Net Asset Value

RNS Number : 4981O

India Capital Growth Fund Limited

07 November 2016

 

7 November 2016

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

Net Asset Value statement at 28 October 2016

Net Asset Value

The Company announces its Net Asset Value per share as at 28 October 2016 was 102.15 pence.

In October the Net Asset Value (NAV) was up 10.0% in Sterling terms, whilst the BSE Mid Cap Total Return Index was up 8.3%, delivering an outperformance against the notional benchmark of 1.7%. In local currency terms, the NAV was up 3.3% for the month.

Portfolio update

Positive attribution to the portfolio's performance came from Jain Irrigation, up 20.0%, supported by Dewan Housing which rose 15.6%, Federal Bank up 13.8%, and City Union Bank up 12.9%. Negative attribution came from Kajaria Ceramics which fell 10.6%, Sobha, down 4.6% and Skipper, down 4.2%.

Market and economic update

The Indian equity market managed to hold on after last month's correction; the BSE Sensex rose 0.3% whilst the BSE Mid Cap Index rallied 1.9%.The Reserve Bank cut interest rates by 25 bps and tensions between India and Pakistan purported to ease. Foreign Institutions were net sellers (US$616m over the month), following seven months of net inflows, whilst Domestic Institutions were net buyers (US$1bn for the month). India's Rupee weakened 0.3% against the US Dollar, but appreciated a further 5.9% against Sterling.

Consumer price inflation for September was reported at a 12 month low of 4.5%, led by lower food prices. Food inflation is expected to remain benign on account of a bumper harvest. Further modest interest rate cuts are potentially on the cards in early 2017.

The Goods & Services Tax (GST) Council postponed a crucial decision on tax rates until early November, implying a lack of consensus between Central and State Governments. The Central Government recently proposed a four slab structure for GST with an additional levy for "demerit" and "super luxury" goods. The disagreement appears to be over the slab rates. April 2017's deadline will be threatened by any further prevarication.

The recent Government-run auction for telecom spectrum raised a paltry US$10bn, falling well short of the US$15bn budgeted target and the nominal US$84bn for sale. A new auction is expected at lower levels where take up should be higher. One year Government bond yields continued to fall but longer dated yields rallied from the lows.

Q2 FY17 results started to trickle in. Results so far are encouraging, with sectors such as Autos, Energy, Pharmaceuticals, Materials and Financials all broadly beating expectations. Consumer Staples, Cement and IT all proved to be damp squibs, in the main. Asset quality in the private sector banks stood firm, but public sector banks have yet to announce. Encouraging levels of order flow in certain industrial sectors eased concerns over poor reported results.

Portfolio analysis by sector as at 28 October 2016
Sector	No. of Companies	% of Portfolio
Financials	9	28.0%
Materials	8	17.8%
Consumer Discretionary	7	17.2%
Industrials	5	10.6%
Healthcare	4	9.4%
Consumer Staples	4	7.1%
IT	2	4.4%
Total Equity Investment	39	94.5%
Net Cash		5.5%
Total Portfolio	39	100.0%
Top 20 holdings as at 28 October 2016
Holding	Sector	% of Portfolio
Yes Bank	Financials	5.0%
Federal Bank	Financials	4.8%
Dewan Housing	Financials	4.7%
Jyothy Laboratories	Consumer Staples	4.0%
Motherson Sumi Systems	Consumer Discretionary	3.5%
Dish TV India	Consumer Discretionary	3.3%
Kajaria Ceramics	Industrials	3.2%
PI Industries	Materials	3.1%
City Union Bank	Financials	3.1%
Indusind Bank	Financials	2.9%
Berger Paints India	Materials	2.7%
The Ramco Cements	Materials	2.7%
Divis Laboratories	Healthcare	2.7%
Sobha	Financials	2.6%
Finolex Cables	Industrials	2.6%
Max Financial Services	Financials	2.6%
Exide Industries	Consumer Discretionary	2.5%
Emami	Consumer Staples	2.5%
Jain Irrigation Systems	Industrials	2.5%
Ramkrishna Forgings	Materials	2.5%
Portfolio analysis by market capitalisation size as 28 October 2016
Market capitalisation size	No. of Companies	% of Portfolio
Small Cap (M/Cap < US$2bn)	25	55.6%
Mid Cap (US$2bn < M/Cap < US$7bn)	10	27.4%
Large Cap (M/Cap > US$7bn)	4	11.5%
Total Equity Investment	39	94.5%
Net Cash		5.5%
Total Portfolio	39	100.0%

* Please note that as at 1 September 2016, our mid cap market capitalisation definitions have been amended from INR60bn < x < INR250bn to US$2bn < x < US$7bn

 

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