India Capital Growth Fund Limited Net Asset Value(s) (9508W)

TIDMIGC

RNS Number : 9508W

India Capital Growth Fund Limited

06 August 2018

6 August 2018

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

Net Asset Value statement at 31 July 2018

Net Asset Value

The Company announces its Net Asset Value (NAV) per share as at 31 July 2018 was 111.50 pence.

In the month the NAV was up 3.2% in Sterling terms, whilst the BSE Mid Cap TR Index was up 3.8%, delivering an under performance against the notional benchmark of 0.6%. In local currency terms, the NAV was up 3.3% for the month.

Portfolio update

Positive contribution to the portfolio's performance came from Motherson Sumi Systems (up 13.1%), NIIT Technologies (up 11.7%) and Balkrishna Industries (up 16.0%). Negative contribution came from Dewan Housing Finance (down 5.8%), Jyothy Laboratories (down 6.1%) and Essel Propack (down 12.0%).

Market and economic update

India's equity markets rallied across the board as global oil prices slid back below $70 per barrel. "Main Board" stocks rose 6.2% whilst the BSE Mid Cap Index recovered some 4.0%, following a bleak half year. The downward move in the oil price also supported the Rupee/Dollar exchange rate after recent weakness; the Rupee depreciated 0.1% against the US Dollar and 0.2% against Sterling. Both Foreign and Domestic Institutions were net buyers for the month; US$208m and US$612m respectively.

The Reserve Bank of India (RBI) raised lending rates by 0.25% to 6.5% on1(st) August for the second time since June, on the back of rising consumer price inflation and the imported costs of higher oil. The RBI retained its "neutral" stance however, intending to contain inflation without choking growth. But clearly the focus is to contain inflation within the target band, and particularly since the Government is intent on raising minimum support prices for key crops well above prior year's prices. This hike will also lend support to the currency, in some manner. The RBI also maintained its real GDP growth projection at 7.4% for this financial year (FY19), but raised its inflation estimates slightly to 4.8%. A target 5% inflation rate for first quarter of FY20 was also introduced.

Indian companies began reporting Q1FY19 (30 June ended) results. To date these results have been mixed. The IT Services, Consumer Staples and Capital Goods sectors have all outperformed expectation, with Consumer Staples the standout, reporting double digit volume growth. These companies are benefitting from a favourable base effect on volumes, since last year's numbers were dulled by problems surrounding the implementation of GST. Management commentary indicates that rural consumption continues to outpace urban consumption, as the benefits of prior monsoons and recent Government sops feed through. However passing on input cost pressures remains a challenge, pressurising margins. Elsewhere, private sector financials reported healthy retail loan growth, but earnings suffered from treasury losses (mark to market) and net interest margin weakness. Corporate loan books also suffered higher provisioning which continued to dent profits, but there was better news on the overall decline in the gross and net NPL ratios.

 
 Portfolio analysis by sector as at 31 July 2018 
 
 Sector                               No. of Companies         % of Portfolio 
 Financials                           8                                 24.4% 
 Materials                            8                                 18.6% 
 Consumer Discretionary               8                                 18.1% 
 Consumer Staples                     4                                  9.7% 
 Industrials                          4                                  8.2% 
 IT                                   2                                  8.3% 
 Real Estate                          2                                  2.7% 
 Healthcare                           2                                  3.4% 
 Total Equity Investment              38                                93.5% 
 Net Cash                                                                6.5% 
 Total Portfolio                      38                               100.0% 
 
 Top 20 holdings as at 31 July 2018 
 
 Holding                              Sector                   % of Portfolio 
 Dewan Housing Finance                Financials                         4.8% 
 NIIT Technologies                    IT                                 4.3% 
 Motherson Sumi Systems               Consumer Discretionary             4.2% 
 Jyothy Laboratories                  Consumer Staples                   4.1% 
 Federal Bank                         Financials                         3.9% 
 Tech Mahindra                        IT                                 3.9% 
 Ramkrishna Forgings                  Materials                          3.8% 
 City Union Bank                      Financials                         3.5% 
 Indusind Bank                        Financials                         3.4% 
 Balkrishna Industries                Consumer Discretionary             3.3% 
 Exide Industries                     Consumer Discretionary             3.0% 
 Radico Khaitan                       Consumer Staples                   3.0% 
 Berger Paints India                  Materials                          2.7% 
 Finolex Cables                       Industrials                        2.7% 
 Sobha Developers                     Real Estate                        2.6% 
 Welspun India                        Consumer Discretionary             2.5% 
 Divi's Laboratories                  Healthcare                         2.5% 
 PI Industries                        Materials                          2.4% 
 Capital First                        Financials                         2.4% 
 Indian Bank                          Financials                         2.4% 
 
 Portfolio analysis by market capitalisation size as 31 July 
  2018 
 
 Market capitalisation size           No. of Companies         % of Portfolio 
 Small Cap (M/Cap < US$2bn)           25                                53.1% 
 Mid Cap (US$2bn < M/Cap < US$7bn)    9                                 26.7% 
 Large Cap (M/Cap > US$7bn)           4                                 13.8% 
 Total Equity Investment              38                                93.5% 
 Net Cash                                                                6.5% 
 Total Portfolio                      38                               100.0% 
 

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August 06, 2018 07:59 ET (11:59 GMT)