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CPSE ETF Review - 4th Tranche FFO3 28th Nov 2018

Published on Tuesday, November 20, 2018 by Dilip Davda

CPSE ETF Review - 4th Tranche FFO3 28th Nov 2018
  • This is the 4th tranche of CPSE ETF since March 2014.
  • CPSE ETF consists of 11 PSUs (that includes Maharatnas, Navratnas, Miniratnas and Sector Leaders.
  • Previous CPSE ETF currently trades around ₹25 giving a return of 8% plus since inception.
  • CPSE ETF FFO3 offers upfront discount of 4.5% to all categories.
  • CPSE ETF has given reward of 8.55% since inception (as on 09.11.2018)

ABOUT MUTUAL FUND

Reliance Nippon Life Asset Management Ltd that manages Reliance Mutual Fund (RMF)assets has the mandate for managing CPSE ETF and has so far brought three tranches of CPSE ETF with maiden fund offer (NFO) in March 2014 and thereafter two successive Following Fund Offers (FFOs) in January 2017 and March 2017 is now coming out with CPSE ETF FFO3. This issue is opening on 27th November 2018 for Anchor Investors and for other categories of investors it will remain open from 28th November 2018 to 30th November 2018.

CPSE ETF Product Label

CPSE ETF SCHEME AND ITS TRACK RECORDS

CPSE ETF is a passive investment fund that was created to help the government in its disinvestment program of divesting stake in select Central Public Sector Enterprises (CPSE) through Exchange Traded Funds (ETF). The fund invests in the Nifty CPSE Index stocks - that includes eleven PSU companies (Maharatnas, Navratnas, Miniratnas, Sector Leaders) selected on the basis of established track record, government holding, market capitalization, dividend history, sector representation, etc. - in the same proportion and weightage as of the index.

CPSE ETF NFO, FFO & FFO 2 received overwhelming response as its collection was ₹4,363 Crs, ₹13,705 Crs and ₹10,083 Crs respectively, out of which ₹1,363 Crs, ₹7,705 and ₹7,583 Crs respectively was refunded to investors due to the limited issue size of ₹3,000, ₹6000 Crs and ₹2,500 Crs respectively. This time for CPSE ETF FFO3 the base limit is ₹8000 cr. and the Fund has permission to keep oversubscription up to 75% of the base size i.e. ₹6000 cr. thus making the overall fund offer of ₹14000 cr. All these ETFs are listed on BSE and NSE.

As of October 31, 2018 composition of CPSE ETF is as under:

Composition of CPSE ETF

No.

Company Name

Industry

Weightage %

1

NTPC Ltd.

Power

19.55%

2

Coal India Ltd.

Minerals/Mining

19.13%

3

Indian Oil Corporation Ltd.

Petroleum Products

18.94%

4

Oil & Natural Gas Corporation Ltd.

Oil

18.89%

5

REC Ltd.

Finance

6.18%

6

Power Finance Corporation Ltd.

Finance

5.49%

7

Bharat Electronics Ltd.

Industrial Capital Goods

4.94%

8

Oil India Ltd.

Oil

3.45%

9

NBCC (India) Ltd.

Construction

1.66%

10

NLC INDIA Ltd.

Power

0.95%

11

SJVN Ltd.

Power

0.64%

Total

99.82%

Source: www.relianceetf.com

This time, CPSE ETF FFO3 offer has changed product mix and is covering power sector as well. While Container Corp, Engineers India and GAIL are out NTPC, SJVN, NBCC and NLC India are in.

The Further Fund Offer 3 in the CPSE ETF is part of the government's larger disinvestment program that was announced earlier by the Ministry of Finance. According to RMF the timing of the issue will help investors benefit from their exposure in a diversified basket like CPSE ETF that includes a list of distinguished PSUs who are leaders in their respective sectors.

Industry Representation

Upfront FFO3 Discount of 4.5% on the "FFO 3 Reference Market Price" to the underlying Nifty CPSE Index shares Constituents of the index are:

ONGC | NLC INDIA LTD | COAL INDIA LTD | RURAL ELECTRIFICATION CORPORATION LTD | OIL INDIA LTD | IOC | POWER FINANCE CORPORATION LTD | NBCC (INDIA) LTD | BHARAT ELECTRONICS LTD | NTPC LTD | SJVN LTD

*Price determined based on the average of the full day volume weighted average price (VWAP) of the constituents of the Nifty CPSE Index on the NSE during the Non Anchor Investor FFO 3 Period (inclusive of Non Anchor Investor FFO 3 Period open as well as close date).

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About Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com


User Comment

avatar
14. Shishir Gupta  Dec 13, 2018 12:04 Reply
When can I sell the units after allotment.
avatar
13. Adesh jain  Dec 7, 2018 13:42 Reply
Think allotment has been done and units will be in our demat accounts anytime today
avatar
13.1. Atma ram navetia  Dec 10, 2018 12:14
Cpse rtf ffo 3 registrar
avatar
12. praveen g  Dec 9, 2018 14:40 Reply
What is the latest premium
avatar
11. ASHOK SHARMA  Dec 8, 2018 12:29 Reply
10 dec 2018
avatar
10. Rajesh kumar  Dec 7, 2018 21:42 Reply
Listing date?
avatar
10.1. ASHOK SHARMA  Dec 8, 2018 12:28
10 DEC 2018
avatar
9. Arun  Dec 4, 2018 20:42 Reply
When will it list?
avatar
8. v for vendetta  Nov 29, 2018 14:36 Reply
Top Contributor Top Contributor (200+ Posts, 200+ Likes)
What is the verdict by DD Sir?
Apply or not?
avatar
7. Shreyansh jain  Nov 29, 2018 06:15 Reply
Anybody how much gains are expected on the listing date
avatar
7.1. AnkurGoel  Nov 29, 2018 10:57
IPO Mentor IPO Mentor (900+ Posts, 800+ Likes)
It depends on market when this FFO will be trade able.
avatar
6. Adesh jain  Nov 28, 2018 16:01 Reply
It is quoting abt 3300 per application of 2 lac rupees.
avatar
5. juju  Nov 28, 2018 11:33 Reply
Top Contributor Top Contributor (300+ Posts, 200+ Likes)
Out of budgeted 80000cr disinvestment, till now just about 15400cr has been achieved, with this 14000cr ( assuming full 8000 and additional 6000) still, Govt. will need to divest about 50000cr in rest of 4 months, which looks quite difficult if market remain bearish
avatar
4. Dhruvam  Nov 25, 2018 10:47 Reply
Is there any commission being offered on form?
avatar
3. Shreyansh jain  Nov 24, 2018 14:44 Reply
How much is the application getting sold at
avatar
2. AnkurGoel  Nov 23, 2018 16:10 Reply
IPO Mentor IPO Mentor (900+ Posts, 800+ Likes)
It is kind of risky bet keeping in view of election result of MP, Rajasthan, Chattishgarh. If BJp repeats govt in these states then it is worth apply otherwise market may crash on result day.
avatar
1. Rajiv Singh  Nov 22, 2018 08:08 Reply
Invest for around 2% listing gains in a week time with low risk investment. Previous FFO gave around Rs 5000 return on listing on Rs 2 Lakh investment.

Apply from all the demat account you have.
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