Net Asset Value(s)

RNS Number : 1603D

India Capital Growth Fund Limited

05 October 2018

 

5 October 2018

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

Net Asset Value statement at 30 September 2018

Net Asset Value

The Company announces its Net Asset Value (NAV) per share as at 30 September 2018 was 92.55 pence.

In September the NAV was down 17.2% in Sterling terms, whilst the BSE Mid Cap TR Index was down 14.8%, delivering an under performance against the notional benchmark of 2.4%. In local currency terms, the NAV was down 14.9% for the month.

Portfolio update

Positive contribution to the portfolio's performance came from Aurobindo Pharma (up 4.5%) and Divi's Laboratories (up 0.4%). Negative contribution came from Dewan Housing Finance (down 58.8%), Yes Bank (down 46.5%) and Radico Khaitan (down 29.7%).

Market and economic update

Indian equity markets corrected sharply in September with the BSE Sensex down 6.3% and BSE Mid Cap Index down 12.4%. Heavy selling pressure was prompted by rising concerns over deteriorating credit quality and tightening liquidity issues in the non-banking finance segment. The initial fear that contagion would spread to the broader financial sector was quelled, as both the Government and the Reserve Bank of India (RBI) acted quickly to stem the uncertainty, and a modicum of stability returned to markets. However this, combined with Brent crude oil continuing its upward path, alongside ongoing currency weakness (the Indian Rupee fell 2.1% against Sterling and 2.8% against the US Dollar), continues to dent market sentiment. Foreign Institutions were net sellers (US$1.3bn for the month) whilst Domestic Institutions were net buyers (US$1.7bn for the month).

Two events triggered the equity selloff. The unlisted, quasi Government owned, Infrastructure Leasing and Financials Services (IL&FS), unexpectedly defaulted on its short term commercial paper. This caused an immediate liquidity tightening in the commercial paper market with the knock on effect spreading to other borrowers. The Board of IL&FS was immediately sacked by the Finance Ministry and replaced with a team of prominent "names" led by Uday Kotak, whilst the Government committed to stand behind the Company's outstanding liabilities until a liquidity injection occurs.  In the same week the RBI curtailed the extension of  Rana Kapoor's tenure as the CEO of Yes Bank (mkt cap US$6.5bn) owing to deep rooted concerns that Yes Bank has been under stating asset quality issues. This is the third instance of forced change in senior management of a private sector bank as the Regulator takes a tougher stance. In further moves, the RBI eased short term liquidity requirements of the banks to infuse cash into system. This, along with other monetary measures, has increased overall liquidity and short term rates are stabilising across various funding channels. Today the RBI announced rates were unchanged at 6.5%.

Portfolio analysis by sector as at 30 September 2018
Sector	No. of Companies	% of Portfolio
Financials	8	19.8%
Materials	8	19.3%
Consumer Discretionary	6	15.0%
Consumer Staples	4	9.9%
IT	2	8.5%
Industrials	4	8.4%
Healthcare	3	7.4%
Real Estate	2	2.7%
Communication Services	2	0.7%
Total Equity Investment	39	91.6%
Net Cash		8.4%
Total Portfolio	39	100.0%
Top 20 holdings as at 30 September 2018
Holding	Sector	% of Portfolio
Tech Mahindra	IT	4.9%
Jyothy Laboratories	Consumer Staples	4.1%
City Union Bank	Financials	4.1%
Ramkrishna Forgings	Materials	4.0%
Motherson Sumi Systems	Consumer Discretionary	3.8%
Federal Bank	Financials	3.6%
NIIT Technologies	IT	3.6%
Exide Industries	Consumer Discretionary	3.3%
Divi's Laboratories	Healthcare	3.3%
Indusind Bank	Financials	3.3%
Aurobindo Pharma	Healthcare	3.2%
Welspun India	Consumer Discretionary	3.0%
Berger Paints India	Materials	2.9%
Kajaria Ceramics	Industrials	2.9%
Balkrishna Industries	Consumer Discretionary	2.8%
PI Industries	Materials	2.7%
Radico Khaitan	Consumer Staples	2.7%
Finolex Cables	Industrials	2.7%
Capital First	Financials	2.5%
Sobha Developers	Real Estate	2.5%
Portfolio analysis by market capitalisation size as 30 September
Market capitalisation size	No. of Companies	% of Portfolio
Small Cap (M/Cap < US$2bn)	28	59.0%
Mid Cap (US$2bn < M/Cap < US$7bn)	8	20.7%
Large Cap (M/Cap > US$7bn)	3	12.0%
Total Equity Investment	39	91.6%
Net Cash		8.4%
Total Portfolio	39	100.0%

 

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