Press "Enter" to skip to content

Rs 3,500 crore Bharat 22 additional offer opens: Should you invest?

NEW DELHI: The single-day Rs 3,500 crore additional offering of Bharat-22 Exchange Traded Fund (ETF) will hit the Street on Thursday. Applications from institutional and retail investors will be accepted till 8 pm.

Retail individual investors can apply for a minimum of Rs 5,000 and in multiples of Re 1 thereafter up to Rs 2,00,000 per investor, while non-retail individual categories can apply for Rs 2,00,001 or more. As per quota, the retail category will be allotted 34 per cent of the maximum amount to be raised. Retirement funds will be allotted 33 per cent and the rest 33 per cent will be allotted between any investor class other than the two mentioned. A 5 per cent discount on additional offering reference market price will be given to all investor categories on the shares disinvested by the government.

The taxation for this ETF will be like that of equity shares or equity mutual funds. Here are five key things to note:

99% of ETF stocks in F&O segment

The index comprises highly liquid stocks, as more than 99 per cent of index constituents are available in the futures and options (F&O) segment. Axis Bank, ITC and Larsen & Toubro alone account for nearly 45 per cent of index weightage.

TABLEEEE BHARTA
Source: HDFC Securities

Sectoral composition

Finance accounts for 25.33 per cent of index weightage, followed by Industrials (18.99 per cent), Utilities (18.95 per cent) and FMCG (16.45 per cent) and Energy (15.43 per cent). In total, the scheme offers diversified exposure to six sectors representing a balance between stability and growth.

History

This will be the third tranche of Bharat 22 EFT. The foundation of BHARAT 22 ETF was laid in Union Budget 2017. The government has so far raised Rs 22,900 crore through the Bharat-22 ETF. While Rs 14,500 crore was raised in November 2017, another Rs 8,400 crore was raised in June 2018.

Here is a brief history:

History
Source: HDFC Securities

Performance
The open-ended ETF has not delivered positive returns in last one year but has performed more or less in line with its benchmark index in the longer time frame. Consensus is more or less positive on the three stocks, L&T, Axis Bank and ITC, which account for over 40 per cent of the portfolio. But the performance of PSU stocks is a worry. Data suggests the BSE PSU index has dropped 30 per cent year to date. The index has fallen 24 per cent in last 2 years. The ETF index invests in stocks of 19 PSUs and 2 private companies.

Table return
Source: HDFC Securities

What ICICI Pru says
Nimesh Shah, MD & CEO, ICICI Prudential AMC said the AOP with the 5 per cent discount offered is an interesting opportunity to partake in India’s growth story by way of diversified companies spread across several sectors which are available at attractive valuation.
Source: Economic Times