Buoyancy in stocks could help govt swell its divestments kitty this year
NEW DELHI: Thanks to a rally in the domestic equity market from its December lows, the government is now hoping to overshoot the revised Rs 45,500 crore disinvestment target during the ongoing financial year.
The rally in last two months has been broad-based, which has pushed the market capitalisation of BSE to a fresh all-time high.
PSU stocks have been a major beneficiary of the rally, as they have generated higher returns from their December lows compared with the benchmark indices.
Data showed 68 listed PSU firms on BSE saw their market capitalisation rise 16 per cent to Rs 13.38 lakh crore ever since the benchmark indices hit their 52-week lows on December 26, 2016. This is against a 12 per cent rise in the BSE Sensex. The combined market-cap of the BSE-listed companies rose nearly 16 per cent during this period.
Many PSU stocks such as ITDC (up 138 per cent), National Fertilisers (118 per cent), CPCL (53 per cent), Indian Bank (43 per cent) and Vijaya Bank (39 per cent) delivered spectacular returns in the two-month period. Only two of the 68 PSUs – Balmer Lawrie (down 10 per cent) and STC (down 6 per cent) – gave negative returns during this period, when an overwhelming 47 PSU stocks beat Sensex return.
“Across the PSU space, there are broadly two or three trends. One is the government trying to get big dividends paid by them, which is good for minority shareholders. The second is that we were talking about oil and petrochemical PSUs creating big companies: ONGC merger with HPCL, BPCL. That is very positive news for the under-penetrated sector,” said Chakri Lokapriya, CIO & MD, TCG AMC, who believes stocks of PSU banks may continue to do well going ahead.
The government last Wednesday sold a 5 per cent stake in PSU Bharat Electronics at Rs 1,498 apiece through an offer for sale (OFS). Finance Minister Arun Jaitley in his Budget speech earlier this month said state-run railway companies such as IRCTC, IRCON and IRFC would be made public soon.
The government has so far raised about Rs 30,000 crore so far this year through sale of minority stakes via OFS, share buybacks and the CPSE ETF.
“So our large theme from the market perspective is clearly the PSUs. We have been talking about this theme for last two or three quarters. One should look for opportunity in this space. But unfortunately, stocks are very limited. They are not smallcaps in the PSU space,” said Sandeep Tandon, MD & CEO at Quant Broking.
Tandon likes BEL and BEML due to their exposure to the defence sector or for potential strategic divestment. He prefers MOIL to SAIL. He believes BPCL and HPCL are crowded, and he does not like Nalco.
The Department of Investment and Public Asset Management (DIPAM) in January launched the second tranche of CPSE Exchange Traded Fund (ETF) that garnered Rs 6,000 crore to the government kitty.
The rally in last two months has been broad-based, which has pushed the market capitalisation of BSE to a fresh all-time high.
PSU stocks have been a major beneficiary of the rally, as they have generated higher returns from their December lows compared with the benchmark indices.
Data showed 68 listed PSU firms on BSE saw their market capitalisation rise 16 per cent to Rs 13.38 lakh crore ever since the benchmark indices hit their 52-week lows on December 26, 2016. This is against a 12 per cent rise in the BSE Sensex. The combined market-cap of the BSE-listed companies rose nearly 16 per cent during this period.
Many PSU stocks such as ITDC (up 138 per cent), National Fertilisers (118 per cent), CPCL (53 per cent), Indian Bank (43 per cent) and Vijaya Bank (39 per cent) delivered spectacular returns in the two-month period. Only two of the 68 PSUs – Balmer Lawrie (down 10 per cent) and STC (down 6 per cent) – gave negative returns during this period, when an overwhelming 47 PSU stocks beat Sensex return.
“Across the PSU space, there are broadly two or three trends. One is the government trying to get big dividends paid by them, which is good for minority shareholders. The second is that we were talking about oil and petrochemical PSUs creating big companies: ONGC merger with HPCL, BPCL. That is very positive news for the under-penetrated sector,” said Chakri Lokapriya, CIO & MD, TCG AMC, who believes stocks of PSU banks may continue to do well going ahead.
The government last Wednesday sold a 5 per cent stake in PSU Bharat Electronics at Rs 1,498 apiece through an offer for sale (OFS). Finance Minister Arun Jaitley in his Budget speech earlier this month said state-run railway companies such as IRCTC, IRCON and IRFC would be made public soon.
The government has so far raised about Rs 30,000 crore so far this year through sale of minority stakes via OFS, share buybacks and the CPSE ETF.
“So our large theme from the market perspective is clearly the PSUs. We have been talking about this theme for last two or three quarters. One should look for opportunity in this space. But unfortunately, stocks are very limited. They are not smallcaps in the PSU space,” said Sandeep Tandon, MD & CEO at Quant Broking.
Tandon likes BEL and BEML due to their exposure to the defence sector or for potential strategic divestment. He prefers MOIL to SAIL. He believes BPCL and HPCL are crowded, and he does not like Nalco.
The Department of Investment and Public Asset Management (DIPAM) in January launched the second tranche of CPSE Exchange Traded Fund (ETF) that garnered Rs 6,000 crore to the government kitty.
