Edelweiss Securities bullish on PSU stocks; here's why
Edelweiss Securities has written an interesting note on Indian public sector undertakings (PSUs) and expects a change in the fortunes of these companies now. Aditya Narain, Research Head of Institutional Equities at Edelweiss Securities, discussed this further.
Edelweiss Securities has written an interesting note on Indian public sector undertakings (PSUs) and expects a change in the fortunes of these companies now. Aditya Narain, Research Head of Institutional Equities at Edelweiss Securities, discussed this further.
Through 2000 and 2010 when there was expansion in the economy, the PSUs did very well. “2010 to 2020 was an entirely different story. It was somewhat contractionary, deflationary for PSUs. So what we are seeing now is you are getting into an entirely different cycle, you are seeing the so-called reflation of global economy happen, you are seeing reflation of commodities happen and you have a situation where the stocks, which were trading at a premium to the market, are trading at a 60 percent discount to the market,” he said.
“That sets you up for a reasonably decent cycle for the PSUs. In terms of the cycle, there should fundamentally be a reasonable change in the PSUs,” he added.
At the start of the last decade of 2010, government ownership was about 80 percent for the PSUs. This has come down to about 57 percent at this point in time. “There, to some extent, the government’s control has moderated and you could see a little bit more moderation with divestments or sales that are lined up,” he shared.
When asked if government involvement could be a hamper going forward, he replied, “At some level, it could be. It is a risk. However, a lot has changed, a lot has happened over the last decade for that to be a less of an influence, going forward.”
For the full interview, watch the accompanying video.
(Edited by : Dipika Ghosh)
First Published: Jul 8, 2021 12:01 PM IST
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