ICICI Prudential Mutual Fund launches India’s first ever Oil & Gas ETF

ICICI Prudential Nifty Oil & Gas ETF is an open-ended exchange-traded fund (ETF) launched by ICICI Prudential Mutual Fund on July 8, 2024. The objective of the scheme is to track the performance of the Nifty Oil & Gas TRI, an index that reflects the performance of companies in the oil and gas sector. The minimum investment amount is ₹100 and there is no exit load for units sold on the secondary market. However, investors will be responsible for any brokerage charges incurred during the sale. The new fund offer (NFO) closes on July 18, 2024. The Nifty Oil & Gas Index features 15 companies from the oil, gas and petroleum industry. These companies are chosen from the Nifty 500 based on their market value which is freely available for trading. The selection ensures that no single company has more than 33% weight, and the top three companies together do not exceed 62% of the index. This approach ensures a well-balanced and diversified exposure to the sector. Speaking on the launch of the product, Chintan Haria, Principal - Investment Strategy at ICICI Prudential AMC, said, "ICICI Prudential Nifty Oil & Gas ETF is designed to provide investors with access to a sector that is pivotal to the economy and is currently undervalued. The oil and gas sector is the driving force of modern economic growth, and with growing demand and consumption, it presents a significant investment opportunity. Our ETF aims to allow investors to capitalise on the resurgence in global interest in this sector."

Performance of the Index: Calendar Year Returns (%)

Nifty Oil & Gas TRI has Outperformed the Nifty 500 TRI six times in the last 10 years. On a YTD basis (as of June 20, 2024) also the index has been outperforming the Nifty 500 TRI. The Nifty Oil & Gas Index is updated twice a year to reflect the sector's performance accurately and has outperformed broader market indices in many years, as shown in the above graph, demonstrating its potential for delivering superior returns.

ICICI Prudential Nifty Oil & Gas ETF

The performance of the scheme will be benchmarked against Nifty Oil & Gas TRI. Since the scheme is an ETF scheme, the composition of the benchmark is such that it is most suited for comparing the performance of the scheme.

HDFC Asset Management said that referring to the addendum dated June 6, 2023, on discontinuation of lumpsum subscriptions and restrictions on Systematic Transactions in HDFC Defence Fund. Regarding the same, the following has been decided in the Scheme with effect from July 22, 2024, i.e. the effective date:

1. New SIP Registrations: Requests for new Systematic Investment Plan (SIP) registrations in the HDFC Defence Fund will not be accepted from July 22, 2024.
2. Lumpsum Investments and Switch-ins: Fresh lumpsum investments, including switch-ins, and new systematic transfer registrations into the HDFC Defence Fund will remain restricted.
3. Existing SIPs: SIPs registered before July 22, 2024, will continue to be processed without any changes.
4. Ongoing Systematic Transactions: All systematic transactions already registered will continue to be processed as usual.

There will be no restrictions on redemptions, switch-outs, or Systematic Transfer Plan (STP) outs from the HDFC Defence Fund. All other terms and conditions outlined in the Scheme Information Document (SID) and Key Information Memorandum (KIM) of the HDFC Defence Fund remain unchanged. This addendum, dated July 8, 2024, is now an integral part of the Scheme Information Document and Key Information Memorandum for the HDFC Defence Fund. HDFC Mutual Fund, which successfully raised ₹1,000 crores through a new fund offer (NFO) targeting defence-related investments, has ceased accepting lumpsum investments in the HDFC Defence Fund since June 12, 2023. The HDFC Defence Fund stands out as the sole actively managed mutual fund in India focused on the defence sector. The fund seeks to leverage opportunities in this area, which has garnered significant interest from investors. With the Indian government prioritising the modernisation of its defence forces and promoting self-reliance, the sector is poised for long-term growth. Additionally, increased global geopolitical tensions have led many countries to enhance their defence capabilities, further supporting this trend. HDFC Defence Fund is an equity thematic fund that started on June 5, 2023. It is benchmarked against the NIFTY 50 TRI and has a total expense ratio (TER) of 1.95% as of May 31, 2024. The fund is open-ended, meaning it allows for ongoing investments and redemptions. The minimum investment and top-up amounts are both ₹100. As of May 31, 2024, the fund's total assets amount to ₹3,232.88 crore. There is an exit load of 1% if the investment is redeemed within one year.

Kotak Mahindra Mutual Fund has launched an open-ended index fund, Kotak Nifty Midcap 50 Index Fund, on July 25, 2024. The fund aims to replicate the Nifty Midcap 50 Index, providing returns matching the index, excluding expenses. It is categorised as an Other Scheme - Index Fund with a minimum investment of ₹100. The New Fund Offer (NFO) closes on August 8, 2024.

Management Commentary on Index Fund Launch

Nilesh Shah, Managing Director of Kotak Mahindra AMC, said, “At Kotak Mutual Fund, we continually strive to provide our investors with diverse investment solutions. The launch of the Kotak Nifty Midcap 50 Index Fund aligns with our commitment to offering active and passive products that cater to different risk appetites and investment horizons. While Midcap 50 Index presents a mixed landscape with varying opportunities across sectors, this index fund allows investors to gain focused exposure to a select group of top midcap companies within Nifty Midcap 150 Index. This index fund facilitates investors to capitalise on the potential of the midcap segment. However, it is important to be cognizant of proper asset allocation of your investments before investing.” Devender Singhal, Executive Vice President & Fund Manager, Kotak Mahindra AMC was of the view that, “The Kotak Nifty Midcap 50 Index Fund is an addition to our passive product line-up, catering to investors’ interest in India’s Midcap space. Midcaps play a crucial role in key sectors of our economy, from Capital Goods and finance to healthcare and information technology. While individual Midcap stocks may exhibit varying performance, this index-based approach allows investors to potentially benefit from the overall growth and innovation potential of the mid-sized companies.”

Kotak Nifty Midcap 50 Index Fund

The investment objective of the Kotak Nifty Midcap 50 Index Fund is to provide returns that, before expenses, correspond to the total returns of the securities as represented by the underlying index, subject to tracking errors.

Who should invest in this fund?

This NFO of Kotak Nifty Midcap 50 Index Fund is suitable for investors who are seeking long-term capital appreciation and return that corresponds to the performance of NIFTY Midcap 50 Index, subject to tracking error.

Benchmark

Gala Precision Engineering IPO price band was announced on Tuesday, August 27, ahead of the launch of the main board issue next week. Gala Precision Engineering Limited has fixed the price band of its initial public offering at ₹503 to ₹529 per share. The book-building issue, worth ₹167.9 crore, will remain open for subscription from September 2 to September 4. Here are five important things to know about the Gala Precision Engineering Limited IPO.

Gala Precision Engineering IPO offer size and minimum investment

The mainboard public offer comprises a fresh issue of 25.58 lakh shares, worth ₹135.34 crore, and an offer-for-sale (OFS) component of 6.16 lakh shares, amounting to ₹32.58 crore. The Qualified Institutional Buyers (QIBs) will be allocated 50% of the shares of Premier Energies IPO. The company has reserved 35% of the issue size for retail investors and 15% for non-institutional investors (NIIs). The minimum lot size for retail investors is 28 shares and multiples thereof. This means that retail investors must invest a minimum of ₹14,812 to subscribe to this IPO.

Gala Precision Engineering business model and top clients

Gala Precision Engineering Limited is a leading manufacturer of technical springs, such as disc and strip springs or DSS, which are used in renewable energy, railways, automobiles, off-highway vehicles, heavy machinery, and electrical and power equipment. The company also manufactures coil and spiral springs (CSS), as well as special fastening solutions (SFS). The CSS products are used in commercial vehicles, passenger vehicles, railways and industrial infrastructure. Gala Precision Engineering supplies these products to original equipment manufacturers (OEMs) worldwide, including Germany, Denmark, China, Italy, Brazil, the United States, Sweden, and Switzerland. The company operates two manufacturing facilities at Wada, located in Maharashtra’s Palghar. It is also setting up a new manufacturing facility in Vallam, Tamil Nadu. The key clients of the company include global OEMs, tier 1 and channel partners across sectors. Some of the big players are: John Deere India, Faiveley Transport Rail Technologies India, Brembo Brake India, BUFAB India Fasteners, Altra Industrial Motion India, Endurance Technologies Limited, Enercon GmbH, EXEDY Clutch India, Hitachi Astemo Chennai Private Limited, MSL Driveline Systems, SAL Automotive, Schaeffler India, Turbo Energy and Wuerth Industrial Services India.

Gala Precision Engineering key financials

Gala Precision Engineering’s consolidated revenue from operations stood at 202 crore for the fiscal year ended 31 March 2024. The company’s net profit for the period stood at ₹22.3 crore. Between FY22 and FY24, the company saw a CAGR rise of 11% in its revenue from operations and 50% in its profit. Moreover, India’s disc & strip springs (DSS) market is expected to grow at a CAGR of 6% between FY24 and FY27, which could benefit the company.

Gala Precision Engineering IPO objectives

The net proceeds of the Gala Precision Engineering IPO will be used to set up a new facility at Vallam-Vadagal in Sriperumbudur of Tamil Nadu to manufacture high tensile fasteners and hex bolts. The proceeds will also be used to fund capital expenditure requirements for the purchase of equipment, plant, and machinery at the company’s Wada units. Gala Technologies will also use the proceeds to repay/prepay certain borrowings and for general corporate purposes.

Gala Precision Engineering IPO key dates

Gala Precision Engineering IPO subscription will close on September 4. The IPO share allotment status is expected to be finalised on Thursday, September 5. Initiation of refunds for unsuccessful bidders and credit of shares to the Demat accounts of successful bidders will be done on Friday, September 6. The shares will tentatively be listed on Monday, September 9, on the BSE and NSE.