India Capital Growth – India at a significant discount

Marten & Co published the following note on the company, which includes the investment managers view that India is trading at a significant discount to other markets, which is unjustified.

In August, India Capital Growth (IGC)’s subscription shares were converted into ordinary shares. This increased its net assets by 29.2% before costs.

IGC’s manager believes that this expansion should improve liquidity in the company’s shares and lower its ongoing charges ratio.

However, IGC’s manager points out that despite these positive developments, an improving outlook for India and superior performance relative to its immediate peers, IGC’s discount has widened both absolutely and relative to its peer group.

The manager feels that this is not justified and sees a number of potential catalysts for it to narrow, particularly if IGC continues to grow and passes the £100m market cap threshold (£91.5m as at 20 October 2016).

About India Capital Growth

The company was established to take advantage of long term investment opportunities in companies based in India. Investments are predominantly made into listed companies through a subsidiary in Mauritius. The objective is to provide long term capital appreciation by investing predominantly in listed mid and small cap companies with a smaller proportion in unlisted companies.  Investments may also be made in large cap Indian companies where the Fund Manager believes long-term capital appreciation will be achieved.  The company may hold liquid assets (including cash) pending deployment in suitable investments.  It is the company’s declared policy not to hedge the exposure to the Indian Rupee.

We have written a number of notes that explain how the fund works – the latest is “A return to earnings growth” but see also “Full steam ahead“, “Compounding machine” , “Indian powerhouse”India at a significant discount and “Moving to the main board

You can access the fund’s website here

IGC : India Capital Growth – India at a significant discount