|»Vivek Kaul's Diary|
Are There Any Public Sector Companies Out There That Reward Shareholders?
21 SEPTEMBER 2018
The next few months will be interesting to see how the Jet Airways saga pans out.
The company's losses are piling up. It seems to be running out of cash. Just last month, it warned its staff that the airline will be grounded in 60 days if they don't agree to pay cuts. Whether the airline will eventually shut down like its infamous and erstwhile peer Kingfisher Airlines remains to be seen.
The point is the crisis staring Jet Airways is nothing new. Airlines is a brutal business to be in. Air India has been grappling with a crisis since quite a while now. But of course, since Air India is a government company, the government has been time and again bailing it out. In other words, throwing good money at the bad.
In fact, it's not just Air India. The government seems quite hell bent on pouring money into chronically loss making public sector enterprises. Hindustan Photo Films is another classic example. And mind you, it is ultimately the taxpayer who ends up paying for this.
Vivek Kaul, as you know, has been writing extensively on the topic in his Diary.
The airline has lost a total of Rs 41,657 crore, between 2010-2011 and 2016-2017. It continues to function on back of the government investing money in it, every year. Between 2011-2012 and 2017-2018, the government has invested a total of Rs 26,545 crore, into the airline. Of course, as we keep saying, every extra rupee invested in this airline, is a rupee taken away from more important areas like defence, education, health, agriculture etc.
|Company||Dividend Yield (%)||Dividend Payout (%)|
|Indian Oil Corporation Ltd.||12.7||89.7|
|Bharat Petroleum Corporation Ltd.||8.3||44.8|
|Rural Electrification Corporation Ltd.||8.3||30.2|
|Coal India Ltd.||7.1||133.3|
|Oil India Ltd.||6.6||71.5|
|National Aluminium Company Ltd.||6.5||67.7|
|Hindustan Petroleum Corporation Ltd.||6.1||35.9|
|NLC India Ltd.||5.9||35.2|
|Power Finance Corporation Ltd.||5.7||59.0|
|Chennai Petroleum Corporation Ltd.||5.5||29.7|
|Oil & Natural Gas Corporation Ltd.||5.4||56.8|
|Mangalore Refinery & Petrochemicals Ltd.||3.6||26.4|
|Balmer Lawrie & Company Ltd.||3.2||24.1|
|GAIL (India) Ltd.||3.0||56.2|
|Container Corporation of India Ltd.||2.7||38.9|
|Cochin Shipyard Ltd||2.6||41.2|
|Gujarat Mineral Development Corporation Ltd.||2.5||29.4|
Of course, this is just a list and in no way indicates that you could blindly put your money in any of them.
It makes sense to go deeper into the fundamentals of the business before you select any.
My point is that it would be unwise to pass over PSU stocks entirely.
If the business fundamentals are good, and the dividends are healthy, then these are safe bets that investors can rely on to build long term wealth.
As the editor of The India Letter, I had been scouting around for PSUs which I think are different and can make the cut - both in terms of dividend yields and healthy financial performance.
Stay tuned for more such profit making opportunities!
Radhika Pandit (Research Analyst)
Editor, The India Letter
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