CPSE Full Form:- While it is common for analysts to advocate investing strategies on dips based on market timing, such active trading strategies can be difficult to put into practice. These become even more difficult to implement when markets are highly volatile, as they are today. So, Worries over rising inflation, monetary tightening, global recession and uncertainties over the Russia-Ukraine war have spooked market participants. As a result, many investors are now looking for passive trading options.
Also, Investors and traders typically have the option of pursuing passive trading by investing in exchange-traded funds (ETFs), which passively track an index and are traded on a stock exchange. CPSE ETF is one such attractive option. In fact, the share price of CPSE ETF has generated over 40% annualized returns in the last year. But what exactly is CPSE ETF and how to invest in it? We are explaining these details in detail below.
What is CPSE ETF?
CPSE ETF is an exchange-traded fund that passively tracks the NIFTY CPSE Total Return Index. The full form of CPSE in Central Public Sector Enterprises. The Nifty CPSE index is made up of a basket of public enterprises that are planned by the government.
The CPSE ETF was launched in 2014 and was oversubscribed 1.45 times. It is currently being managed by Nippon AMC and has Rs. 19,000 crore AUM. So far, 7 tranches have been offered to investors with the 6th FFO launched in 2020. The units of CPSE ETF are tradable on both NSE and BSE.
Since the constituents of the Nifty CPSE Index vary as the index is rebalanced quarterly, the stocks tracked by the CPSE ETF vary accordingly. Additionally, the stock weighting in the index is capped at 20%. Currently, CPSE ETF tracks 11 equity stocks including NTPC, ONGC, Coal India etc.
CPSE Full Form: Features of CPSE ETF
So, CPSE ETFs are open-ended funds without any lock-in period. Their units are tradable on the stock exchange, where investors can buy as little as 1 unit and get exposure to all CPSE stocks that form part of the Nifty CPSE Index. Around 98.6% of the CPSE ETF is currently invested in equity shares, with the remaining in liquid securities. These equity holdings are dominated by large-cap companies with over 75% exposure. Mid-cap companies hold 20% of the CPSE ETF.
CPSE ETF is a highly concentrated fund as most of its equity components are related to the power and oil & gas sectors. Companies such as NTPC, Power Grid Corp and ONGC make up around 20% each of the CPSE ETF. Being a passive fund, CPSE ETF has one of the lowest expense ratios in the industry. Its expense ratio currently stands at 0.05% as compared to 2% for a typical mutual fund.
CPSE ETF Performance
Since the CPSE ETF share price passively tracks the performance of Navratna PSU stocks, the fund generates a very high dividend yield. The CPSE ETF claimed a dividend yield of 6.78% in the last month as compared to only 1.41% earned by the benchmark Nifty 50. On an absolute-return basis, the CPSE ETF has generated 25.7% return YTD and 114.04% since inception. Even though it has historically underperformed the Nifty 50, it has done exceptionally well, especially in the last year, where it has given nearly 43% returns.
Additionally, these CPSE ETF shares are priced low. Their valuation multiple is 6.76 times P/E and 1.6 times P/B, which is lower than Nifty’s average valuation of 21.2 times and 4.12 times. Also, CPSE ETF is expected to continue to outperform given the continuous efforts made by the government to improve the efficiency of its CPSEs. In addition, these CPSEs will benefit from the government’s thrust on the ‘Make in India’ policy and plans to increase infrastructure spending. Lastly, CPSE ETF share price is not affected much by FII selling, as CPSE ETFs receive inflows from EPFO.
Factors to Consider Before Investing in CPSE ETF
While investing in CPSE ETF allows you to safely invest in Public Sector Undertakings, these companies are not risk-free. Due to the high concentration of oil and gas stocks in the index, any adverse movement in oil prices or change in government regulations will affect the unit prices of CPSE ETFs. Also, the total returns on these CPSEs will be affected by government regulations. Depending on the decision of the government to go ahead or not with the privatization of a particular CPSE, the index and the CPSE ETF change.
Also, the highly PSU-focused nature of CPSE ETFs may not be suitable for all types of retail investors. This is true, especially for those investors whose current portfolio shares a high correlation with PSU stocks.
How to Invest: CPSE Full Form
Also, For tranche offerings of the fund, retail investors and non-institutional investors need to invest a minimum of Rs. 5,000 and Rs. 2 lacks respectively. The government usually provides a discount of 3% on the listing price at the time of offering the fund. But to invest in CPSE ETF units post offer you only need a demat trading account. However, to buy more than 1 lakh units, you will have to buy these units directly from the mutual fund house.
All Full Forms of CPSE
You will find all the full forms of CPSE in Hindi in the following table. Please note that all definitions are listed popularity-wise:
- Central Public Sector Enterprises (Departments and Agencies)
- California Psychology Supplemental Exam (Syllabus)
- Complex partial status epilepticus (Diseases and Conditions)
- Preschool Special Education Committee (Educational Organization)
- Center for Process Systems Engineering (R&D)
- Commercial Property Standard Inquiries (Law & Legal)
- Psychology in Schools and Education (Educational Organization)
- General Payload Support Equipment (Aeronautics)
Maharatna Companies – Eligibility Criteria and Benefits of Maharatna Status
PSUs in India are also classified based on their specific non-financial objectives and are registered under section 8 of the Companies Act, 2013 (section 25 of the Companies Act, 1956). In 2010, the government established a higher Maharatna category.
- Should have Navratna status
- Must be listed on an Indian stock exchange with minimum prescribed public shareholding under Securities and Exchange Board of India (SEBI) regulations
- Average annual net profit after tax exceeding Rs. 5,000 crores during the last 3 years
- Average annual turnover of Rs. 25,000 crores for 3 years, or
- So, The average annual net worth of Rs. 15,000 crores for 3 years
- Must have global presence / international operations
Oil and Natural Gas Corporation (ONGC): CPSE Full Form
- On 14 August 1956, the Directorate of Oil and Natural Gas was converted into the Oil and Natural Gas Commission by the Government of India. It is involved in the exploration and exploitation of hydrocarbons in 26 sedimentary basins of India and owns and operates over 11,000 km of pipelines in the country.
- It got Maharatna status in 2010.
- ONGC is the largest crude oil and natural gas company in the country. 75 per cent of India’s domestic production is met by ONGC.
- It has discovered six out of seven gas-producing basins in the country.
Oil and Natural Gas Corporation (ONGC) – Subsidiary Companies:
- ONGC Videsh Limited (OVL) – It is the international arm of ONGC. It was renamed on 15 June 1989.
- Hindustan Petroleum Corporation Limited (HPCL) – is an Indian state-owned oil and natural gas company headquartered in Mumbai, Maharashtra.
- ONGC Mangalore Refinery Petrochemicals Limited (MRPL) – ONGC and MRPL operate ONGC Mangalore Petrochemicals Limited (OMPL). ONGC acquired MRPL in 2003.
Steel Authority of India Limited (SAIL)
Steel Authority of India (SAIL) is an Indian state-owned steel-making company based in New Delhi, India. SAIL is the 20th largest steel producer in the world and the 3rd largest in India. SAIL owns and operates 5 integrated steel plants at Bhilai, Rourkela, Durgapur, Bokaro and Burnpur (Asansol) and 3 specialized steel plants at Salem, Durgapur and Bhadravati.
Read about Mission Purvodaya – an initiative of the Ministry of Steel, Petroleum and Natural Gas in the linked article.
Bharat Heavy Electricals Limited (BHEL)
BHEL is engaged in the design, engineering, manufacturing, manufacturing, testing, commissioning and servicing of a wide range of products, systems and services for core sectors of the economy.
- power and transmission industry
- Renewable energy
- oil Gas
BHEL supplies electric locomotives to the Indian Railways and defence equipment such as the Super Rapid Gun Mount (SRGM) naval gun manufactured in partnership with the Ordnance Factory Board, and simulators to the Indian Armed Forces.
Indian Oil Corporation Limited (IOCL): CPSE Full Form
Indian Oil Corporation Limited (IOCL) is the largest commercial oil company in India:
IndianOil has ventured into alternative energy and globalization of downstream operations. It has subsidiaries in Sri Lanka, Mauritius, the United Arab Emirates, Singapore, Sweden, the United States of America and the Netherlands.
The business interests of Indian Oil Corporation Limited (IOCL) overlap the entire hydrocarbon value chain, which includes
- pipeline transport
- marketing of petroleum products
- Exploration and production of crude oil, natural gas and petrochemicals
Coal India Limited (CIL)
- In April 2011, CIL was awarded Maharatna status by the Central Government of India.
- Coal India Limited was established in 1975.
- The headquarters of Coal India Limited is located in Kolkata, West Bengal.
- CIL is the world’s largest coal-producing company.
FAQs on CPSE Full Form
What is the difference between CPSE and PSU?
Also, Public Sector Units (PSUs) can be classified as Central Public Sector Enterprises (CPSEs), Public Sector Banks (PSBs), or State Level Public Sector Enterprises (SLPEs). CPSEs are administered by the Ministry of Heavy Industries and Public Enterprises.
What is a CPSE employee?
Central Public Sector Enterprises (CPSEs) are those companies in which the direct stake of the Central Government or other CPSEs is 51% or more.
What is CPSE UPSC?
The Government of India classifies Central Public Sector Enterprises (CPSEs) under three different categories – Maharatna, Navratna and Miniratna. These classifications are based on various criteria.
What are the criteria for Schedule A CPSE?
The criteria for a CPSE to be classified as Navratna are (i) the CPSE should be a Miniratna I and a Schedule A company, (ii) the CPSE should have an ‘Excellent’ or ‘Very Good’ rating in three out of the last five MoUs and (iii) the CPSE should obtain an overall score of 60 or above, calculated with reference to seven.
Which department comes under CPSE?
Also, The Department of Public Enterprises is the nodal department for all Central Public Sector Enterprises (CPSEs) and formulates policies relating to CPSEs. It specifically sets policy guidelines on performance improvement and appraisal, autonomy and financial delegation and personnel management in CPSEs.
What is CPSE in assets?
So, As part of the buyer’s due diligence in a commercial property transaction, the Commercial Property Standard Inquiry (“CPSE”) will normally be raised by the buyer’s solicitors. CPSE is a standard set of inquiries which extracts detailed information about the property.
What is the CPSE document?
This document is part of the Commercial Property Standards Inquiry (CPSE) suite of documents prepared by members of the London Property Support Lawyers Group and supported by the British Property Federation.
What is the difference between CPSE and PSU Upsc?
A state-owned enterprise in India is called PSU or PSE. These companies are wholly or partly owned by the Government of India (Central Government) and/or one of the State or Union Territory Governments. PSUs are called Central Public Sector Enterprises (CPSUs, CPSEs) if they are wholly or partly owned by the Government of India.
Is ONGC a CPSE?
Also, ONGC is a Schedule-‘A’/Maharatna CPSE with administrative jurisdiction of the Ministry of Petroleum & Natural Gas. Its registered corporate office is in New Delhi. The Company employed 28496 regular employees (Executives- 17589, Non-Executives- 10907) as of 31.