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% on1^st 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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