Net Asset Value

RNS Number : 8571O

India Capital Growth Fund Limited

04 October 2019

 

4 October 2019

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

Net Asset Value statement at 30 September 2019

Net Asset Value

The Company announces its Net Asset Value per share as at 30 September 2019 was 92.51 pence.

In September the Net Asset Value (NAV) was up 4.0% in Sterling terms, whilst the BSE Mid Cap TR Index was up 5.4%, delivering an under performance against the notional benchmark of 1.4%. In local currency terms, the NAV was up 3.4% for the month.

Portfolio update

Positive contribution to the portfolio's performance was driven by Berger Paints (up 17.8%), Jyothy Labs (up 18.7%) and PI Industries (up 14.5%). The negative contribution mainly stemmed from Indian Bank (down 37.3%), Jammu & Kashmir Bank (down 19.5%) and Yes Bank (down 30.9%).

Market and economic update

Indian Equity markets rose in September with the BSE Sensex and BSE Midcap Total Return indices up 3.6% and 4.8% respectively (in Indian Rupees) on the back of the Government announcing a cut in headline corporation tax from 30% to 22% (and 15% for manufacturing companies). Both foreign institutional investors and domestic institutions were net buyers for the month at US$955m and US$1.7bn respectively. The Indian Rupee also reacted positively, appreciating by 1.5% against the US Dollar and 0.6% against Pound Sterling.

The new corporation tax rates come into effect as of this year and have been received well with estimates in the Street predicting an across the board boost to bottom line earnings of around 9%. The cut for the manufacturing sector from 25% to 15% makes India's rate globally competitive at a time when investment into China is under threat. On the fiscal side the cost to the Government's reserves is estimated to be 0.8% of GDP and, putting any revival in growth to one side, it's unclear how this will be funded. We anticipate a renewed push in privatisation to help. Reports suggest that Oil, Gas and Shipping companies will be considered (alongside Air India!).

The market has been increasingly concerned about the Government's commitment to sustainable growth through structural reform. This has been viewed as a big bang response and confirms the Government's belief in the private sector as the core source of wealth creation (something that had come into question more recently). The next challenge is to resolve asset quality issues and confidence in the financial sector specifically.

Portfolio analysis by sector as at 30 September 2019
Sector	No. of Companies	% of Portfolio
Financials	7	22.8%
Materials	7	21.9%
Consumer Discretionary	5	12.2%
Consumer Staples	4	10.9%
Industrials	5	10.3%
Health Care	3	7.2%
Information Technology	2	6.1%
Real Estate	1	0.1%
Communication Services	0	0.0%
Energy	0	0.0%
Utilities	0	0.0%
Total Equity Investment	34	91.5%
Net Cash		8.5%
Total Portfolio	34	100.0%
Top 20 holdings as at 30 September 2019
Holding	Sector	% of Portfolio
Federal Bank	Financials	7.3%
City Union Bank	Financials	5.5%
Tech Mahindra	Information Technology	5.3%
Berger Paints India	Materials	4.7%
PI Industries	Materials	4.6%
Kajaria Ceramics	Industrials	4.5%
Jyothy Laboratories	Consumer Staples	4.3%
Emami	Consumer Staples	3.7%
Divi's Laboratories	Health Care	3.3%
Welspun India	Consumer Discretionary	3.1%
IDFC Bank	Financials	3.1%
Finolex Cables	Industrials	3.1%
Motherson Sumi Systems	Consumer Discretionary	3.0%
Indusind Bank	Financials	2.9%
Radico Khaitan	Consumer Staples	2.9%
Aurobindo Pharma	Health Care	2.7%
JK Lakshmi Cement	Materials	2.7%
The Ramco Cements	Materials	2.7%
Exide Industries	Consumer Discretionary	2.6%
Balkrishna Industries	Consumer Discretionary	2.6%
Portfolio analysis by market capitalisation size as 30 September 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	45.7%
Large Cap (M/Cap > US$7bn)	2	8.2%
Total Equity Investment	34	91.5%
Net Cash		8.5%
Total Portfolio	34	100.0%

 

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