Net Asset Value

RNS Number : 1667Z

India Capital Growth Fund Limited

08 January 2020

 

8 January 2020

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

Net Asset Value statement at 31 December 2019

Net Asset Value

The Company announces its Net Asset Value per share as at 31 December 2019 was 88.50 pence.

In December the Net Asset Value (NAV) was down 2.6% in Sterling terms, whilst the BSE Mid Cap TR Index was down 1.6%, delivering an under performance against the notional benchmark of 1.0%. In local currency terms, the NAV was down 1.8% for the month.

Portfolio update

Positive contribution to the portfolio's performance was driven by Motherson Sumi Systems (up 13.1%), City Union Bank (up 4.1%) and Balkrishna Industries (up 6.9%). The negative contribution mainly stemmed from Jyothy Labs (down 17.9%), Yes Bank (down 31.3%) and Welspun India (down 9.1%).

Market and economic update

December saw the resumption of divergence between large caps and the rest of the market with the BSE Sensex up 1.1% and the BSE Midcap Index down 0.8% (total return in Indian Rupees). Foreign institutional investors pumped US$862m of net flows into equities whilst domestic institutions were marginally net sellers (US$107m) for the month. The Indian Rupee appreciated by 0.5% against the US Dollar and depreciated 0.9% against Pound Sterling.

The Reserve Bank of India kept policy rates on hold against market expectations of a 25bps cut with consumer price inflation trending up to 5.5% in November versus 4.6% last month on the back of high food inflation. Whilst 6.0% is the upper end of the RBI's tolerance threshold, it indicated that "there is monetary policy space for future action". It also slashed its full year FY20 GDP growth forecast from 6.1% to 5.0% noting that "economic activity has weakened further and the output gap remains negative".

In the face of multiple institutions downgrading India's growth forecasts, the Government continued its efforts to reform economy activity by announcing the National Infrastructure Pipeline (NIP) worth US$1.4tn across energy, roads, urban and railways over the next five years. The central and state Governments would have an equal share of 39% each in the NIP while the private sector will have a 22% share. Around 42% of the projects in NIP are under implementation while 31% are at the concept stage. However, in order to achieve 22% private sector participation, the Government will need to implement various sectoral reforms to ensure the viability of projects.

Portfolio analysis by sector as at 31 December 2019 Sector No. of Companies % of Portfolio Financials 7 24.6% Materials 7 23.2% Consumer Staples 4 15.0% Consumer Discretionary 5 12.4% Industrials 4 7.7% Health Care 3 6.8% Information Technology 2 5.2% Real Estate 1 0.1% Communication Services 0 0.0% Energy 0 0.0% Utilities 0 0.0% Total Equity Investment 33 94.9% Net Cash 5.1% Total Portfolio 33 100.0% Top 20 holdings as at 31 December 2019 Holding Sector % of Portfolio Federal Bank Financials 7.1% City Union Bank Financials 5.7% Berger Paints India Materials 5.4% PI Industries Materials 4.9% Bajaj Consumer Care Consumer Discretionary 4.6% Tech Mahindra Information Technology 4.5% Motherson Sumi Systems Consumer Discretionary 4.0% Jyothy Laboratories Consumer Staples 3.9% Divi's Laboratories Health Care 3.6% Emami Consumer Staples 3.5% IDFC Bank Financials 3.4% Balkrishna Industries Consumer Discretionary 3.2% Indusind Bank Financials 3.1% DCB Bank Financials 3.0% Finolex Cables Industrials 2.9% Kajaria Ceramics Industrials 2.8% Welspun India Consumer Discretionary 2.8% Radico Khaitan Consumer Staples 2.8% Ramkrishna Forgings Materials 2.7% JK Lakshni Cement Materials 2.7% Portfolio analysis by market capitalisation size as 31 December 2019 Market capitalisation size No. of Companies % of Portfolio Small Cap (M/Cap < US$2bn) 18 38.5% Mid Cap (US$2bn < M/Cap < US$7bn) 13 48.9% Large Cap (M/Cap > US$7bn) 2 7.5% Total Equity Investment 33 94.9% Net Cash 5.1% Total Portfolio 33 100.0%

 

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