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PSU fervour: Is it for real? - Views on News from Equitymaster
 
 
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  • Mar 12, 2001

    PSU fervour: Is it for real?

    Public Sector Undertakings (PSUs) have seen a lot of steam in recent times. However, what has been their performance in the last couple of months and have they been able to survive the carnage of the last few days? Letís take a look.

    A cursory glance at the stock graphs of leading PSUs will indicate that most of them have not been hammered as badly as the tech companies. But it doesnít mean that all of them have been unscathed either.

    For example, the stock price of Bhel has come off 6% in the last couple of months. MTNL has come off a significant 25% during the same period and VSNL by 5%. However, BPCL has not only managed to keep its head above the water but has also gained around 52% in the last couple of months.

    In the current phase the market movers have adopted a wait and watch policy. A process is on to separate the wheat from chaff. Finally, itís not the PSU fervour that has lasted but rather the basic profitability and fundamentals of the company. There was a TMT madness once, and we know what happened to that. There was a PSU madness quite recently, the effects of which we can see for ourselves.

    The lesson: Letís not go by current craze of the markets but rather look at the finer prints. A healthy bottomline, cash position, business profile and a focussed management give us a better hedge to stand the test of time. Markets will continue to be volatile and give us shocks, but a company with the aforesaid aspects will ensure safety of the retail investments (against almost all odds).

     

     

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