Top Five Navaratnas Of India - Part II
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Last week we had carried a slideshow on India’s top five Navaratnas and we are continuing this subject with second part of the top Navaratnas. This part contains the next five companies in our original Navaratna list which was based on a descending order of their market capitalization. Just to remind our readers, in all there are 14 Navaratna companies of which one company, Hindustan Aeronautics, is not listed while the rest 13 companies are listed on the bourses. Navaratna companies get autonomy of Rs 1,000 crore when they take any investment decision.
Of these five companies only NALCO has a government stake of over 80 per cent while HPCL has a government stake of just over 51 per cent. Two companies in the list are lenders to the power sector while another two are petroleum companies. NALCO is in the metal sector - a non-ferrous company.
| Rank | Company | Sector |
|---|
| 06 | Power Finance Corporation | Financial Services |
| 07 | Bharat Petroleum Corporation | Petroleum (Refinery & Marketing) |
| 08 | Rural Electrification Corporation | Financial Services |
| 09 | National Aluminum Company | Other Minerals & Metals |
| 10 | Hindustan Petroleum Corporation | Petroleum (Refinery & Marketing) |
Power Finance Corporation
Power Finance Corporation (PFC) is a leading power sector public financial institution and a non-banking financial company providing fund and non-fund based support for the development of the Indian power sector. The company is engaged in power sector financing and the integrated development of the power and associated sectors. Of the total shareholding, the government currently holds 73.72 per cent of the shares. For FY12 the company’s topline increased by 28 per cent to Rs 13,014 crore while the bottomline grew by 16 per cent to Rs 3,031 crore. Further, the current market capitalization of the company is around Rs 24,500 crore. On an YTD basis the scrip has surged by almost 35 per cent and is currently trading at a price to earnings multiple of eight times of its FY12 earnings.
Bharat Petroleum Corporation
Bharat Petroleum is one of the leading petroleum companies in the country. A total of 54 per cent shares in the company are held by the Government of India. It has highly recognised brands in its portfolio like Bharat Gas, Speed Petrol, MAK Lubricants, etc. BPCL has refineries in Mumbai and Kochi. Besides its own projects, BPCL also has several joint ventures with leading PSUs like GAIL, Indian Oil Corporation, ONGC, etc. Last year the company made five oil and gas discoveries in various countries which augurs well for the future of the company in terms of sustainable business. Recently the company has given a bonus in the proportion of 1:1. The YTD returns at 20 per cent are better than that given by the Sensex. Last year the government earned a dividend income of Rs 278 crore from BPCL at a dividend of Rs 14 per share.
Rural Electrification Corporation
Rural Electrification Corporation (REC) is engaged in the financing and promotion of transmission, distribution and generation projects throughout India. Their main objective is to finance and promote rural electrification projects all over the country. They provide financial assistance to state electricity boards, state government departments and rural electric cooperatives for rural electrification projects as are sponsored by them. In the year 2005 the company was appointed as a nodal agency for the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). Of the total shareholding, the government currently holds 66.80 per cent of the shares. For FY12 the company’s topline increased by 25 per cent to Rs 10,337 crore while its bottomline grew by 10 per cent to Rs 2,817 crore. Further, the current market capitalization of the company is around Rs 20,700 crore. On an YTD basis the scrip has surged by almost 37 per cent. The scrip is currently trading at a price to earnings multiple of 7.33 times of its FY12 earnings.
National Aluminum Company
National Aluminum Company Limited (NALCO) was incorporated in 1981 as a public sector enterprise of the Government of India which holds 87 per cent stake. It is Asia’s largest integrated aluminum complex, encompassing bauxite mining, alumina refining, aluminum smelting and casting, power generation, etc. The commodity markets are doing well globally due to a weakening demand which has resulted in modest results for the company. For the quarter ended June 2012 the net sales of the company have declined by 0.79 per cent on a YOY basis to Rs 1,748 crore. Due to high input costs, the net profit has declined by 41 per cent to Rs 223 crore. On an YTD basis the stock moved up by 6 per cent and is currently trading at Rs 53.7 per share. The company, however, has consistently offered handsome returns in terms of dividends and bonuses in the last five years. For the year FY12 the company had offered a dividend of Rs 1 per share on a face value of Rs 5.
Hindustan Petroleum Corporation
Hindustan Petroleum Corporation Limited is one of the largest integrated oil refining and marketing companies in India with an annual net income from operations to the extent of Rs 1,78,139.23 crore and a net profit of Rs 911.43 crore in FY12. The company’s operations are spread across the exploration, production, refining and marketing of petroleum products. The company operates two refineries, one at Mumbai and one at Vishakapatnam and also owns and operates the largest lube refinery in India. The market capitalization of HPCL is Rs 10.473 crore. The government holds a 51.11 per cent stake in the company, getting an annual income from dividends of Rs 242.30 crore, with a dividend yield of 4.5 per cent. The scrip has yielded returns of 23.6 per cent.
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