Net Asset Value(s)

RNS Number : 9508W
India Capital Growth Fund Limited
06 August 2018
 

 

6 August 2018

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

Net Asset Value statement at 31 July 2018

Net Asset Value

The Company announces its Net Asset Value (NAV) per share as at 31 July 2018 was 111.50 pence.

In the month the NAV was up 3.2% in Sterling terms, whilst the BSE Mid Cap TR Index was up 3.8%, delivering an under performance against the notional benchmark of 0.6%. In local currency terms, the NAV was up 3.3% for the month.

Portfolio update

Positive contribution to the portfolio's performance came from Motherson Sumi Systems (up 13.1%), NIIT Technologies (up 11.7%) and Balkrishna Industries (up 16.0%). Negative contribution came from Dewan Housing Finance (down 5.8%), Jyothy Laboratories (down 6.1%) and Essel Propack (down 12.0%).

Market and economic update

India's equity markets rallied across the board as global oil prices slid back below $70 per barrel. "Main Board" stocks rose 6.2% whilst the BSE Mid Cap Index recovered some 4.0%, following a bleak half year. The downward move in the oil price also supported the Rupee/Dollar exchange rate after recent weakness; the Rupee depreciated 0.1% against the US Dollar and 0.2% against Sterling.  Both Foreign and Domestic Institutions were net buyers for the month; US$208m and US$612m respectively.

The Reserve Bank of India (RBI) raised lending rates by 0.25% to 6.5% on1st August for the second time since June, on the back of rising consumer price inflation and the imported costs of higher oil. The RBI retained its "neutral" stance however, intending to contain inflation without choking growth. But clearly the focus is to contain inflation within the target band, and particularly since the Government is intent on raising minimum support prices for key crops well above prior year's prices. This hike will also lend support to the currency, in some manner. The RBI also maintained its real GDP growth projection at 7.4% for this financial year (FY19), but raised its inflation estimates slightly to 4.8%. A target 5% inflation rate for first quarter of FY20 was also introduced.

Indian companies began reporting Q1FY19 (30 June ended) results. To date these results have been mixed. The IT Services, Consumer Staples and Capital Goods sectors have all outperformed expectation, with Consumer Staples the standout, reporting double digit volume growth. These companies are benefitting from a favourable base effect on volumes, since last year's numbers were dulled by problems surrounding the implementation of GST. Management commentary indicates that rural consumption continues to outpace urban consumption, as the benefits of prior monsoons and recent Government sops feed through. However passing on input cost pressures remains a challenge, pressurising margins. Elsewhere, private sector financials reported healthy retail loan growth, but earnings suffered from treasury losses (mark to market) and net interest margin weakness. Corporate loan books also suffered higher provisioning which continued to dent profits, but there was better news on the overall decline in the gross and net NPL ratios.

 

Portfolio analysis by sector as at 31 July 2018




Sector

No. of Companies

% of Portfolio

Financials

8

24.4%

Materials

8

18.6%

Consumer Discretionary

8

18.1%

Consumer Staples

4

9.7%

Industrials

4

8.2%

IT

2

8.3%

Real Estate

2

2.7%

Healthcare

2

3.4%

Total Equity Investment

38

93.5%

Net Cash


6.5%

Total Portfolio

38

100.0%




Top 20 holdings as at 31 July 2018




Holding

Sector

% of Portfolio

Dewan Housing Finance

Financials

4.8%

NIIT Technologies

IT

4.3%

Motherson Sumi Systems

Consumer Discretionary

4.2%

Jyothy Laboratories

Consumer Staples

4.1%

Federal Bank

Financials

3.9%

Tech Mahindra

IT

3.9%

Ramkrishna Forgings

Materials

3.8%

City Union Bank

Financials

3.5%

Indusind Bank

Financials

3.4%

Balkrishna Industries

Consumer Discretionary

3.3%

Exide Industries

Consumer Discretionary

3.0%

Radico Khaitan

Consumer Staples

3.0%

Berger Paints India

Materials

2.7%

Finolex Cables

Industrials

2.7%

Sobha Developers

Real Estate

2.6%

Welspun India

Consumer Discretionary

2.5%

Divi's Laboratories

Healthcare

2.5%

PI Industries

Materials

2.4%

Capital First

Financials

2.4%

Indian Bank

Financials

2.4%




Portfolio analysis by market capitalisation size as 31 July 2018




Market capitalisation size

No. of Companies

% of Portfolio

Small Cap (M/Cap < US$2bn)

25

53.1%

Mid Cap (US$2bn < M/Cap < US$7bn)

9

26.7%

Large Cap (M/Cap > US$7bn)

4

13.8%

Total Equity Investment

38

93.5%

Net Cash


6.5%

Total Portfolio

38

100.0%

 


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