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The year 2023 has been a comeback year and a dream run for the 103 listed public sector companies, which, riding on the government’s Capex push in sectors such as railways and defence and the overall ‘Make in India’ thrust, have added nearly ₹20-lakh crore in market capitalisation.
The Nifty PSE index grew a whopping 81 per cent to become the best-performing sector index this calendar year, stock market data showed.
The battered public sector names of 2022 got rerated in 2023, riding on expectations of the entire PSU pack performing well on the back of positive and enabling business conditions put in place by the Modi-led government.
In fact, the Nifty PSE index is up 40 per cent since the time Prime Minister Narendra Modi spoke about public sector companies in Parliament and how people must put faith and optimism in their financial and operational performance.
Investors, including retail shareholders, who had the conviction to hold the PSU stocks during their long-term underperformance have been richly rewarded for their patience this year, say capital market experts and observers.
Jitendra Gohil, Chief Investment Strategist, Kotak Alternate Asset Managers Ltd said, “The Indian economy has demonstrated remarkable resilience since Covid and the economic boom has surprised many. This is clearly reflected in the stark re-rating of PSUs, as their performance is largely dependent on political stability, policies, and governance.
We believe a large part of the PSUs still offer some more valuation upside as they are relatively undervalued and underowned, even after this stupendous rally.”
Top gainers
In percentage terms, India has been the biggest gainer in terms of market capitalisation across the world this year. 2023 is the eighth consecutive year of Nifty and Sensex positive return.
Also, one out of every three PSU stocks on the BSE PSU index delivered over a 100 per cent return in 2023.
Not only public sector enterprises, even public sector banks had a fabulous year in 2023 as regards increase in their valuations at the bourses.
Public sector banks such as Bank of Baroda, Indian Bank, Punjab National Bank, Canara Bank, Bank of Maharashtra, Union Bank of India, Indian Overseas Bank, Punjab & Sind Bank, UCO Bank, and Bank of India delivered 25–60 per cent returns for the year, say capital market observers.
Power sector companies, including PFC, REC, and NTPC, saw robust re-ratings, giving handsome returns to shareholders in 2023.
Some of the PSUs that saw strong rallies include REC (252%), PFC (241%), IRFC (197%), Mazgaon Dock (195%), NLC (193%), BHEL (145%), NTPC (87%), and Coal India (67%).
Other PSU stocks that delivered multi anger returns in 2023 include Hindustan Aeronautics Ltd, Mangalore Refinery And Petrochemicals Ltd, Bharat Heavy Electricals Ltd., Housing & Urban Development Corporation Ltd, Hindustan Copper Ltd, Engineers India Ltd., and NBCC (India) Ltd.
A key factor that is driving the performance of PSU stocks is the expectation of current dispensation coming back to power in the 2024 general elections, say analysts and capital market observers.
The year 2023 saw Indian domestic institutional investors pump in a record ₹1.86-lakh crore in Indian equities, much higher than foreign portfolio investors, who made gross purchases of over $20 billion in 2023, reflecting their optimism about Indian equities and their economic growth outlook.
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