Net Asset Value(s)

RNS Number : 8477S

India Capital Growth Fund Limited

05 October 2017

 

05 October 2017

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

Net Asset Value statement at 30 Sep 2017

Net Asset Value

The Company announces its Net Asset Value (NAV) per share as at 30 Sep 2017 was 109.75 pence.

The NAV was down 4.7% in Sterling terms, whilst the BSE Mid Cap TR Index was down 6.3%, delivering an outperformance against the notional benchmark of 1.5%. In local currency terms, the NAV was up 1% for the month.

Portfolio update

Positive attribution to the portfolio's performance came from Dewan Housing Finance (up 8.8%), Motherson Sumi Systems (up 9.2%), Manpasand Beverages (up 18.7%) and Divis Laboratories (up 22.9%). Negative attribution came from Neuland Laboratories (down 22.7%), Welspun India (down 11.9%) and Matrimony (down 19.3%).

Market and economic update

India's equity markets continued to moderate as foreign investors reduced exposure, prompted by lofty valuations and weaker than expected economic output. Main board stocks fell 1.4%, whilst the BSE Mid Cap TR Index was down 0.6%. Foreign Institutions were net sellers (US$1.7bn for the month), but domestic institutions further sustained the market, investing US$3.2bn in September. India's Rupee depreciated 2.2% against the US Dollar and 6.1% against Sterling.

Positive sentiment towards the market lessened to some extent over concerns that the Finance Ministry may be forced to expand the fiscal deficit for the full year (FY18) beyond current forecasts. Potential "fiscal slippage" is increasingly likely since the Government has already front-ended expenditure (over the first five months of fiscal year), to 96% of the annual budget, exemplifying the negative impact of demonetisation and the implementation of the Goods and Services Tax (GST). In a tacit acknowledgement of poor growth, the Government reported that it may take a call on additional borrowing after December. Furthermore, India's 2Q17 Current Account Deficit (CAD) widened sharply to US$14.3bn as opposed to US$3.5bn in the first quarter, causing the currency to weaken immediately. Current Account weakness was a result of poor export growth and a spike in gold imports in advance of the festive season; the latter should reverse itself in the months ahead, easing pressure on the current account.

Consumer Price Inflation rose sequentially to 3.4% in August from 2.4% as the transition to GST pushed up prices. The Reserve Bank chose to keep interest rates unchanged whilst revising downwards its GDP growth forecast for FY18 to 6.7% from 7.3% earlier. On a brighter note, India's manufacturing PMI bounced back to 51.2 from 47.9, as the impact of GST implementation, which caused a mass destocking of the inventory channel, started to recover.

Portfolio analysis by sector as at 30 September 2017
Sector	No. of Companies	% of Portfolio
Financials	8	28.4%
Materials	9	20.3%
Consumer Discretionary	8	17.4%
Consumer Staples	4	9.6%
Industrials	4	9.5%
IT	2	5.8%
Real Estate	2	3.5%
Healthcare	2	3.3%
Total Equity Investment	39	97.8%
Net Cash		2.2%
Total Portfolio	39	100.0%
Top 20 holdings as at 30 September 2017
Holding	Sector	% of Portfolio
Dewan Housing	Financials	6.9%
Federal Bank	Financials	5.2%
Yes Bank	Financials	4.9%
Motherson Sumi Systems	Consumer Discretionary	4.6%
Jyothy Laboratories	Consumer Staples	3.9%
Ramkrishna Forgings	Materials	3.9%
Kajaria Ceramics	Industrials	3.6%
Sobha Developers	Real Estate	3.2%
City Union Bank	Financials	3.1%
NIIT Technologies	IT	3.1%
Indusind Bank	Financials	3.0%
Finolex Cables	Industrials	2.8%
Tech Mahindra	IT	2.8%
The Ramco Cements	Materials	2.6%
Manpasand Beverages	Consumer Staples	2.6%
Skipper	Materials	2.5%
Sagar Cements	Materials	2.5%
Balkrishna Industries	Consumer Discretionary	2.4%
PI Industries	Materials	2.3%
Exide Industries	Consumer Discretionary	2.3%
Portfolio analysis by market capitalisation size as 30 September 2017
Market capitalisation size	No. of Companies	% of Portfolio
Small Cap (M/Cap < US$2bn)	27	57.2%
Mid Cap (US$2bn < M/Cap < US$7bn)	9	28.2%
Large Cap (M/Cap > US$7bn)	3	12.4%
Total Equity Investment	39	97.8%
Net Cash		2.2%
Total Portfolio	39	100.0%

 

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