PSU pack on the block: Steer clear or load up ahead of Budget 2023?

The government may revive the proposal to sell stakes in more PSU banks in the next year’s Budget along with the divestment of BPCL which got stalled in the current fiscal

‘);
$(‘#lastUpdated_’+articleId).text(resData[stkKey][‘lastupdate’]);

//if(resData[stkKey][‘percentchange’] > 0){
// $(‘#greentxt_’+articleId).removeClass(“redtxt”).addClass(“greentxt”);
// $(‘.arw_red’).removeClass(“arw_red”).addClass(“arw_green”);
//}else if(resData[stkKey][‘percentchange’] = 0){
$(‘#greentxt_’+articleId).removeClass(“redtxt”).addClass(“greentxt”);
//$(‘.arw_red’).removeClass(“arw_red”).addClass(“arw_green”);
$(‘#gainlosstxt_’+articleId).find(“.arw_red”).removeClass(“arw_red”).addClass(“arw_green”);
}else if(resData[stkKey][‘percentchange’] 0)
{
var resStr=”;
let secglbVar = 1;
var url = ‘//www.moneycontrol.com/mccode/common/saveWatchlist.php’;
$.get( “//www.moneycontrol.com/mccode/common/rhsdata.html”, function( data ) {
$(‘#backInner1_rhsPop’).html(data);
$.ajax({url:url,
type:”POST”,
dataType:”json”,
data:{q_f:typparam1,wSec:secglbVar,wArray:lastRsrs},
success:function(d)
{
if(typparam1==’1′) // rhs
{
var appndStr=”;
//var newappndStr = makeMiddleRDivNew(d);
//appndStr = newappndStr[0];
var titStr=”;var editw=”;
var typevar=”;
var pparr= new Array(‘Monitoring your investments regularly is important.’,’Add your transaction details to monitor your stock`s performance.’,’You can also track your Transaction History and Capital Gains.’);
var phead =’Why add to Portfolio?’;
if(secglbVar ==1)
{
var stkdtxt=’this stock’;
var fltxt=’ it ‘;
typevar =’Stock ‘;
if(lastRsrs.length>1){
stkdtxt=’these stocks’;
typevar =’Stocks ‘;fltxt=’ them ‘;
}

}

//var popretStr =lvPOPRHS(phead,pparr);
//$(‘#poprhsAdd’).html(popretStr);
//$(‘.btmbgnwr’).show();
var tickTxt =’‘;
if(typparam1==1)
{
var modalContent = ‘Watchlist has been updated successfully.’;
var modalStatus = ‘success’; //if error, use ‘error’

$(‘.mc-modal-content’).text(modalContent);
$(‘.mc-modal-wrap’).css(‘display’,’flex’);
$(‘.mc-modal’).addClass(modalStatus);

//var existsFlag=$.inArray(‘added’,newappndStr[1]);
//$(‘#toptitleTXT’).html(tickTxt+typevar+’ to your watchlist’);
//if(existsFlag == -1)
//{
// if(lastRsrs.length > 1)
// $(‘#toptitleTXT’).html(tickTxt+typevar+’already exist in your watchlist’);
// else
// $(‘#toptitleTXT’).html(tickTxt+typevar+’already exists in your watchlist’);
//
//}
}

//$(‘.accdiv’).html(”);
//$(‘.accdiv’).html(appndStr);
}
},
//complete:function(d){
// if(typparam1==1)
// {
// watchlist_popup(‘open’);
// }
//}
});
});
}
else
{
var disNam =’stock’;
if($(‘#impact_option’).html()==’STOCKS’)
disNam =’stock’;
if($(‘#impact_option’).html()==’MUTUAL FUNDS’)
disNam =’mutual fund’;
if($(‘#impact_option’).html()==’COMMODITIES’)
disNam =’commodity’;

alert(‘Please select at least one ‘+disNam);
}
}
else
{
AFTERLOGINCALLBACK = ‘overlayPopup(‘+e+’, ‘+t+’, ‘+n+’)’;
commonPopRHS();
/*work_div = 1;
typparam = t;
typparam1 = n;
check_login_pop(1)*/
}
}

function pcSavePort(param,call_pg,dispId)
{
var adtxt=”;
if(readCookie(‘nnmc’)){
if(call_pg == “2”)
{
pass_sec = 2;
}
else
{
pass_sec = 1;
}
var postfolio_url = ‘https://www.moneycontrol.com/portfolio_new/add_stocks_multi.php?id=’+dispId;
window.open(postfolio_url, ‘_blank’);
} else
{
AFTERLOGINCALLBACK = ‘pcSavePort(‘+param+’, ‘+call_pg+’, ‘+dispId+’)’;
commonPopRHS();
/*work_div = 1;
typparam = t;
typparam1 = n;
check_login_pop(1)*/
}

}

function commonPopRHS(e) {
/*var t = ($(window).height() – $(“#” + e).height()) / 2 + $(window).scrollTop();
var n = ($(window).width() – $(“#” + e).width()) / 2 + $(window).scrollLeft();
$(“#” + e).css({
position: “absolute”,
top: t,
left: n
});
$(“#lightbox_cb,#” + e).fadeIn(300);
$(“#lightbox_cb”).remove();
$(“body”).append(”);
$(“#lightbox_cb”).css({
filter: “alpha(opacity=80)”
}).fadeIn()*/

$(“.linkSignUp”).click();
}

function overlay(n)
{
document.getElementById(‘back’).style.width = document.body.clientWidth + “px”;
document.getElementById(‘back’).style.height = document.body.clientHeight +”px”;
document.getElementById(‘back’).style.display = ‘block’;
jQuery.fn.center = function () {
this.css(“position”,”absolute”);
var topPos = ($(window).height() – this.height() ) / 2;
this.css(“top”, -topPos).show().animate({‘top’:topPos},300);
this.css(“left”, ( $(window).width() – this.width() ) / 2);
return this;
}
setTimeout(function(){$(‘#backInner’+n).center()},100);

}
function closeoverlay(n){
document.getElementById(‘back’).style.display = ‘none’;
document.getElementById(‘backInner’+n).style.display = ‘none’;
}
stk_str=”;
stk.forEach(function (stkData,index){
if(index==0){
stk_str+=stkData.stockId.trim();
}else{
stk_str+=’,’+stkData.stockId.trim();
}
});

$.get(‘//www.moneycontrol.com/techmvc/mc_apis/stock_details/?sc_id=’+stk_str, function(data) {
stk.forEach(function (stkData,index){
$(‘#stock-name-‘+stkData.stockId.trim()+’-‘+article_id).text(data[stkData.stockId.trim()][‘nse’][‘shortname’]);
});
});

function redirectToTradeOpenDematAccountOnline(){
if (stock_isinid && stock_tradeType) {
window.open(`https://www.moneycontrol.com/open-demat-account-online?classic=true&script_id=${stock_isinid}&ex=${stock_tradeType}&site=web&asset_class=stock&utm_source=moneycontrol&utm_medium=articlepage&utm_campaign=tradenow&utm_content=webbutton`, ‘_blank’);
}
}

The government has geared up to get closer to its divestment target of Rs 65,000 crore set for FY23 by setting up to 5 percent of its stake in Indian Railway Catering and Tourism Corporation (IRCTC) on the block.

The government has set the floor price at Rs 680 per share for the offer-for-sale (OFS) scheduled to be launched on December 15. It is expected to garner Rs 2,720 crore for the exchequer. It intends to sell 2.5 percent with the option to sell an extra 2.5 percent, bringing the total issue size to 4 crore shares.

The government has managed to raise just Rs 28,383 crore so far this year  with the listing of LIC alone contributing close to Rs 20,500 crore. An ONGC offer-for-sale fetched Rs 3,026 crore, an ONGC employee-OFS drew Rs 33 crore, while the Paradeep Phosphates OFS mopped up Rs 472 crore, GAIL-BB raised Rs 497 crore) and the sale of Axis Bank shares held by SUUTI garnered Rs 3,839 crore.

From the candidates planned for divestment during the current fiscal, the expressions of interest (EOI) are currently open for IDBI Bank, Ferro Scrap Nigam Ltd (FSNL), and NMDC.

The Centre may extend the deadline for submission of early bids for IDBI stakes to January, an official said on December 9 after the government received requests from the transaction advisor to push forward the deadline for IDBI Bank EoIs.

The government had set a December 16 deadline to submit expressions of interest for the sale of a majority stake in IDBI Bank.

Likely divestment candidates for FY23-24

So, which PSU companies will be on the government’s list for divestment in the next fiscal when the finance minister will present the Union Budget for 2023-24 on February 1?

“Certain PSUs are direct beneficiaries of the government’s agenda of defined thrust areas,” said Nirav Karkera – Head of Research at Fisdom. Segments like manufacturing, defence, power, logistics and fertilisers are expected to experience a healthy turnaround in business growth owing to improving fundamentals while being bolstered by policies like the PLI, priority sector subsidies, and higher capex outlay.

The early bids for the stake sale of Container Corporation of India (CONCOR) are being called from December 15 onwards. The company has already conducted several roadshows to attract probable suitors.

The other EOIs in the pipeline include Rashtriya Ispat Nigam Ltd and Indian Medicines Pharmaceutical Corporation Ltd (IMPCL).

The Centre may get the financial bids for stake sales in state-run BEML and Shipping Corporation of India in the current financial year but these transactions may only be completed in the next fiscal, the official said. The EOIs for the same are in advanced stages along with Projects and Development India Ltd (PDIL) and HLL Lifecare Ltd.

There is also a strong possibility that the proposal to sell stakes in more PSU banks will be revived again in the next year’s budget along with the divestment of BPCL which got stalled in the current fiscal.

The stocks associated with Indian Railways have witnessed quite a bit of run-on anticipation of divestments but going by the experts’ views, CONCOR is the only strong candidate from that segment.

They, however, suggest that government may look at stake sales in some of the Dedicated Freight Corridors (DFCs) and might issue tenders to private parties to construct five storage facilities along the DFCs. This has seen significant interest from the private parties.

Going by the PSE policy, going forward, only a bare minimum presence will remain in sectors such as atomic energy, space, defence, transport and telecoms, power, petroleum, coal, minerals, and banking, insurance, and financial services.

Sharma of Green Portfolio has RCF and Hindustan Zinc on his list of divestment candidates among the PSU stocks while Varadarajan of Asit C Mehta Financial Services looks at BPCL, Pawan Hans, and some PSU banks as the possible companies that can be divested in FY23-24.

Should you invest in these stocks

“There’s plenty of opportunity in the PSU pack where loading up could be well-rewarding and with a stroke of good fortune, disinvestment could further accentuate the prospects,” said Karkera of Fisdom. According to him, the current period reflects strong investor confidence and a structural bullish undercurrent that corroborates with the quality thesis.

While the disinvestment is an important event and can really churn out a fortune for many investors, that may not be the sole reason for investors to dig through the PSU pack and load up on gems.

Exercising caution and avoiding speculation is the key here. If we look at examples from the past, many of these divestment talks hit bottlenecks and might get delayed beyond the expected timelines. BPCL and NALCO are live examples of such kind.

“No doubts that the divestment will take place, also we are seeing dedicated efforts on potential divestment targets, but predicting the closure timelines is tough”, added Sharma of Green Portfolio.

Another market veteran, who did not wish to be quoted, suggested that no one should indulge in ‘event-based or hope’ trading. Events like divestment are very difficult to predict and cannot be linked to any technical or fundamental factors. His advice to investors is to “stick to stocks backed by technical and strong fundamentals and any event-based trading is pure speculation which may or may not result in a favorable end result”.

In short, the experts are not quite positive about trading in divestment candidates as there might be rumor-driven rallies in these stocks, but they advise investors to shy away from this news-driven price action.

Disclaimer: The views and investment tips of investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.