Net Asset Value

RNS Number : 5321L

India Capital Growth Fund Limited

06 September 2019

 

6 September 2019

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

Net Asset Value Statement at 30 August 2019

Net Asset Value

The Company announces its Net Asset Value per share as at 30 August 2019 was 88.97 pence.

In August the Net Asset Value (NAV) was down 5.6% in Sterling terms, whilst the BSE Mid Cap TR Index was down 5.3%, delivering an under performance against the notional benchmark of 0.3%. In local currency terms, the NAV was down 1.4% for the month.

Portfolio update

Positive contribution to the portfolio's performance was driven by Tech Mahindra (up 9.0%), Berger Paints (up 11.6%) and Jammu & Kashmir Bank (up 18.2%). The negative contribution mainly stemmed from Ramkrishna Forgings (down 32.3%), Yes Bank (down 34.3%) and Federal Bank (down 10.3%).

Market and economic update

Indian Equity markets continued to correct in August with the BSE Sensex and BSE Midcap Total Return indices down 0.4% and 1.1% respectively (in Indian Rupees) on another tepid earnings season and a slowdown in domestic consumption. Foreign institutional investors were net sellers (US$2.3bn) while domestic institutions continued to be net buyers (US$2.9bn) for the month. The Indian Rupee depreciated by 3.8% against the US Dollar and 4.4% against Pound Sterling on the back of escalation of trade tensions between the United States and China and a sharp devaluation in the Renminbi.

Real GDP growth for the first quarter of FY20 (ending in June 2019) fell to multi-year lows of 5% owing to sluggish demand and a slowdown in Government spending which lead to lower growth across industries including Manufacturing, Construction, Mining and Services. On the expenditure side private consumption growth plummeted to 3.1% (7.2% in 4QFY19) while Government expenditure growth also slowed to 8.8% (13.1% in 4QFY19) primarily due to slower pace of expenditure during elections. As such, election-related uncertainty contributed to investment growth remaining sluggish at 4%.

To stem the equity outflow of foreign portfolio investors the Government u-turned on a poorly received additional levy on capital gains and announced a number of measures to boost economic growth. To improve liquidity, outstanding GST refunds to SME's are to be paid within thirty days and future refunds within 60 days. An additional 15% depreciation allowance for commercial owners of vehicles has been allowed to reduce their tax burden, improve demand and ease inventories. There was an infusion of capital to public sector banks, and in an aggressive move, ten will be merged into four. Further stimulus is due from the Reserve Bank of India, whose sharp increase in income helped it to transfer higher than budgeted dividend of $24bn to the Government which should aid the Government with capex spending.

Portfolio analysis by sector as at 30 August 2019 Sector No. of Companies % of Portfolio Financials 7 23.0% Materials 7 19.8% Consumer Discretionary 5 11.7% Consumer Staples 4 10.2% Industrials 5 8.6% Health Care 3 7.0% Information Technology 2 6.6% 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 30 August 2019 Holding Sector % of Portfolio Tech Mahindra Information Technology 5.7% Federal Bank Financials 5.5% City Union Bank Financials 5.3% Berger Paints India Materials 4.1% PI Industries Materials 4.1% Jyothy Laboratories Consumer Staples 3.6% Kajaria Ceramics Industrials 3.6% Emami Consumer Staples 3.6% IDFC Bank Financials 3.5% Divi's Laboratories Health Care 3.3% Indusind Bank Financials 3.0% Aurobindo Pharma Health Care 2.9% Welspun India Consumer Discretionary 2.9% Motherson Sumi Systems Consumer Discretionary 2.9% Radico Khaitan Consumer Staples 2.7% The Ramco Cements Materials 2.7% Balkrishna Industries Consumer Discretionary 2.6% Exide Industries Consumer Discretionary 2.5% Jammu & Kashmir Bank Financials 2.4% Finolex Cables Industrials 2.4% Portfolio analysis by market capitalisation size as 30 August 2019 Market capitalisation size No. of Companies % of Portfolio Small Cap (M/Cap < US$2bn) 20 37.6% Mid Cap (US$2bn < M/Cap < US$7bn) 12 40.6% Large Cap (M/Cap > US$7bn) 2 8.7% Total Equity Investment 34 87.0% Net Cash 13.0% Total Portfolio 34 100.0%

 

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