Net Asset Value(s)

RNS Number : 9091L

India Capital Growth Fund Limited

06 October 2016

 

6 October 2016

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

Net Asset Value statement at 30 September 2016

Net Asset Value

The Company announces its Net Asset Value per share as at 30 September 2016 was 92.84 pence.

In the month the Net Asset Value (NAV) was up 1.4% in Sterling terms, whilst the BSE Mid Cap Total Return Index was up 1.1%, delivering an outperformance against the notional benchmark of 0.3%. In local currency terms, the NAV was little changed for the month.

Portfolio update

Positive attribution to the portfolio's performance came from Jyothy Laboratories (up 11.7%), Kajaria Ceramics (up 10.1%), Balkrishna Industries (up 15.5%) and Federal Bank (up 4.7%). Negative attribution came from Yes Bank (down 8.2%), Tech Mahindra (down 10.4%) and Ramkrishna Forgings (down 15.8%).

Market and economic update

The Indian equity market corrected after gaining for six consecutive months; the BSE Sensex was down 2.1% whilst the BSE Mid Cap Total Return Index fell 0.3%. This was mainly on the back of geopolitical risk, as the Indian Army carried out surgical strikes on terrorist camps in Pakistan in response to increased hostility in Kashmir. Foreign Institutions were net buyers (US$1.4bn), as were domestic institutions (US$299m). The Indian Rupee appreciated 0.5% against the US Dollar and 1.4% against Sterling.

July Industrial Production fell 2.4% driven by a decline in capital goods, manufacturing and consumer non-durables, whilst mining and electricity expanded. Better news flow came from August consumer price inflation, which fell to 5.1% (a four month low) led by lower food prices, mainly pulses. As largely anticipated, this was followed by a 0.25% cut in nominal interest rates to 6.25%, announced by the newly formed Monetary Policy Committee (MPC), chaired by central bank governor Urjit Patel, and comprising of five additional members (two further Reserve Bank appointees and three highly qualified independent appointees). All six members voted unanimously in favour of the cut. Looking ahead, any further changes will be dependent on consumer price inflation, which has a five year target of 4%, with a 2% tolerance level. The recent public salary pay increases, and the fiscal impact that may ensue, makes any further near term cuts to interest rates less likely.

In an effort to crack down on illicit "black money", the Indian Government conducted "The Income Declaration Scheme" which allowed citizens to report previously undeclared assets to the taxman, without risk of prosecution. The Government received disclosures worth US$9.9bn, implying an aggregate Government tax revenue of US$4.4bn. In addition, between April and September this year, the Government has raised US$3.1bn through stake sales and buybacks of public sector companies; this is the highest figure publicly divested in the first half of a financial year, but accounts for only 37% of the total disinvestment target for FY16/17.

Portfolio analysis by sector as at 30 September 2016
Sector	No. of Companies	% of Portfolio
Financials	9	27.1%
Materials	8	17.3%
Consumer Discretionary	7	16.4%
Industrials	5	11.6%
Healthcare	4	8.6%
Consumer Staples	4	7.3%
IT	2	4.6%
Total Equity Investment	39	92.9%
Net Cash		7.1%
Total Portfolio	39	100.0%
Top 20 holdings as at 30 September 2016
Holding	Sector	% of Portfolio
Yes Bank	Financials	5.1%
Federal Bank	Financials	4.4%
Dewan Housing	Financials	4.2%
Jyothy Laboratories	Consumer Staples	4.0%
Kajaria Ceramics	Industrials	3.7%
Motherson Sumi Systems	Consumer Discretionary	3.5%
Dish TV India	Consumer Discretionary	3.3%
PI Industries	Materials	3.1%
Indusind Bank	Financials	2.9%
Sobha Developers	Financials	2.9%
Berger Paints India	Materials	2.8%
City Union Bank	Financials	2.8%
Divis Laboratories	Healthcare	2.8%
Finolex Cables	Industrials	2.7%
The Ramco Cements	Materials	2.7%
Max Financial Services	Financials	2.6%
Exide Industries	Consumer Discretionary	2.5%
NIIT Technologies	IT	2.4%
Skipper	Materials	2.3%
Essel Propack	Materials	2.2%
Portfolio analysis by market capitalisation size as 30 September 2016
Market capitalisation size*	No. of Companies	% of Portfolio
Small Cap (M/Cap < US$2bn)	26	58.9%
Mid Cap (US$2bn < M/Cap < US$7bn)	9	22.3%
Large Cap (M/Cap > US$7bn)	4	11.6%
Total Equity Investment	39	92.9%
Net Cash		7.1%
Total Portfolio	39	100.0%

* Please note that as at 1 September 2016, our mid cap market capitalisation definitions have been amended from INR60bn < x < INR250bn to US$2bn < x < US$7bn

 

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