare	3.8%
IndusInd Bank	Financials	3.7%
Dewan Housing	Financials	3.6%
Berger Paints India	Materials	3.5%
City Union Bank	Financials	3.4%
Motherson Sumi Systems	Consumer Discretionary	3.2%
Exide Industries	Consumer Discretionary	3.2%
The Ramco Cements	Materials	3.0%
Lupin	Healthcare	2.8%
Emami	Consumer Staples	2.8%
Max Financial Services	Financials	2.8%
Dish TV India	Consumer Discretionary	2.8%
Finolex Cables	Industrials	2.7%
Tech Mahindra	IT	2.6%
Sobha Developers	Financials	2.6%
Portfolio analysis by market capitalisation size as 29 February 2016
Market capitalisation size	No. of Companies	% of Portfolio
Small Cap (M/Cap <INR60bn)	19	34.9%
Mid Cap (INR60bn <M/Cap<INR250bn)	13	39.3%
Large Cap (M/Cap > INR250bn)	7	22.2%
Total Equity Investment	39	96.4%
Net Cash		3.6%
Total Portfolio	39	100.0%

 

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