Even after this selling, some of the stocks have managed to give double-digit returns in just two months.
ETMarkets scanned through the quarterly shareholding of promoters, and found seven companies where the holding came down sharply on a sequential basis, while the stocks have gained up to 55% so far in 2024.
Of the seven companies, four are public sector enterprises, namely HUDCO, Ircon International, Indian Bank, and Bank of India.
The other three are Sterling and Wilson Renewable Energy, Easy Trip Planners, and Kaynes Technology.
In HUDCO and Ircon International, the government launched an offer for sale in the last quarter, which received an overwhelming response from both institutional and retail investors.
In HUDCO, the government’s stake fell by 664 basis points sequentially in the December quarter to 75.2%. However, the stock has been one of the best performing stocks in the PSU space, giving returns of more than 55% so far in 2024. This follows a staggering 142% returns that the stock gave in 2023.
Even after such a stellar run, for Sanjiv Bhasin of IIFL Securities, this is a PSU stock that one can still consider adding to their portfolio.
Similarly, Ircon International stock value has gone up threefold in 2023, and the scrip extended the rally this year, adding another 32% gains in just two months of 2024.
Analysts remain bullish on the stock given the company’s aim to clock 15% growth in revenue and EBITDA, aided by a strong order book and increasing government spending on infrastructure.
“The PSU rally is a reflection of where the value creation is happening in the economy,” says Harendra Kumar of Elara Securities India. “The impetus put by the government on Energy, Railways and Defence – is being discounted by the market. The ruling incumbent has ambitious plans for the country in terms of capacity creation in all the above areas and investors are looking at further cues on those fronts.”
The other two PSU stocks that saw a fall in promoter shareholding were in the banking space, as lenders – Bank of India and Indian Bank – raised capital through qualified institutional placement of shares.
The QIPs of both the banks was a big success as it received overwhelming response, suggesting the confidence that institutions now have on PSU lenders with respect to growth and balance sheet.
Bank of India raised Rs 4,500 crore through QIP, while Indian Bank mopped Rs 4,000 crore.
Even after the stake dilution, shares of both the lenders gave double-digit returns of up to 25% so far in 2024.
The rally in PSU bank stocks notwithstanding, brokerage firm Jefferies sees re-rating potential of 25-30% on PE/PB valuations in the stocks.
Moving from the public sector names to private sector ones, Easy Trip Planners was one stock which saw a reduction in promoter holding in the December quarter, but the stock clocked more than 17% gains in two months, driven largely by the Ayodhya Ram Mandir theme.
Sterling and Wilson Renewable is another stock, where promoter holding came down sharply, as the company raised funds through a QIP. The company, which is 40% owned by Reliance Industries Ltd’s subsidiary Reliance New Energy, raised Rs 1,500 crore through QIP.
While promoter stake sale traditionally doesn’t bode well with investors, they seem to now look beyond and ride on the market momentum.
(Data inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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