RNS Announcement

14:41: Net Asset Value

6 April 2020

India Capital Growth Fund Limited (the “Company” or “ICGF”)

Net Asset Value statement at 31 March 2020

Net Asset Value

The Company announces its Net Asset Value per share as at 31 March 2020 was 57.54 pence.

In March the Net Asset Value (NAV) was down 30.7% in Sterling terms, whilst the BSE MidCap TR Index was down 27.5%, delivering an under performance against the notional benchmark of 3.2%. In local currency terms, the NAV was down 30.7% for the month.

Portfolio update

None of the stocks positively contributed to the portfolio’s performance. The negative contribution mainly stemmed from Federal Bank (down 52.2%), DCB Bank (down 41.4%) and City Union Bank (down 39.8%).

Market and economic update

Indian Equity markets corrected sharply in March with the S&P BSE Sensex down 23.1% and the BSE Midcap down 27.4% (total return, in Indian Rupees). The sell-off was driven by foreign institutional investors who pulled out US$7.9bn over the month compared to domestic institutions who were net buyers of US$7.5bn. The Indian Rupee depreciated 4.8% against the US Dollar and 0.1% against Pound Sterling.

 

The Indian Government announced a 21 day lockdown to stem infections of COVID-19 and followed this with a US$22bn relief package, targeted at the economically weaker sections of society. This involves a number of direct cash transfers and food security through the public distribution system. It also involves insurance cover for medical workers at the frontline. The Reserve Bank of India preponed its policy meeting and cut the repo rate by 75 bps to 4.4%. It also undertook measures to infuse liquidity, including reducing Cash Reserve Ratio for banks by 100bps for a year. Furthermore it has permitted all lending institutions to allow a moratorium of three months on the payment of instalments for term loans outstanding on 1 March 2020 and allowed the deferment of three months’ payment of interest with respect to working capital facilities.

The impact of the lockdown on the economy is difficult to quantify and will be dependent on the extent of the coronavirus spread (currently 2,586 confirmed positive with the pace of spread increasing daily which is a concern) and how quickly India resumes its economic activity. The consensus is that GDP growth will slow down to the range of 2%-3% against a pre-outbreak prediction of 5% for FY21. The main positive for India has come from the sharp collapse of crude oil prices translating into a lower oil import bill, thereby in turn lowering the current account deficit and inflation. There will also be a fiscal benefit from the oil price collapse as the Government is not likely to pass on the full impact to the consumer. The windfall gains from higher indirect taxation is also likely to play a part in any revival in growth going forwards.

 

Portfolio analysis by sector as at 31 March 2020

Sector

No. of Companies

% of Portfolio

Materials

7

21.9%

Financials – Banks

5

16.3%

Consumer Discretionary

4

11.5%

Consumer Staples

4

11.1%

Industrials

4

10.2%

Health Care

3

8.9%

Information Technology

2

4.7%

Utilities

1

3.6%

Financials – Diversified

1

3.6%

Energy

1

1.9%

Financials – Insurance

1

0.6%

Real Estate

1

0.1%

Communication Services

0

0.0%

Total Equity Investment

34

94.5%

Net Cash

5.5%

Total Portfolio

34

100.0%

Top 20 holdings as at 31 March 2020

Holding

Sector

% of Portfolio

Divi’s Laboratories

Health Care

5.9%

PI Industries

Materials

5.5%

Berger Paints India

Materials

5.2%

Federal Bank

Financials – Banks

5.1%

Tech Mahindra

Information Technology

4.2%

DCB Bank

Financials – Banks

4.0%

Bajaj Consumer Care

Consumer Discretionary

4.0%

Kajaria Ceramics

Industrials

3.8%

Jyothy Laboratories

Consumer Staples

3.8%

Radico Khaitan

Consumer Staples

3.7%

City Union Bank

Financials – Banks

3.7%

Gujarat Gas

Utilities

3.6%

Multi Commodity Exchange

Financials – Diversified

3.5%

Emami

Consumer Staples

3.0%

JK Lakshmi Cement

Materials

3.0%

Balkrishna Industries

Consumer Discretionary

2.9%

The Ramco Cements

Materials

2.7%

Exide Industries

Consumer Discretionary

2.7%

Finolex Cables

Industrials

2.6%

IDFC Bank

Financials – Banks

2.4%

Portfolio analysis by market capitalisation size as 31 March 2020

Market capitalisation size

No. of Companies

% of Portfolio

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

25

63.6%

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

8

26.7%

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

1

4.2%

Total Equity Investment

34

94.5%

Net Cash

5.5%

Total Portfolio

34

100.0%