Net Asset Value(s)

RNS Number : 0299A

India Capital Growth Fund Limited

06 September 2018

 

6 September 2018

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

Net Asset Value statement at 31 August 2018

Net Asset Value

The Company announces its Net Asset Value (NAV) per share as at 31 August 2018 was 111.75 pence.

In August the NAV was up 0.2% in Sterling terms, whilst the BSE Mid Cap TR Index was up 3.0%, delivering an under performance against the notional benchmark of 2.8%. In local currency terms, the NAV was up 2.7% for the month.

Portfolio update

Positive contribution to the portfolio's performance came from Welspun India (up 32.2%), NIIT Technologies (up 14.7%) and City Union Bank (up 17.8%). Negative contribution came from Skipper (down 19.8%), Finolex Cables (down 11.6%) and Federal Bank (down 8.9%).

Market and economic update

Indian equity markets continued to rise in local currency terms. The BSE Sensex rose 2.8% in August touching all-time highs, whilst the BSE Mid Cap recovery extended for a second month, rising 5.6%. Rupee weakness intensified this month, touching all-time lows, falling 2.5% against Sterling and 3.6% against the US Dollar. Ongoing tensions between the United States and various key oil producing countries is driving oil prices higher, which is increasing the demand for Dollars, as import costs rise. The Reserve Bank of India (RBI) has indicated it is currently impervious to the falling currency, but may step in to reduce volatility. Ongoing currency weakness may also impact RBI's thinking over future interest rate rises, the next meeting being in October. Foreign currency reserves have fallen but remain above US$400bn and 10 year government bond yields crossed 8%. Foreign Institutions were net sellers of equities (US$278m for the month) and Domestic Institutions were net buyers (US$402m for the month).

The rally in stock prices remains narrowly based and seemingly driven by ongoing fund flow into domestic mutual funds, whose cash holdings are limited. That said, real GDP growth accelerated to 8.2% in Q1FY19 compared to 7.7% in Q4FY18, comfortably beating market expectations. A favourable base effect arising from a weak Q1FY18 (ahead of the GST implementation) played a role, but strong growth was enjoyed across a broad base. On the demand side, private consumption growth surged to 8.6% while capital expenditure (private sector investment) grew by 10%. Within sectors it was largely led by a pickup in agriculture (5.3% from 3.0% in Q1FY18) and industrial growth (10.3% from 0.1% in Q1FY18). In the industrial space, manufacturing (13.5% from -1.8% in Q1FY18) and construction (8.7% from 1.8% in Q1FY18) were the key contributors. The RBI expects India's economic growth rate to accelerate to 7.4% in the current financial year based upon a pickup in industrial activity and a good monsoon, although rising inflation due to the impact of increasing minimum support prices and a widening current account deficit, may yet temper these assumptions. In July, consumer price inflation fell to 4.2%, inside the RBI's comfort zone.

Portfolio analysis by sector as at 31 August 2018
Sector	No. of Companies	% of Portfolio
Financials	8	22.7%
Materials	8	17.9%
Consumer Discretionary	8	16.7%
Consumer Staples	4	9.8%
IT	2	8.2%
Industrials	4	8.0%
Healthcare	3	6.3%
Real Estate	2	2.6%
Total Equity Investment	39	92.2%
Net Cash		7.8%
Total Portfolio	39	100.0%
Top 20 holdings as at 31 August 2018
Holding	Sector	% of Portfolio
Tech Mahindra	IT	4.3%
City Union Bank	Financials	4.0%
Jyothy Laboratories	Consumer Staples	3.9%
NIIT Technologies	IT	3.9%
Motherson Sumi Systems	Consumer Discretionary	3.9%
Ramkrishna Forgings	Materials	3.5%
Federal Bank	Financials	3.5%
Dewan Housing Finance	Financials	3.5%
Radico Khaitan	Consumer Staples	3.3%
Welspun India	Consumer Discretionary	3.2%
Balkrishna Industries	Consumer Discretionary	3.1%
Indusind Bank	Financials	3.1%
Exide Industries	Consumer Discretionary	3.0%
Berger Paints India	Materials	2.8%
Capital First	Financials	2.8%
Divi's Laboratories	Healthcare	2.8%
Aurobindo Pharma	Healthcare	2.6%
Kajaria Ceramics	Industrials	2.4%
Sobha Developers	Real Estate	2.4%
Finolex Cables	Industrials	2.3%
Portfolio analysis by market capitalisation size as 31 August 2018
Market capitalisation size	No. of Companies	% of Portfolio
Small Cap (M/Cap < US$2bn)	24	47.7%
Mid Cap (US$2bn < M/Cap < US$7bn)	11	31.2%
Large Cap (M/Cap > US$7bn)	4	13.4%
Total Equity Investment	39	92.2%
Net Cash		7.8%
Total Portfolio	39	100.0%

 

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