Electoral Bonds List Puts these 10 Stocks in Limelight. Do You Own?

Electoral bonds are dominating headlines. Companies involved are jockeying for attention while small investors are waiting on the sidelines, carefully observing how the big guns play the game.

Lots of chaos. Lots of noise.

But how exactly did we get here?

Firstly, it's important to understand what electoral bonds are because that's the most searched query... at least on Google Trends.

Electoral bonds mean a form of financial instrument introduced in India to provide a transparent and anonymous way for individuals and corporations to donate money to political parties.

This financial instrument was introduced by the Government of India in 2018, allowing individuals and corporations to donate anonymously to political parties.

These bonds are issued by the State Bank of India (SBI) and can be purchased by any Indian citizen or entity incorporated in India.

The purpose of electoral bonds is to ensure transparency in political funding while protecting the anonymity of donors.

However, the scheme has also been subject to criticism and legal scrutiny over concerns of transparency and potential misuse.

Which brings us to today's topic of discussion...

The Supreme Court asked for details of electoral bond purchases to be made public when it scrapped the political funding instrument earlier in 2024.

I went down a deep rabbit hole over the last few days and this article aims to outline everything that I learned.

Let's look at the top bond buyers list and most importantly, the listed Indian companies that could be in focus in the coming days owing to being in news because of these electoral bonds.

Top Buyers List

After SBI released the data of the top buyers, Coimbatore-based Future Gaming & Hotel Services emerged at the top of the list which bought electoral bonds worth Rs 13.7 billion (bn) between 12 April 2019 and 24 January 2024.

Apart from lottery business, the company also has interests in the real estate, hospitality and textiles sectors in India and Myanmar.

The second company is Megha Engineering & Infrastructure, which claims to be the third largest unlisted infra player.

The Hyderabad-based company is the same firm which beat infra giant Larsen & Toubro in recent months for bagging some huge orders.

Megha Engineering bought electoral bonds worth Rs 9.7 bn between April 2019 and October 2023.

On the third spot, the Jalans of Kolkata spent a cumulative Rs 6.2 bn on electoral bonds since April 2019.

Some other companies in this list include Qwik Supply Chain, Haldia Energy, and Essel Mining & Industries.

Fun fact... Qwik's regulatory filings show that it has some link with Reliance Industries... it's primarily engaged in constructing warehouses and storage units, which make up nearly 91% of the revenue.

100 Indian Stocks Make the List

Coming to the listed Indian stocks that could be in focus in the coming days, here are the top 10.

Please note, data released shows that nearly 100 listed companies across 32 sectors have contributed to political parties through electoral bonds.

While it's difficult to list out every other company that contributed, we've highlighted the top 10 that could be in focus in the coming days.

#1 Vedanta Group

Vedanta was the fourth biggest donor in the list. The mining major purchased electoral bonds worth Rs 4 bn.

Vedanta is India's largest private sector oil producer and has a big presence in aluminium, zinc, silver, copper, iron and steel.

The company has been engaged in several legal wrangles with the government over the years.

The company's copper smelter in Tamil Nadu has been shut for years due to alleged violation of green energy norms.

Not to mention Vedanta's JV with Taiwan's Foxconn in 2022 to set up a semiconductor business in India not taking off...

#2 Bharti Airtel

The Bharti Group donated Rs 2.5 bn to political parties in the last five years through electoral bonds, with most of the donations made between November 2023 and January 2024.

The payments were made by group firms Bharti Airtel, Indus Towers, and Bharti Telemedia, with Airtel accounting for 80%.

Note that the Sunil Mittal-led group had previously backed government's allocation of satcom spectrum, even as rivals Jio and Vodafone Idea demanded auctions.

#3 Olectra Greentech

Remember Megha Engineering, the unlisted infra company we discussed above? It's the promoter of Olectra Greentech.

Megha Engineering is the promoter entity of Olectra Greentech and owns a 50% stake in the company, as per its December quarter shareholding pattern.

Megha Engineering emerged as the second-highest purchaser of electoral bonds.

Following a 13% rally in its shares on Thursday, when the list was just released, shares of the company fell 3% in the next trading session.

#4 Jindal Steel & Power

Jindal Steel & Power was the 15th biggest donor according to the list released. The company bought bonds worth Rs 1.2 bn.

Another Jindal group company Jindal Stainless bought bonds worth Rs 300 million (m). Jindal Saw bought Rs 290 m worth of bonds, while Jindal Poly Films bought Rs 35 m worth.

As soon as the list was released, a congress leader went on to share his views as said Jindal Power and Steel "won the Gare Palma IV/6 coal mine only 3 days after they gave ?25 crore in EBS".

#5 Welspun Corp

Engineering company Welspun Corp also made it to the list.

Soon after the list was released, a user took it X (formerly Twitter) saying Adani has used his shell company to purchase Electoral Bonds.

A little context... Adani group and Welspun group have a joint venture Adani Welspun Exploration Limited.

In Conclusion

Apart from the above, some other companies like IFB Agro, Torrent Power, Dr Reddy's Laboratories, Aurobindo Pharma and Natco Pharma also made it to the donors list.

Other renowned firms include ITC, M&M, DLF, PVR, Birla, Bajaj, Spicejet, IndiGo and the Goenkas.

Grasim Industries, Piramal Enterprises, Apollo Tyres, Edelweiss, Sula Wines, Sun Pharma, Vardhman Textiles, Phillips Carbon Black, CEAT, and Ultratech Cement were also in the list.

Even though unlisted companies like Megha Engineering, etc. dominated the list of purchasers, there are about 50 listed firms that collectively spent some Rs 20 bn for donating to political parties.

Interestingly, a report released suggest that a major chunk of the bond-buying by listed firms was done over the last two years.

Most companies opted not to disclose the ultimate beneficiary of their donations, but Torrent Power highlighted the ruling Bhartiya Janta Party (BJP) in its annual report.

Another big reveal was that Mukesh Ambani's Reliance Industries and Adani Group did not make the list of donors.

In conclusion, we'd like to say that don't get carried away with all this noise.

While the discourse around electoral bonds may generate considerable noise and controversy, it's crucial for investors to filter out market noise to focus on fundamental analysis and long-term goals.

Stay informed, stay grounded, and let your investment strategy be guided by reason, not by the clamour of the moment.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here.