The Union government can unlock nearly ₹2.4 lakh crore if it plans on monetising its excess stake in over 19 state-run companies ranging from IRFC to Life Insurance Corporation, SJVN and many state-run banks.
Excess stake implies those companies in which government shareholding is more than 75%. Companies, both private and PSUs, need to have promoter shareholding of 75% or less to comply with the Securities and Exchange Board of India's (SEBI's) minimum public shareholding norms.
When CNBC-TV18 had last addressed this on September 18, that excess stake was worth nearly ₹1.9 lakh crore. Since then, the rally in PSU stocks has boosted that value by over 26%. When this was first reported by CNBC-TV18 on July 28, that excess stake was worth nearly ₹1.5 lakh crore. From those levels, the value is up by over 60%.
| Excess Government Stake In PSUs | |
| Data | Value |
| July 28, 2023 | ₹1.5 lakh crore |
| September 18, 2023 | ₹1.9 lakh crore |
| January 20, 2024 | ₹2.4 lakh crore |
As per CNBC-TV18's calculations, the excess stake in 19 companies is now worth ₹2.42 lakh crore as per the price of these companies on January 20. The list does not include MRPL as ONGC and HPCL, not the President of India, are classified as the company's promoters.
Among these 19 companies, there are nine such firms where the government has a stake of 90% or more.
The excess government stake in India's largest insurer, LIC is worth nearly ₹1.2 lakh crore as of the current market price.
The government had offloaded only 3.5% in India's largest IPO in 2022, leaving it with a 96.5% stake. Shares of LIC are currently trading above their retail IPO price after a recent rally, but remain below their original IPO price of ₹949. However, in this case, the government has the opportunity to comply with the minimum public shareholding norms by 2032.
| Company | Excess Stake Held By Govt. | Stake At Current Price |
| Life Insurance Corp of India | 21.5% | ₹1.19 lakh crore |
| Indian Railway Finance Corp Ltd | 11.36% | ₹22,437 crore |
| Indian Overseas Bank | 21.38% | ₹17,274 crore |
| IDBI Bank Ltd | 19.71% | ₹15,825 crore |
| UCO Bank | 20.39% | ₹9,706 crore |
The government still owns more than 75% stake in stocks like Mazagon Dock Shipbuilders and IRFC, which have seen a strong rally through 2023 and continue to enjoy the same in the new year as well. In fact, shares of IRFC have surged 75% in January itself and are now 6x higher than their IPO price of ₹26.
The government still has an excess 11% stake in the railway financier, which in case it plans to offload, will now fetch them a handsome ₹22,500 crore.
"Most of these companies are getting orders and have longevity in a way and cash flows for these companies are also visible, which was absent during the past 7-8 years. So, corporate earnings along with cash flows plus a lot of execution, pickup strength which these companies are exhibiting, I think they are still away to peak out for PSUs," said Devang Mehta of Spark Capital Management.
The recent rally in PSUs has now taken the overall PSU market capitalisation past the ₹60 lakh crore mark. That figure, at the start of 2023, stood at ₹35 lakh crore.
(Edited by : Amrita)
First Published: Jan 20, 2024 11:26 AM IST
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