Shipbuilder Mazagon Dock and rail infrastructure stock Rail Vikas Nigam are among eight BSE PSU index constituents that delivered over 100 per cent returns to investors in a year marked by PSU overperformance over the broader market after a long time. The list includes a total of four state-run banks namely Bank of Baroda, UCO Bank, Punjab & Sind Bank and Indian Bank and two defence stocks Bharat Dynamics and Hindustan Aeronautics.
The PSU index has jumped 18 per cent this calendar so far compared with a 3 per cent rise in the BSE Sensex during the same period. If one were to go by what Motilal Oswal says the recent recovery in PSUs’ profits and market capitalisation should sustain going ahead.
Among the PSU stocks, shares of Mazagon Dock Shipbuilders saw its shares soaring 202 per cent to Rs 842.65 from Rs 278.90 a piece on December 31, 2021. UCO Bank has jumped 145 per cent to Rs 31.90 from Rs 13 level.
Bharat Dynamics gained 124 per cent to Rs 876.50 from Rs 390.80 level.
Punjab & Sind Bank (up 117 per cent), Hindustan Aeronautics (up 116 per cent), Indian Bank (up 113 per cent) and Rail Vikas Nigam (up 105 per cent) have also delivered solid returns this year.
Motilal Oswal noted that the BSE PSU Index was largely flat in FY17-22 against Nifty’s 13.7 per cent growth. This is even as the profits of PSUs grew at 22.5 pe cent CAGR) and outperformed that of private sector’s 14.5 per cent CAGR) over the same period.
The share of PSUs’ in the profit pool expanded to 31 per cent in FY22 after hovering in the range of 17-30 per cent during the past few years, it noted.
“The profitability of PSUs is shooting up across domestic as well as global cyclicals with turnaround in the fortunes of PSU Banks driving the overall trend. Higher commodity prices over the past two years have aided the P&L and balance sheets of metals and oil & gasPSUs. The government’s emphasis on localisation and make-in-India in defense sector has catalysed the improvement in fortunes of Industrial PSUs. Consequently, we expect this recovery in PSUs’ contribution to both – profits and market-cap – to sustain,” Motial Oswal said.
Meanwhile, Union Bank of India, Cochin Shipyard, Rashtriya Chemicals and Fertilizers, Central Bank of India, Canara Bank, Bank Of Maharashtra, Indian Overseas Bank and Coal India are some other PSU stocks that jumped 50-90 per cent so far this calendar.
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