PM Modi says invest in PSUs; Here’s how HAL to LIC have performed, experts explain

In a sarcasm to the opposition parties, Modi said that stock market investors may take a cue from the Indian opposition in near term. He advised stock market investors (in lighter mood) to buy those PSU stocks that the opposition critices in future.

Even though PM recommended PSU stocks to buy in a lighter mood in parliament, stock market experts believe that its time to accumulate PSU stocks, especially the banking and power stocks as they are expected to outperform other segments in medium to long term. They said that in recent years, high skilled professionals have been hired to overhaul the management of PSU companies. This helped the PSUs to increase their CAPEX and decrease their provisions and NPA. This has helped companies like HAL and LIC to give strong numbers and this trend is expected to continue. However, they said that PSU bank shares are still available at attractive levels and one can look at those PSU stocks to buy at current levels.

On why one should buy PSU stocks, Sandeep Pandey, Former Deputy Vice President at HDFC Bank said, “Indian economy is witnessing a paradigm shift in per capita income and when such things happen in any country, its stock market goes into an ultra bull trend. Coming back to Indian stock market, in that ultra bull trend on Dalal Street, PSU stocks will have a big role to play. After special focus on state-owned companies by the Indian government by hiring skilled managers and other professionals, the Indian government has almost overhauled the management of PSU companies.”

“Now, the PSU company management is trying to compete against their peers in private sector. For example, you can look at Indian PSU banks, by merging the banks, Indian government brought down their CASA without much change in their business model. Now a day, State Bank of India (SBI) has incurred more profit than Reliance Industries Ltd and this has happened with some change in approach towards their business model.”

Stocks to buy today

On stocks to buy from PSU segment, Saurabh Jain, Vice President — research at SMC Global Securities said, “While selecting bank PSU stocks, one needs to look at the CASA of the banks as net interest margins of the Indian banks have peaked out and now it’s CASA that is going to play an important role. So, big banks like SBI, Bank of Baroda and Canara bank in PSU segment are expected to continue attracting business as their cost of lending would be lower in comparison to other small banks.”

On other than banking theme that is expected to work in PSU segment, Saurabh Jain of SMC Global Securities said, “One can look at power sector stocks in PSU segments as they are available at attractive valuations and demand for power is expected to grow at least in double digits.” He advised positional investors to look at PSU power stocks like NTPC, NHPC, Power Grid Corporation, Satluj Jal Vidyut Nigam or SJVN.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Updated: 11 Aug 2023, 11:59 AM IST