Net Asset Value(s)

RNS Number : 4013Q

India Capital Growth Fund Limited

06 June 2018

 

6 June 2018

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

Net Asset Value statement at 31 May 2018

Net Asset Value

The Company announces its Net Asset Value (NAV) per share as at 31 May 2018 was 116.03 pence.

In May the NAV was down 0.8% in Sterling terms, whilst the BSE Mid Cap TR Index was down 2.6%, delivering an out performance against the notional benchmark of 1.8%. In local currency terms, the NAV was down 4.1% for the month.

Portfolio update

Positive attribution to the portfolio's performance came from Jyothy Labs (up 16.5%), BLS International (up 26%) and Radico Khaitan (up 9.9%). Negative attribution came from Manpasand Beverages (down 44.3%), Federal Bank (down 13.7%) and Motherson Sumi (down 12.1%).

Market and economic update

India's equity markets continue to favour larger cap stocks. In May the BSE Sensex rose 0.5%, consolidating last month's gain, whilst the BSE Mid Cap TR Index fell further (down 5.8%) as investors sold the more highly rated stocks reflecting growing concern around India's widening trade balance and weakening currency. In May foreign institutions were net sellers (US$1.4bn for the month) whilst domestic institutions were net buyers (US$2.2bn for the month) in the equities market and INR depreciated 1.1% against USD, but appreciated 3.3% against GBP.

In Karnataka, the BJP won the largest number of seats in the state election with an increased vote share but failed to obtain a sufficient majority. The local party, the JD(S), backed by its minority partner, the Congress Party, finally formed the state government raising uncertainty about Prime Minister Modi's ability to score an emphatic victory in the national elections in 2019.

India's real GDP growth picked up to 7.7% in Q4FY18 compared to 7.0% in Q3FY18 and 6.1% in Q4FY17, aided by a low base, a sharp jump in fixed investment (GFCF) growth to 14.4% and a 16.8% increase in Government expenditure. The manufacturing sector grew by 9.1%, whilst construction activities rose 11.5%. All this points towards nascent economic recovery following the damage created by the demonetisation experiment and the implementation of the Goods and Services Tax. On the latter issue, tax revenues are now growing in line with expectations.

The quarterly earnings season is underway as Corporate India reports Q4 and full year results for FY2018. The consumer staples, information technology, industrials and materials sectors all reported better than forecast. Financials, notably the Public Sector Banks, disappointed the street, owing to higher credit costs following the Reserve Bank of India's adjustment to their provisioning requirements. Although this is expected to roll into next quarter, we do not foresee a meaningful increase in fresh non-performing loans. In other sectors the results were also disappointing.

Portfolio analysis by sector as at 31 May 2018
Sector	No. of Companies	% of Portfolio
Financials	8	24.6%
Materials	8	19.9%
Consumer Discretionary	8	17.8%
Consumer Staples	4	9.7%
Industrials	4	9.3%
IT	2	9.0%
Healthcare	2	3.1%
Real Estate	2	2.8%
Total Equity Investment	38	96.2%
Net Cash		3.8%
Total Portfolio	38	100.0%
Top 20 holdings as at 31 May 2018
Holding	Sector	% of Portfolio
Dewan Housing Finance	Financials	6.0%
NIIT Technologies	IT	5.1%
Ramkrishna Forgings	Materials	4.4%
Tech Mahindra	IT	4.0%
Motherson Sumi Systems	Consumer Discretionary	3.9%
Jyothy Laboratories	Consumer Staples	3.8%
Federal Bank	Financials	3.6%
City Union Bank	Financials	3.5%
Indusind Bank	Financials	3.2%
Radico Khaitan	Consumer Staples	3.0%
Balkrishna Industries	Consumer Discretionary	2.9%
Finolex Cables	Industrials	2.9%
Kajaria Ceramics	Industrials	2.8%
Exide Industries	Consumer Discretionary	2.7%
Welspun India	Consumer Discretionary	2.7%
Sobha Developers	Real Estate	2.7%
Sagar Cements	Materials	2.6%
Berger Paints India	Materials	2.5%
PI Industries	Materials	2.5%
Capital First	Financials	2.4%
Portfolio analysis by market capitalisation size as 31 May 2018
Market capitalisation size	No. of Companies	% of Portfolio
Small Cap (M/Cap < US$2bn)	25	57.1%
Mid Cap (US$2bn < M/Cap < US$7bn)	9	26.0%
Large Cap (M/Cap > US$7bn)	4	13.1%
Total Equity Investment	38	96.2%
Net Cash		3.8%
Total Portfolio	38	100.0%

 

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