6 June 2018

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

Net Asset Value statement at 31 May 2018

Net Asset Value

The Company announces its Net Asset Value (NAV) per share as at 31 May 2018 was 116.03 pence.

In May the NAV was down 0.8% in Sterling terms, whilst the BSE Mid Cap TR Index was down 2.6%, delivering an out performance against the notional benchmark of 1.8%. In local currency terms, the NAV was down 4.1% for the month.

Portfolio update

Positive attribution to the portfolio's performance came from Jyothy Labs (up 16.5%), BLS International (up 26%) and Radico Khaitan (up 9.9%). Negative attribution came from Manpasand Beverages (down 44.3%), Federal Bank (down 13.7%) and Motherson Sumi (down 12.1%).

Market and economic update

India's equity markets continue to favour larger cap stocks. In May the BSE Sensex rose 0.5%, consolidating last month's gain, whilst the BSE Mid Cap TR Index fell further (down 5.8%) as investors sold the more highly rated stocks reflecting growing concern around India's widening trade balance and weakening currency. In May foreign institutions were net sellers (US$1.4bn for the month) whilst domestic institutions were net buyers (US$2.2bn for the month) in the equities market and INR depreciated 1.1% against USD, but appreciated 3.3% against GBP.

In Karnataka, the BJP won the largest number of seats in the state election with an increased vote share but failed to obtain a sufficient majority. The local party, the JD(S), backed by its minority partner, the Congress Party, finally formed the state government raising uncertainty about Prime Minister Modi's ability to score an emphatic victory in the national elections in 2019.

India's real GDP growth picked up to 7.7% in Q4FY18 compared to 7.0% in Q3FY18 and 6.1% in Q4FY17, aided by a low base, a sharp jump in fixed investment (GFCF) growth to 14.4% and a 16.8% increase in Government expenditure. The manufacturing sector grew by 9.1%, whilst construction activities rose 11.5%. All this points towards nascent economic recovery following the damage created by the demonetisation experiment and the implementation of the Goods and Services Tax. On the latter issue, tax revenues are now growing in line with expectations.

The quarterly earnings season is underway as Corporate India reports Q4 and full year results for FY2018. The consumer staples, information technology, industrials and materials sectors all reported better than forecast. Financials, notably the Public Sector Banks, disappointed the street, owing to higher credit costs following the Reserve Bank of India's adjustment to their provisioning requirements. Although this is expected to roll into next quarter, we do not foresee a meaningful increase in fresh non-performing loans. In other sectors the results were also disappointing.

Portfolio analysis by sector as at 31 May 2018

Sector

No. of Companies

% of Portfolio

Financials

8

24.6%

Materials

8

19.9%

Consumer Discretionary

8

17.8%

Consumer Staples

4

9.7%

Industrials

4

9.3%

IT

2

9.0%

Healthcare

2

3.1%

Real Estate

2

2.8%

Total Equity Investment

38

96.2%

Net Cash

3.8%

Total Portfolio

38

100.0%

Top 20 holdings as at 31 May 2018

Holding

Sector

% of Portfolio

Dewan Housing Finance

Financials

6.0%

NIIT Technologies

IT

5.1%

Ramkrishna Forgings

Materials

4.4%

Tech Mahindra

IT

4.0%

Motherson Sumi Systems

Consumer Discretionary

3.9%

Jyothy Laboratories

Consumer Staples

3.8%

Federal Bank

Financials

3.6%

City Union Bank

Financials

3.5%

Indusind Bank

Financials

3.2%

Radico Khaitan

Consumer Staples

3.0%

Balkrishna Industries

Consumer Discretionary

2.9%

Finolex Cables

Industrials

2.9%

Kajaria Ceramics

Industrials

2.8%

Exide Industries

Consumer Discretionary

2.7%

Welspun India

Consumer Discretionary

2.7%

Sobha Developers

Real Estate

2.7%

Sagar Cements

Materials

2.6%

Berger Paints India

Materials

2.5%

PI Industries

Materials

2.5%

Capital First

Financials

2.4%

Portfolio analysis by market capitalisation size as 31 May 2018

Market capitalisation size

No. of Companies

% of Portfolio

Small Cap (M/Cap < US$2bn)

25

57.1%

Mid Cap (US$2bn < M/Cap < US$7bn)

9

26.0%

Large Cap (M/Cap > US$7bn)

4

13.1%

Total Equity Investment

38

96.2%

Net Cash

3.8%

Total Portfolio

38

100.0%

Attachments

  • Original document
  • Permalink

Disclaimer

India Capital Growth Fund Limited published this content on 06 June 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 06 June 2018 08:17:03 UTC