Market cap share of state-run firms at four-year high

livemint.com:

MUMBAI : The share of public sector undertakings (PSUs) in the overall market capitalization of the listed universe is at more than a four-year high of 11.34%, a Mint analysis showed, indicating that these companies could be on the path of recovery after reeling under pressure for the past three years. The analysis covered 1,958 BSE-listed stocks, and the data is as of 28 August. As of 31 March, the PSU stocks’ share in the total market capitalization reclaimed the 11% mark, the first time it ended a fiscal year at that level since 31 March 2019.

The current level marks a significant rise since a year ago when the share was 9.9%. “The government initiative towards clean-up of debt from PSU balance sheets, focus towards indigenous production in defence, towards localization, have led to improvement in PSUs," said Arvinder Singh Nanda, senior vice president, Master Capital Services, a listed financial services provider. “Undervaluation and attractive dividend yields have also led to increased market capitalization of PSUs." Still, the PSUs’ share remains far from its peak value of around 32% more than a decade ago.

Equity markets have had a topsy-turvy ride this year, with year-to-date gains of 6.8% in the 30-share Sensex. In the same period, the overall market capitalization of the stocks covered in the analysis has grown nearly 12%, but the combined valuation of 70 PSU stocks has risen 13.8%. In the past year, the Sensex has delivered an 8.9% return, while the BSE PSU index has outperformed the blue-chip stocks with a 25.8% gain.