RNS Number : 4598N
JPMorgan Indian Invest Trust PLC
19 June 2025
JPMORGAN INDIAN INVESTMENT TRUST PLC
HALF YEAR REPORT & FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31st MARCH 2025
Legal Entity Identifier: 549300OHW8R1C2WBYK02
Information disclosed in accordance with the DTR 4.1.3
Highlights
- For the six months ended 31st March 2025, NAV total return of -7.2% compared with -10.6% for the MSCI India Index (in Sterling terms) (the ‘Benchmark’). Share price return of -4.8%.
- The key drivers of relative performance were:
1) The market decline during the six months to end March 2025 meant that CGT write backs supported performance over the review period.
2) Strong earnings were delivered in three out-of-index positions – Coforge/Exls/Make My Trip.
3) Long-standing overweight in two banks, Kotak and ICICI, due to a more favourable outlook on rates and liquidity condition, and the structural underweight to Reliance Industries, an oil and gas refiner.
- The discount to NAV narrowed from 17.8% at the previous year end to 15.6% at the half year end. As at 17th June 2025 the discount was 7.7%.
- The Company repurchased 3,136,391 shares into Treasury during the six-month reporting period, equating to 3% of the Company’s share capital. Since the half year end, a further 133,228 shares have been bought back for holding in Treasury.
The Chairman of JII, Jeremy Whitley, commented:
“Whilst the Company outperformed the benchmark, thanks to positive stock selection and the favourable effect of capital gains tax credits arising from the market decline, the outright fall in returns is nonetheless disappointing. However, as we have previously noted, we believe that it is more meaningful to assess performance over the longer term“
“It remains the Board’s view that the investment case for Indian equities is very strong. The pace of growth may be easing at present, but India’s very positive long-term growth trajectory remains in place, supported by several major structural changes such as increased infrastructure investment, digitalisation and the growth of the middle classes.“
“Together with the Company’s advisers and managers, and with engagement with shareholders, on 19th May 2025 we announced a suite of proposals that we believe should enhance the attractiveness of the Company to both existing and potential shareholders and which are intended to narrow the discount to a consistently lower level.“*
*Details outlined in Chairman’s statement (below), subject to shareholder approval at the General Meeting on 8th July 2025.
Portfolio Managers, Amit Mehta and Sandip Patodia, commented:
“The decline in Indian equity market, combined with the growth slowdown, meant that the six months to end March 2025 was a challenging time for investors.“
“The Indian equity markets experienced a significant and broad-based correction, triggered by a cyclical yet shallow slowdown in economic activity, moderation in government-led capital expenditure, weaker than expected corporate earnings and ongoing slowdown in mass consumption.“
“Looking ahead, it is important to stress that the current weakness in Indian equities, and any potential further near-term sell-off, do not alter the long-term structural opportunities offered by this market.“
CHAIRMAN’S STATEMENT
Performance
In the six months ending 31st March 2025, the Company’s return on net assets was -7.2% in sterling terms. Its share price return declined by 4.8%. This compares with a return of -10.6% for the Company’s benchmark, the MSCI India Index.
Whilst the Company outperformed the benchmark, thanks to positive stock selection and the favourable effect of capital gains tax credits arising from the market decline, the outright fall in returns is nonetheless disappointing. However, as we have previously noted, we believe that it is more meaningful to assess performance over the longer term, as the Portfolio Managers make their investment decisions with a view to maintaining positions for five or more years. On this basis, the portfolio made an annualised return of 16.3% in NAV terms over the five years to end March 2025, and averaged a return of 6.2% per annum on the same basis over the corresponding ten-year period. Even so, this performance lagged the benchmark’s annualised returns of 19.6% and 9.4% respectively, in large part because the benchmark does not include the adverse effects of capital gains tax during periods of market strength.
In their report on pages 14 to 18 of the Half Year Report, the Portfolio Managers provide a detailed commentary on performance over the six-month review period. They also discuss portfolio activity and their outlook for the Indian market over the remainder of this year and beyond.
Discount and Share Repurchases
At the AGM held in February 2025, shareholders gave approval for the Company to renew the Directors’ authority to repurchase up to 14.99% of the Company’s shares for cancellation or transfer into Treasury.
The discount at which the Company’s shares traded relative to its NAV narrowed from 17.8% at the previous financial year end, to 15.6% at the half year end. Consistent with the Company’s share buyback policy, the Board constantly weighs the merits of buying back shares to manage the absolute level and volatility of the discount. The Company repurchased 3,136,391 shares into Treasury during the six-month reporting period, equating to 3% of the Company’s share capital. Since the half year end, a further 133,228 shares have been bought back for holding in Treasury.
Result of detailed review of Company’s future strategy and options
The wide discount noted above has remained a constant source of concern for the Board, as it has for a number of other Investment Companies. The Board has therefore been actively considering reasons for the continuing discount and options for tackling the issue. Together with the Company’s advisers and managers, and with engagement with shareholders, on 19th May 2025 we announced a suite of proposals that we believe should enhance the attractiveness of the Company to both existing and potential shareholders and which are intended to narrow the discount to a consistently lower level. The Board concluded that the Manager’s strategy and investment process of investing in quality and growth companies trading at valuations offering reasonable returns over the medium to long term would reward patient investors over a normal market cycle. Furthermore, the Board was reassured by the Investment Manager’s commitment to invest in their Indian equity strategy by hiring an additional research resource to take advantage of India’s expanding investable universe.
Specific amendments are being proposed in terms of additional discount control mechanisms. The Board proposes to adopt the following discount control mechanisms:
• A tender offer for up to 30% of the Company’s outstanding share capital (excluding shares held in treasury) providing a cash exit at the tender price (the ‘First Tender Offer‘). The terms of the tender and details of the calculation of the tender price can be found in the circular on the Company’s website: http://www.jpmindian.co.uk. The First Tender Offer is subject, amongst other things, to shareholders’ approval. If shareholder approval is obtained, the Company’s existing performance-related conditional tender offer will be removed.
• Introduce a commitment to target a single digit discount through active market buybacks, utilising the 14.99% buyback authority approved by shareholders at the AGM in February 2025.
• Introduce a triennial tender offer for 100% of the Company’s outstanding share capital at a 3% discount to the prevailing NAV (the ‘Triennial Tender Offers‘). The Board anticipates the first of the Triennial Tender Offers to be launched in Q2 2028. It is clear from consultation with shareholders that size and scale of the Company are imperative for their ongoing engagement. The Board therefore reserves the right to withdraw the Triennial Tender Offer if the applications to tender are of a level that the Company would shrink below an NAV of £150 million. In this instance the Board would anticipate putting resolutions to shareholders to wind up the Company. In addition, the Board notes that the next continuation vote will be put to shareholders at the Company’s AGM to be held in 2029.
Furthermore, the Board proposes to pay dividends each financial year totalling at least 4% of the NAV of the Company at the end of the preceding financial year. Dividends will be paid by way of four equal interim dividends in December, March, June and September each year. The Board believes that the introduction of an enhanced dividend distribution policy, which will be financed through a combination of any available net income in each financial year and other reserves, utilises the investment structure and will differentiate the Company from its peers, noting that the Company would be the only Indian Investment Company paying a dividend at this time. The Board is hopeful that the introduction of the dividend will appeal to a wider investor audience and is cognisant of the success other JPMF managed investment trusts have had in attracting additional investor demand for their shares having adopted such an enhanced dividend distribution policy.
In addition to the initiatives outlined above, the Board is pleased to announce that the Company’s investment management fee arrangements with JPMF will change. With effect from 1st October 2025 the annual investment fee will be calculated as 0.65% on the first £300 million of the lower of the Company’s market capitalisation or net assets and 0.55% in excess of £300 million, instead of 0.75% on the first £300 million and 0.60% in excess of £300 million.
A General Meeting will be convened on 8th July 2025 at 11.00 a.m. at 60 Victoria Embankment, London, EC4Y 0JP, at which all shareholders will be able to vote on the resolutions proposed respectively: to authorise the Company to make market purchases of the exit shares pursuant to the First Tender Offer, to adopt the enhanced dividend distribution policy and to approve certain amendments to the Company’s existing Articles required in connection with the enhanced dividend distribution policy. More details, including the notice of the General Meeting, can be found in the circular on the Company’s website.
Shareholders should note that the proposed discount control mechanisms set out above and the enhanced dividend distribution policy will not be implemented unless all the Resolutions are passed at the General Meeting.
The Board
Charlotta Ginman became the Chair of the Audit and Risk Committee at the conclusion of the Company’s 2025 AGM, following the retirement of Jasper Judd. I would like to take this opportunity on behalf of the Board to thank Jasper once again for his dedication and consistently insightful and constructive input.
Stay Informed
The Company delivers email updates containing regular news and views, as well as the latest performance. If you have not already signed up to receive these communications and you wish to do so, you can opt in via www.tinyurl.com/JII-Sign-Up, or by scanning the QR code in the Half Year Report. Shareholders are also encouraged to visit the Company’s website at www.jpmindian.co.uk, which contains detailed information on the Company’s performance, and monthly commentaries, as well as interviews and recordings with the Portfolio Managers.
Outlook
The new US administration’s approach to trade policy and international relations more generally is clearly a source of exasperation and some despair for investors everywhere. But India should be able to weather the effects of a global trade war, should one eventuate, better than most other major economies. India’s export dependency is relatively low, while corporate balance sheets are in good shape and the Reserve Bank of India has adopted a more supportive monetary stance in response to the current growth slowdown.
And taking a longer view, it remains the Board’s view that the investment case for Indian equities is very strong. The pace of growth may be easing at present, but India’s very positive long-term growth trajectory remains in place, supported by several major structural changes such as increased infrastructure investment, digitalisation and the growth of the middle classes. Among the major economies, only China can hope to achieve comparable rates of growth over the next decade. This positive outlook will generate many exciting opportunities for patient, long-term investors such as your Company to invest in quality companies, with superior growth prospects, at the right price.
My fellow board members and I are confident that this approach will continue to provide shareholders with consistent, attractive returns as India realises its substantial long-term potential.
If the anticipated returns do not meet the Board’s expectations, we believe the proposals outlined in the previous section, especially the Triennial Tender Offer for 100% of the company’s outstanding share capital at a 3% discount to the prevailing NAV, will provide shareholders with the choice to either continue their investment or opt to cash out. Should shareholders choose to cash out, they will have the flexibility to do so at a time and in a manner that suits them, rather than being subject to unpredictable market conditions.
We thank you for your ongoing support.