Bharat 22 ETF: Decoding six constituent firms

The Bharat 22 ETF, a part of Narendra Modi government's ambitious divestment drive, fell 0.89 percent or 0.33 points to 36.95 on NSE today. Compared to its counterpart CPSE ETF which was launched in March 2014, the Bharat-22 Exchange Traded Fund (ETF) is more diversified with blue chips such as ONGC, SBI, IOC, Nalco, BPCL, NTPC and Bank of Baroda as well as SUUTI shares in entities such as ITC, Axis Bank and L&T. We look into the financials of these six firms as a third part of the four-story series which covers the constituents of Bharat 22 ETF.

GAIL India: A public sector undertaking that is considered amongst the top natural gas players in the world. It is engaged in gas exploration & processing and produce value-added products such as LPG, propane, pentane, naphtha and petrochemicals. The company has an extensive pipeline network consisting of above 11,000 kms of natural gas pipeline and more than 2000 kms of LPG pipeline.

It has 60% share in natural gas market in India & 50% share in the domestic PNG connections. Conferred Navratna status in 1997-98, GAIL has a global presence with offices in USA & Singapore and JVs in Egypt and China. Company's human resource development initiatives helped the value added per employee which was Rs 218.38 lacs in FY17.

Bharat Electronics:  The company meets the specialized electronic equipment requirements of the Indian Defence Services and produces a wide range of state-of-the-art equipment in fields such as defence communication, radars, naval systems, C4I systems, weapon systems, homeland security, telecom & broadcast systems, electronic warfare, tank electronics, electro optics, professional electronic components and solar photovoltaic systems.

It also has a significant presence in the civilian market with products ranging from Electronic Voting Machines, tablet PC, solar-powered traffic signal systems and Access Control Systems. Defence contributes 88% of sales revenue, with the balance 12% comes from the civilian sector. R&D has been the main focus area with investment in R&D as a percentage of turnover during FY17 was 8.81% which is one of the highest among the defence PSUs. The company has a strong order book of Rs 40,24,200 Lakhs (as on 1 April 2017) and  expects good order flow in the next 2-3 years.

Power Finance Corporation:  A specialized financial institution in the Indian power sector with nearly 20% market share and a leading Non-Banking Financial Corporation in India. In FY17, company's annual loan sanctions crossed a figure of Rs 1,00,000 crore, reflecting an increase of 55% compared to FY16.

State sector got the highest share of disbursement of 72% followed by private sector (14%), central sector (9%) and joint sector (5%).  The company enjoys the highest domestic credit ratings of AAA.

REC: Rural Electrification Corporation is a public infrastructure financial services firm. The company provides finance to power sector. It finances and promotes rural electrification projects in India. The firm provides financial assistance to state electricity boards, state government departments and rural electric cooperatives for rural electrification projects as are sponsored by them. Rural Electrification Corporation Limited, a public financial institution, provides financing and promotion services for power transmission, distribution, and generation projects in India. It formulates, implements, and finances a range of power projects.

The company primarily offers long-term loans, medium-term Loans, and short-terms loans, as well as other products comprising debt refinance, bridge loans, equipment lease, loans for power purchase through Indian energy exchange, and transitional finance loans; and counter-part funding for the integrated power development scheme. The company serves Indian public sector power utilities, such as central and state power utilities, as well as private sector power utilities through a network of project offices and its training centre. The company was incorporated in 1969 and is based in New Delhi.

NHPC: State owned NHPC was incorporated in 1975 and is engaged in electricity generation. The company is engaged in electric power generation by hydroelectric power plants. NHPC is also engaged in contracts, project management and consultancy works. Its power stations include Bairasiul, Salal, Chamera-I, Tanakpur, Dhauliganga, Rangit and Loktak. It focuses on Teesta Low Dam-IV Hydroelectric Project (160 megawatt), West Bengal; Kishanganga Hydroelectric Project (330 megawatt), Jammu and Kashmir; Parbati- II Hydroelectric Project (800 megawatt), Himachal Pradesh, and Subansiri Lower Hydroelectric Project (2,000 megawatt), Assam/Arunachal Pradesh.

The firm provides consultancy services in various fields of hydropower, including river basin studies, survey works, design and engineering, geological studies, geotechnical studies, hydraulic transient studies, hydrological studies, contract management, construction management, equipment planning, underground construction, testing, commissioning, and operation and maintenance.