Government gains PSU muscle as stocks climb peaks

Mumbai: State ownership in listed firms, in terms of the held, surged to a seven-year high of 10.38% of total as of March 31, driven by a robust rally in several public sector unit (PSU) stocks. The value had touched a high of 22% of total market capitalisation of listed firms in June 2009, dropping to a low of 5.

1% in September 2020 before doubling since then, according to data from primeinfobase.com. amid large valuation discounts, high dividend yields, record cash flows and news of possible privatisation triggered a sharp rally in over the last three years.



Listed state-owned firms have added nearly ₹43 lakh crore in market cap in the three years ended March 31 to hit ₹61.22 lakh crore. To be sure, about ₹6.

4 lakh crore was added via six new listings, such as those of Life Insurance Corp. of India (LIC) and Indian Renewable Energy Development Agency (IREDA), among others, during this period. The and have seen significant gains of 326% and 493%, respectively, in three years, compared to a 142% return by Nifty.

"The PSU re-rating isn't without reason, and the robust stock performance is underpinned by the strong financial resilience of traditional economy sectors during the Covid-19 pandemic, government policies and reforms, such as defence indigenisation, benefiting companies in these sectors," said Ashish Gupta, CIO, . "A heightened focus on , including formalised payout policies, balance sheet restructuring in public sector banks, and a structured , and attractive v.