Gujarat government-run public sector undertakings (PSUs) grabbed investors’ attention after the State announced its new guidelines on minimum dividend distribution and bonus issue. All the seven listed State PSUs gained with heavy buying on each counter.

The biggest gainers were Gujarat State Fertilizers and Chemicals Limited (GSFC), Gujarat Mineral Development Corporation (GMDC) and Gujarat Industrial Power Corporation Ltd (GIPCL), each gaining 20 per cent on Wednesday to close at ₹153.30, ₹159.70 and ₹91.10, respectively on NSE.

Gujarat Alkalies and Chemicals Limited (GACL) posted robust gains of 17.21 per cent to end at ₹733.50, while Gujarat Narmada Valley Fertilizers and Chemicals (GNFC) gained 10.55 per cent to end at ₹587. Gujarat State Petronet Ltd (GSPL) and Gujarat Gas Limited (GGL) advanced with gains of 7.15 per cent and 1.01 per cent, respectively.

In its latest regulations, the Gujarat government has mandated that the State PSUs will be required to offer minimum dividend of 30 per cent of its profit after tax, or 5 per cent of net worth, depending on whichever is higher. Also, the policy requires every State PSU having a network of at least ₹2,000 crore and cash and bank balance of ₹1,000 crore to exercise the option of buyback of their own shares.

The State PSUs, which have defined reserves and surplus equal to or more than 10 times of its paid-up equity share capital, are required to issue bonus shares to its shareholders. Further, the PSUs are mandated to split their shares where market price or book value of the State PSUs’ shares exceed 50 times of its value, provided the existing face value of share is more than ₹1.

Analysts are looking at the reaction as a sentiment-driven buying. Kishor Ostwal, CMD, CNI Research, said, “The stocks will react when individual announcements would come.”

S Ranganathan, Head of Research at LKP Securities, said, “While a few of the Gujarat State-run entities may be facing temporary headwinds in few of its business verticals, the fact is that almost all of them are expanding product lines and looking to grow. Hence, the new policy in our view would go a long way towards boosting the confidence of minority shareholders since most of them are cash-rich even after their annual capex requirements with robust free-cash generation.”

The State has set up about 100 PSUs in different sectors, with specific objectives to be achieved.

Meanwhile, the BSE Sensex ended the day with marginal gains of 0.28 per cent and the Nifty50 closed 0.25 per cent higher.