At least 10 PSU stocks including Cochin Shipyard Ltd, Indian Railway Finance Corporation Ltd (IRFC), Housing & Urban Development Corporation Ltd (HUDCO), Rail Vikas Nigam Ltd (RVNL), NBCC (India) Ltd, REC Ltd, Ircon International Ltd and Bharat Heavy Electricals Ltd, among others, delivered 200-700 per cent returns in the past one year. In total, 32 PSU shares including those from railways, defence, housing, finance and capital goods sectors doubled investor money during the said period.
The government’s support in terms of higher allocation towards some of these sectors may hold key for stock performances, as valuations have turned unattractive.
“In the upcoming Budget, key aspects to monitor include allocations and reforms in railway infrastructure and modernisation, defense spending and procurement policies, and measures affecting public sector undertakings (PSUs), particularly in terms of investments and strategic initiatives. These factors will provide insights into government priorities and their impact on these sectors’ performance and market dynamics,” said Manish Chowdhury, Head of Research at StoxBox.
Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities said capex outlay numbers are something markets would like to watch out for. The FM Nirmala Sitharaman had announced a provisional capex outlay of Rs 11.11 lakh crore for FY25 in the interim budget.
“If this number remains the same or increases, the market will take it positively and would reflect the government’s focus on capex and infrastructure development, which will be beneficial for railways, defence and other PSU’s,” Sheth said.
Cochin Shipyard Ltd has delivered 700 per cent return, with the stock closing at Rs 2,671.80 level on Monday against the year-ago’s Rs 334.15 level. IRFC shares have rallied 485 per cent, followed by HUDCO (up 436 per cent), RVNL (up 357 per cent), NBCC India (up 347 per cent), REC (up 282 per cent). Ircon International Ltd, Oil India Ltd, Bharat Heavy Electricals Ltd and Power Finance Corporation Ltd climbed 200-244 per cent. SJVN, Mazagon Dock Shipbuilders Ltd, BEML Ltd, ITI Ltd, Hindustan Copper Ltd, Hindustan Aeronautics Ltd, MMTC Ltd, Bharat Dynamics Ltd and Bharat Electronics Ltd delivered 150-200 per cent return during the same period.
“We find the valuations of many PSU stocks to be quite bizarre, when compared with their fundamentals (see Exhibit 13). Most of these companies trade at very high P/E, P/B or EV/assets, and many have not seen any meaningful improvement in their fundamentals; some make losses. Some of these companies will require extraordinary assumptions and a massive turnaround in their operations (and financials) to justify their current market caps,” Kotak said in a recent note.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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