Net Asset Value(s)

RNS Number : 1200I

India Capital Growth Fund Limited

06 August 2019

 

6 August 2019

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

Net Asset Value statement at 31 July 2019

Net Asset Value

The Company announces its Net Asset Value per share as at 31 July 2019 was 94.21 pence.

In July the Net Asset Value (NAV) was down 2.9% in Sterling terms, whilst the BSE MidCap TR Index was down 3.6%, delivering an out performance against the notional benchmark of 0.7%. In local currency terms, the NAV was down 6.9% for the month.

Portfolio update

Positive contribution to the portfolio's performance came from Emami (up 7.0%), Berger Paints (up 4.2%) and Divis Labs (up 2.3%). Negative contribution came from Federal Bank (down 14.8%), Kajaria Ceramics (down 18.5%) and Indian Bank (down 28.2%).

Market and economic update 

Indian equities continued to correct in July with the BSE Sensex and BSE MidCap TR Index down 4.6% and 7.6% respectively (in Indian Rupees) as disappointment with the Union Budget, a tepid earnings season and an ongoing liquidity crunch continue to act as drags on sentiment. Foreign institutional investors (FII) were net sellers to the tune of US$1.9bn whilst investments from domestic institutions continued to be strong (net buyers of US$3.0bn). The Indian Rupee for the month appreciated by 0.3% against the US Dollar and 4.1% against Pound Sterling.

The newly appointed finance minister Nirmala Sitharaman presented the Government's inaugural budget in July. Whilst some measures were received positively - maintaining fiscal discipline with a deficit to GDP target of 3.3% for FY20 (3.4% in FY19) and aiming to fund up to 10% of it from the overseas market - overall the Budget has contributed to market negativity. For instance, in an attempt to increase surcharges on super high income individuals operating through registered trusts and associations, approximately 40% of Foreign Portfolio Investors are liable to a higher tax bill, thus triggering a net FII outflow in July. 

Indian companies began reporting Q1FY20 results (ending on 30 June). Results so far have shown a trend of weakening demand particularly in the rural economy, both in big ticket items such as Automobiles and in Consumer Staples. Hindustan Unilever reported volume growth of 5%, the slowest in the last seven quarters. In IT, margins were weak, however demand trends are stable. Private Banks reported a slight moderation in loan growth, while for wholesale banks concerns remain on potential slippages from the clean-up of asset books that is underway. On an encouraging note, Larsen & Toubro, India's largest private sector infrastructure company, reported in-line with expectations; order inflows grew by 11% and the management team has guided for similar growth going forwards.

Portfolio analysis by sector as at 31 July 2019
Sector	No. of Companies	% of Portfolio
Financials	7	22.4%
Materials	7	21.8%
Consumer Discretionary	5	11.3%
Consumer Staples	4	10.6%
Industrials	5	8.2%
Health Care	3	6.8%
Information Technology	2	5.7%
Real Estate	1	0.1%
Communication Services	0	0.0%
Energy	0	0.0%
Utilities	0	0.0%
Total Equity Investment	34	87.0%
Net Cash		13.0%
Total Portfolio	34	100.0%
Top 20 holdings as at 31 July 2019
Holding	Sector	% of Portfolio
Federal Bank	Financials	5.5%
City Union Bank	Financials	5.0%
Tech Mahindra	Information Technology	4.8%
PI Industries	Materials	3.9%
Emami	Consumer Staples	3.8%
Jyothy Laboratories	Consumer Staples	3.7%
Berger Paints India	Materials	3.7%
Kajaria Ceramics	Industrials	3.5%
Ramkrishna Forgings	Materials	3.4%
Divi's Laboratories	Health Care	3.3%
IDFC Bank	Financials	3.3%
Indusind Bank	Financials	3.0%
Welspun India	Consumer Discretionary	2.8%
Aurobindo Pharma	Health Care	2.7%
Essel Propack	Materials	2.7%
Motherson Sumi Systems	Consumer Discretionary	2.7%
The Ramco Cements	Materials	2.7%
Radico Khaitan	Consumer Staples	2.6%
Exide Industries	Consumer Discretionary	2.5%
Balkrishna Industries	Consumer Discretionary	2.4%
Portfolio analysis by market capitalisation size as 31 July 2019
Market capitalisation size	No. of Companies	% of Portfolio
Small Cap (M/Cap < US$2bn)	20	38.2%
Mid Cap (US$2bn < M/Cap < US$7bn)	12	41.0%
Large Cap (M/Cap > US$7bn)	2	7.8%
Total Equity Investment	34	87.0%
Net Cash		13.0%
Total Portfolio	34	100.0%

 

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