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India Capital Growth FundAnnouncement

09/02/2018 15:35

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RNS Number : 4953E
India Capital Growth Fund Limited
09 February 2018 
 
7 February 2018 
 
India Capital Growth Fund Limited (the "Company" or "ICGF") 
 
Net Asset Value statement at 31 January 2018 
 
Net Asset Value 
 
The Company announces its Net Asset Value (NAV) per share as at 31 January
2018 was 119.40 pence. 
 
In the month the NAV was down 6.0% in Sterling terms, whilst the BSE Mid Cap
TR Index was down 7.2%, delivering an outperformance against the notional
benchmark of 1.2%. In local currency terms, the NAV was down 1.3% for the
month. 
 
Portfolio update 
 
Positive attribution to the portfolio's performance came from NIIT
Technologies (up 32.7%), Tech Mahindra (up 21.5%), Radico Khaitan (up 23.0%)
and Sagar Cements (up 18.3%). Negative attribution came from Ramkrishna
Forgings (down 9.5%), Kajaria Ceramics (down 13.4%) and City Union Bank (down
11.7%). 
 
Market and economic update 
 
India's equity markets performance was mixed with the S&P BSE Sensex up 5.6%,
whilst the BSE Mid Cap TR Index fell 2.6%. Foreign Institutions were
significant net buyers (US$2bn for the month) and Domestic Institutions were
also net buyers (US$63m for the month). The Rupee appreciated 0.4% against US
Dollar but depreciated 5.0% against Sterling. The correction that is currently
underway in mid-caps was prompted by Domestic Institutions booking profits on
lofty valuations and strong performance in 2017. 
 
India's Finance Minister, Arun Jaitley, presented the last budget before the
2019 Federal Election which provided little by way of surprise or excitement
for investors. The key thrust was rural in nature with education and
healthcare also at the forefront. The primary purpose is to bring relief to an
agricultural community justifiably in need of Government support, as well as
poorer communities as a whole. Widely expected was slippage in the fiscal
deficit targets for this year (FY18) from 3.2% to 3.5% and for next year
(FY19) from 3.0% to 3.3%.  This, along with rising inflation to 5.2% for
December, is reflected in 10 Year Government bond yields rising to 7.6%.
However in a move that disappointed equity investors across the board, long
term capital gains tax (greater than 12 months) was raised from 0% to 10%,
effective from 31 January 2018. This, along with deteriorating investor
sentiment in the broader markets, contributed to further falls in early
February. 
 
Indian companies began reporting Q3 (quarter ended December 17) earnings which
have been faring better than expectations: Private Banks are witnessing a
pick-up in loan growth and improving asset quality trends. The Consumer
Staples and Discretionary sectors have reported good volume growth supported
by a favourable base effect. IT earnings were in line although the growth
outlook is improving for FY19. 
 
 Portfolio analysis by sector as at 31 January 2018                   
                                                                                                              
 Sector                                                               No. of Companies        % of Portfolio  
 Financials                                                           8                       24.3%           
 Materials                                                            8                       20.4%           
 Consumer Discretionary                                               8                       17.3%           
 Industrials                                                          4                       10.4%           
 Consumer Staples                                                     4                       9.1%            
 IT                                                                   2                       7.6%            
 Real Estate                                                          2                       3.1%            
 Healthcare                                                           2                       3.1%            
 Total Equity Investment                                              38                      95.3%           
 Net Cash                                                                                     4.7%            
 Total Portfolio                                                      38                      100.0%          
                                                                                                              
 Top 20 holdings as at 31 January 2018                                
                                                                                                              
 Holding                                                              Sector                  % of Portfolio  
 Dewan Housing Finance                                                Financials              5.5%            
 Motherson Sumi Systems                                               Consumer Discretionary  4.5%            
 NIIT Technologies                                                    IT                      4.3%            
 Ramkrishna Forgings                                                  Materials               4.2%            
 Federal Bank                                                         Financials              4.1%            
 Finolex Cables                                                       Industrials             3.4%            
 Tech Mahindra                                                        IT                      3.3%            
 Jyothy Laboratories                                                  Consumer Staples        3.1%            
 Capital First                                                        Financials              3.0%            
 Sobha Developers                                                     Real Estate             2.9%            
 Kajaria Ceramics                                                     Industrials             2.9%            
 Balkrishna Industries                                                Consumer Discretionary  2.9%            
 Indusind Bank                                                        Financials              2.7%            
 Sagar Cements                                                        Materials               2.7%            
 City Union Bank                                                      Financials              2.7%            
 Skipper                                                              Materials               2.6%            
 The Ramco Cements                                                    Materials               2.5%            
 Jain Irrigation Systems                                              Industrials             2.5%            
 PI Industries                                                        Materials               2.5%            
 Radico Khaitan                                                       Consumer Staples        2.3%            
                                                                                                              
 Portfolio analysis by market capitalisation size as 31 Janaury 2018  
                                                                                                              
 Market capitalisation size                                           No. of Companies        % of Portfolio  
 Small Cap (M/Cap < US$2bn)                                           25                      57.3%           
 Mid Cap (US$2bn < M/Cap < US$7bn)                                    19                      25.5%           
 Large Cap (M/Cap > US$7bn)                                           4                       12.5%           
 Total Equity Investment                                              38                      95.3%           
 Net Cash                                                                                     4.7%            
 Total Portfolio                                                      38                      100.0%          
 
 
This information is provided by RNS
The company news service from the London Stock Exchange