Grant Thornton India Watch Index outperforms all major London indices for the first half of 2011

Saturday, July 16, 2011 | Posted by: Grant Thornton
Categories: India, India Watch Issue 13 | Tags: India, Grant Thornton, economy, UK, performance, India Watch, South Asia Group, AIM, IPO, capital markets, London listing, share price, PLUS, main market, equity, raising finance

The Grant Thornton India Watch Index* showed the strongest performance in H1 2011 of all the major London indices, with a positive performance of 2.65%. This compares to FTSE 100 (0.78%) and FTSE AIM UK 50 (1.17%) and the falling AIM 100 (-8.54% ) and FTSE AIM All-Share (-8.10%).

Interestingly, since the start of the financial crisis in late 2008, the Grant Thornton India Watch Index has gained 142.85%, followed by the FTSE AIM ALL-SHARE (117.58%) and FTSE AIM 100 (112.46%) respectively, highlighting the sustained growth of the AIM market.

 

When looking at Q2 2011, the best India Watch Index performers were EIH, a non-equity investment instrument, which gained 20.91% and two property companies Alpha Tiger Property Trust (19.83%) and Hirco (29.23%).

Conversely, the worst performing stocks in the previous quarter were India Hospitality Corporation (-36.36%), DQ Entertainment (-24.66%) and OPG Power Ventures (-20.48%).

 

Best and worst performers for Q2 2011

Percentage change	Last quarter	Year to date	Last 12 months
	1 Apr 2011 to 30 Jun 2011	1 Jan 2011 to 30 Jun 2011	1 Jul 2010 to 30 Jun 2011
Alpha Tiger Property Trust	19.83	8.59	5.30
EIH	20.91	19.08	35.50
Hirco	29.23	-22.79	-61.04
DQ Entertainment	-24.66	-35.04	-25.34
India Hospitality	-36.36	-64.10	-61.11
OPG Power Ventures	-20.48	-6.56	15.89

 

Best and worst performers for last 12 months

Percentage change	Last quarter	Year to date	Last 12 months
	1 Apr 2011 to 30 Jun 2011	1 Jan 2011 to 30 Jun 2011	1 Jul 2010 to 30 Jun 2011
Indus Gas	-4.61	16.75	45.29
Infrastructure India	1.91	28.00	61.62
Oilex	0.00	7.87	357.14
Hirco	29.23	-22.79	-61.04
India Hospitality	-36.36	-64.10	-61.11
Indian Energy	-6.80	17.07	-56.36

 

Looking back over the past 12 months, there have been five IPO’s of India related companies on AIM. Three have performed positively - Caparo Energy (4.02%), iEnergizer (9.60%) and Jubilant Energy (2.26%) while Photon Kathaas (-7.77%) and SKIL Ports & Logistics (-20.57%) shares have dropped in value.

 

Caparo Energy

An AIM listed company that raised £50.2m at float, giving a £188.2m starting market cap.

Hoping to build up a portfolio of wind power generating assets across six wind-rich states of Tamil Nadu, Karnataka, Gujarat, Rajasthan, Maharashtra and Andhra Pradesh, Caparo has signed an agreement with wind turbine generator manufacturer Suzlon Energy to acquire up to 3,000 megawatts of wind power generating farms. This is in addition to a 2,000 MW turbine supply agreement with Gamesa over the next five years.

Given concerns over the long-term security of oil and with the Indian government seeking to treble its clean energy capacity to 54 gigawatts by 2017, there are great opportunities for it to grow in a highly fragmented Indian wind farm market.

 

iEnergizer

Noida-based iEnergizer, a Business Process Outsourcing player, has become the first Indian BPO to be listed on AIM, having successfully raised £37m during August 2010. In fact, it was one of the five largest IPOs on AIM in 2010, demonstrating the strength of investors’ interest in Indian companies on the junior market.

 

Jubilant Energy

Jubilant Energy raised equity of £53.4m as part of an AIM float in November 2010. The company recorded revenues of USD13.6m, 8% higher compared to the previous financial year, when average oil prices realised over the year were USD84.9 per barrel, 22% higher compared to previous year.

 

SKIL Ports and Logistics (SKIL)

SKIL raised £76m of new capital on AIM in October 2010, the net proceeds of which will be used towards the construction of a port and logistic facility in Mumbai. The Company has a market capitalisation of £110 million based on the Placing Price.

SKIL has a government lease to address the need for extra port and logistic capacity in Mumbai, one of the principal mercantile routes into the India economy. Much of India’s growth will be delivered by shipping, with the port of Mumbai a the key location in this development.

Interestingly, an analysis done by foreign fund managers threw up an interesting fact — investment in Chinese port companies yielded the best returns across asset classes. An economy that is reaching 8-10% GDP growth year after year needs ports to ship in raw materials and ship out finished goods. The story in India is no different.

 

Photon Kathaas Productions

The company was admitted to AIM in November 2010 raising approximately USD2.4m. The company was established to produce and co-produce South Indian films and films primarily targeted at a South Indian audience it has secured revenues of $396,404 to date from its share of sales of Nadunisi Naaygal (Dogs of the Midnight).

 

Fiona Owen

Partner and Head of South Asia Group Capital Markets

Grant Thornton UK LLP

 

* The India Watch Index consists of 31 Indian companies listed on AIM or the Main Market (excluding GDRs). We only consider companies to be Indian if they are domiciled in India and/or foreign companies holding Indian assets or Investment companies with Indian promoters. The index has been created via Datastream, a Thomson Reuters product and is weighted by Market Value. To avoid distortion of index trends, the two largest market cap entities, Essar Energy and Vedanta Resource, are excluded.

 

** Data sourced from Thomson Reuters.

 

Other articles in this issue of India Watch include:

Sustained momentum in India M&A deal activity

India’s United Progressive Alliance must act decisively for effective change

Indian listings in London: AIMing for the long term

Navigating India’s new Direct Tax Code