PSU issues have traditionally created excellent value for the ‘buy and hold' kind of investor rather than the one looking for mere listing gains.
Analysts say PSUs have always made money for investors, but in the long-term, over a period exceeding five years (see table). “Take the case of NMDC. It was divested through a bidding process by the government on December 28, 1993 at an average price of Rs 83.52 and is now at Rs 287.4. Considering the dividend yield the stock has performed very well,” said Mr Manish Laddha, Director, Ideas 1 {+s} {+t} Research.
There is also a feeling among market experts that one should pick those PSUs that have minimal government intervention in policy matters. “Oil marketing company stocks took a hit for three years because the Government was reluctant to bite the bullet on oil price deregulation,” said Mr Varun Goel, AVP & Fund Manager, PMS, KC Securities.
“Though PSUs are perceived as inefficient, the markets seem to have woken up to the reality that these companies hold tremendous intrinsic value,” he added.
The performance of the recent PSU offerings is still being measured in the short term, analysts said. Since June 2009 a total of eight PSU issues have hit the capital market — four IPOs and four FPOs by EIL, SJVN, NTPC, REC, United Bank, NMDC and OIL India. With the exception of EIL (16.4 per cent) and REC (18.9 per cent), no other issue has seen double digit appreciation on the day of listing.
To add to the Government's misery, retail subscription was far below expectation in NMDC (0.22 times) and NTPC (0.1646 times).
Key challenges
The problems faced by PSU issuers since last year include very low broker commissions, small lead time for marketing the issues, bunching of issues and small ticket sizes for retail investors. Faced with these challenges, the Department of Disinvestment got cracking and held meetings with brokers in Mumbai, Ahmedabad and New Delhi in April, Kolkata in July, Indore in August and Chennai in September this year to receive feedback and insights into what went wrong and what could be done.
Changes in approach
There has been substantial change in regulation in terms of implementation of ASBA for all categories of investors, in terms of doing away the 10-per cent rule for QIBs, bringing down the number of days from issue closure to listing to 12 from 22 and QIB book closing, since January 2010, a day prior to all other books. Finally, PSU issuers have started giving five per cent discount for retail investors as a norm.
After Coal India, follow-on/public public offers of behemoths such as Shipping Corporation, Power Grid, Manganese Ore India Ltd, Hindustan Copper and SAIL are in the pipeline.
They would come out with a combination of an offer for sale and a fresh issue of equity and are expected to mop up the sum envisaged (Rs 40,000 crore in FY-11) by the government's disinvestment programme.
No comments:
Post a Comment