PSUs PROPEL TO PROFITS
Business Today India|September 29, 2024
PUBLIC SECTOR UNDERTAKINGS (PSUS), ONCE CONSIDERED WHITE ELEPHANTS, HAVE MANAGED TO STAGE A SMART TURNAROUND IN RECENT YEARS WITH INITIATIVES AND REFORM MEASURES TAKEN BY THE GOVERNMENT BEARING FRUIT
PRINCE TYAGI AND SURABHI
PSUs PROPEL TO PROFITS

FROM WHITE ELEPHANT to a galloping beast. That has been the evolution of public sector undertakings (PSUs) in the past few years. Once seen to be slow and inefficient, PSUs have managed to stage a smart turnaround in recent years with initiatives and reform measures taken by the government bearing fruit. The government’s focus on public expenditure in recent years has also put the spotlight on these firms and made them at least partly shoulder the responsibility of a revival in investment.

Reflecting these changed dynamics, PSU stocks, too, have displayed robust profitability growth and strong market performance in the past couple of years. In the past 12 months, the BSE PSU index has outperformed the large-cap and broader equity benchmarks. The BSE PSU index has rallied 96% in the past year (as of July 31, 2024), while the benchmark BSE Sensex and BSE 500 have surged 23% and 37%, respectively. In fact, select PSU stocks have surged by up to 660% in this period.

Aamar Deo Singh, Senior Vice President of Research at brokerage Angel One, says the government’s focus on infrastructure and manufacturing sectors has helped PSUs. “Special stress on railways and defence also helped many of the PSUs deliver solid performance and further, the priority given to ‘Make in India’ also aided in this stellar growth. Also, the thrust on infrastructure in terms of building highways, power [assets], ports, and airports have also helped the PSU pack,” he says.

This story is from the September 29, 2024 edition of Business Today India.

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This story is from the September 29, 2024 edition of Business Today India.

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