What to do with PSU stocks as time-wise & price-wise correction kicks in? Taher Badshah explains
Taher Badshah, CIO, Invesco Mutual Fund, points out that the broad triggers for the entire PSU space moving up and the valuation tables expanding irrespective of the sector that they belong to, are perhaps behind us. We now have to deal with the delivery on earnings In the first flash, everything gets re-rated but once the dust settles down, the second phase of execution, performance, and delivery starts to come in. That will probably happen in the PSU space, particularly in the industrial space/the defence sub-segments of the industrial space. Markets will start differentiating between good quality execution and not so good quality execution.
You are managing PSU stocks. How are you approaching them given that a time-wise and a price-wise correction has kicked in?
Taher Badshah: As far as our PSU strategy and our PSU fund is concerned, it is a strategy that has been around for a very long time.
We have gone through almost 14-15 years. We have seen several cycles and different kinds of market conditions. At one level, we all know that PSUs for a fairly long period were ignored by the market and valuations were at a very steep discount to the rest of the market, maybe 60-70%, 80% at times as well.
But in general, this is a space, that is linked to the investment cycle but is also somewhat narrower in terms of its available opportunity set. We are dealing with sectors like industrials, commodities, banks, and utilities. This makes up the bulk of the PSU space by and large.
