PSU investment opportunity: Bharat 22 ETF issue open for retail, only for today, after IRCTC success

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October 4, 2019 1:04 PM

After the mega success of IRCTC IPO, another PSU issue Bharat 22 ETF opened for retail investors only for today.

On Thursday, the rupee had settled for the day at 70.87 against the US dollar.On Thursday, the rupee had settled for the day at 70.87 against the US dollar.

After the mega success of IRCTC IPO, another PSU issue Bharat 22 ETF opened for retail investors only for today. Notably, Indian Railway Catering and Tourism Corporation (IRCTC) IPO created a new record to become the most subscribed PSU issue ever, after the firm saw bids for 112 times the issue size at the end of last day of bidding. The Rs 645 crore IRCTC IPO received bids for 225 crore shares, as against the total issue size for 2.01 crore, implying a subscription of more than 112 times. Investors will get another opportunity to invest in PSU space with the launch of Bharat 22 ETF. Even as investors mull whether to subscribe to the issue, we take a look at key things to know.

Also read: RBI Monetary Policy LIVE: Another repo rate cut on cards; these factors to weigh on MPC’s mind

Issue details

Bharat 22 ETF has a base issue size of Rs 2,000 crore, with a greenshoe option to retain another Rs 6,000 crore, taking the total amount to about Rs 8,000 crore, government sources told PTI. The minimum investment amount for retail investors is fixed at Rs 5,000. Therefore, retail investors can invest with the minimum amount of Rs 5,000 and in multiples of Re 1 thereafter. The maximum investment amount is kept at Rs 2 lakh for the retail category. ICICI Prudential AMC will handle this tranche of the ETF. Notably, the government is also offering investors a discount of 3% to woo investors.

Constituents of Bharat 22 ETF

Bharat 22 ETF invests in 22 companies, out of which 19 companies are PSUs while scrips belong to the private sector. The private players Axis Bank, ITC and L&T constitute about 39.4% of the overall weightage. ONGC, IOC, SBI, BPCL, Coal India, Nalco, Bharat Electronics, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, PGCIL, NLC India, Indian Bank, Bank of Baroda are among the other components of the Bharat 22 ETF. Notably, just 5 stocks including L&T (16.7%), ITC (14.3%), SBI (9.4%), Axis Bank (8.4%) and NTPC (7.70%) account for nearly 57% of the overall weightage. Only three public sector banks — SBI, Indian Bank and Bank of Baroda — figure in the Bharat-22 index. In terms of sectors,  industrials (22%), followed by finance (21%) and utilities (21%) make up a major chunk.

Strong response from anchor investors

The fourth tranche of Bharat 22 ETF received an overwhelming response from institutional investors on Thursday with the portion reserved for them garnering bids worth Rs 13,500 crore, around 27 times of the size, according to a PTI report. The ETF issue that opened on Thursday received subscriptions from investors like mutual funds, foreign portfolio investors, and insurance funds.

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