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    Share of PSUs in total m-cap falls to decade’s low of 4.6%

    Synopsis

    The market cap of PSUs shrank by 3% annually over the past decade even as the country’s market cap increased by 8%.

    Back in 2010, the price-book (P/B) multiples of the S&P BSE PSU index and the S&P BSE Sensex were similar.

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    ET Intelligence Group: The insipid stock returns and unabated disinvestments are waning the union government’s clout in Indian equities. The proportion of the public sector undertakings (PSUs) in India’s total market capitalisation fell to a decade low of 4.6% in June 2020 according to an analysis by the ET Intelligence Group.

    There are 76 companies on the stock exchanges where the government holding is more than 50%. Their total market cap is Rs 12.5 lakh crore. Of this, 42% is spread among the top five PSUs by market cap including SBI, ONGC, Power Grid Corporation, NTPC, and BPCL.

    The market cap of PSUs shrank by 3% annually over the past decade even as the country’s market cap increased by 8%. Following their poor show, PSUs no longer figure in the list of the country’s top 10 stocks by market cap even though they are still the leaders across sectors including power generation and transmission, oil exploration, gas transmission and lending.
    PSU-graph

    Back in 2010, the price-book (P/B) multiples of the S&P BSE PSU index and the S&P BSE Sensex were similar. The gap between the two has however widened over the years. The P/Bs of the Sensex and the PSU index are at 2.81 and 0.8 currently. Of the PSU sample, more than half or 41 to be precise now trade at P/B of less than one.

    Over the past 10 years, the government has raised Rs 3.1 lakh crore by divesting stakes in the leading PSUs such as ONGC, Coal India, and NTPC according to the data from the Department of Investment and Public Asset Management.

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    27 Comments on this Story

    Muthuswamy Sundararaman127 days ago
    Compare the market caps of HDFC Bank @ over six lakh cores versus Indian Bank at 7000 crores and Canara bank@14000 croes book value of these PSU banks is Rs.10/- whereas HDFC Bank is Re one and aaaaaaaaaaICICI Bank is Rs.2/ PSB,s market cap is less than 1000 crores and UNION Bank and PNB are is pathetic prices and their market cap is awfully low even though the recent merger has incresed their branches and total business.
    Muthuswamy Sundararaman127 days ago
    High time the Govt realises that the investors in these companies cannot be put to further loss and instead supprt PSUs and PSU banks by adopting policies which will benefit these these companies instead of helping PVT sector which are only profiting themselves and their promoters and put a stop to their prices being manipulated in stock markets
    sunilsauson128 days ago
    Quality of governance of a company is reflected in its share price. Markets know the governance level of PSUs. Govt has no business to be in business- yet they are clinging to it. This is the reason they are retaining majority stake to keep the goose. To garner funds one PSU is being sold to another PSU to keep the control and deteriorating the balance sheet of PSU . PSUs are raising debts, when Pvt companies are reducing debt, to support Govt finances.
    Markets are smarter ... they foresee deteriorating balance sheet of these PSUs, hence the lowest valuation. Look at the valuation of IOC, GAIL,,ONGC,NTPC,COAL INDIA.... it reflects the value of GOVT Tag.
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