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Wealth destroying PSU's and opportunities for investment

Sinking PSU Eroded Investors wealth



Hello readers,
This blog I was planed in Feb 2020 but due to some reasons it was late but I am thinking for any start it is  'NEVER TOO LATE'.
ONGC India's most valued PSU's Stock price touch 15 years low recently. The combined market capitalization of 62 PSUs, at around Rs 15.4 trillion, is the lowest in nearly four years and excluding State Bank of India, their market capitalization is the lowest since March 2009 (see chart).


The PSUs’ market capitalisation is down 17.6 per cent in the current fiscal year, against a 4.3% rise in the benchmark NSE Nifty50 index during the period.  Excluding SBI, PSU Index 28% down in past 3 years becoming biggest wealth destroyer. 

M-Cap                       Time
19.2 trillion rupees Mar-17
15.4 trillion rupees  18-Feb-2020

Below is top 5 PSU's  by M-cap



Top 5 wealth destroyer in last 3 years


Highest PE ratio among PSU's

 PE ratio shows current investor demand for a company share. A high PE ratio generally indicates increased demand because investors anticipate earnings growth in the future.
EPS Analysis-
Earnings per share (EPS) is calculated as a company's profit divided by the outstanding shares of its common stock. The resulting number serves as an indicator of a company's profitability. ... The higher a company's EPS, the more profitable it is considered.


Highest dividend paying PSU's

The dividend payout  measures the percentage of net income that is distributed to shareholders in the form of dividends during the year. In other words, this shows the portion of profits the company decides to keep to fund operations and the portion of profits that is given to its shareholders.


Above is some picture of PSU's in terms of some data. Recently Government of India became very aggressive about it's PSU disinvestment plan. But remember on thing Aviation Jewel Air India(Maharaja)  not  getting bidder since last 2 year. Also there is o more action taken about BPCL sell except passing a bill in parliament by Government of India. Government of India had Department of Disinvestment under Ministry of Finance which having DIPAM( Department of Investment and public Asset Management) as Nodal agency.


Remember one thing, Government of India's Disinvestment is nothing to do with about companies business and its model.  As you as investor think  about is business is sustainable or not management of company, balance-sheet of company.
In past there is many examples of where government sold stakes and then company doing well after that(e.g. ICICI Bank) also where government buy stake and then company doing well.  "MANAGEMENT" is very important when you thinking to invest in company. Yaa there is many PSU's who not doing well or they are puppet of politicians but but there is also good companies.(Diamond's and coal find at same place). So I advise do your own research and invest wisely. Many of you read this article for they will get multi-bagger PSU stock information here but sorry friends study PSU by your own, I am just giving direction to your thinking.

Thank you.

Some important website for study PSU-https://dipam.gov.in/disinvestments/recent
https://www.drishtiias.com/to-the-points/paper3/strategic-disinvestment-1
Specific company's website



Mayur Jagtap
Investment Consultant
jagtapmayur.v@gmail.com


For regular and daily small update 



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