The Biz Reporter

Srinagar, Jan 15: Public sector undertakings (PSUs) have experienced significant market value erosion, with stocks plummeting by ₹16.55 lakh crore from their August 2024 highs. This marks one of the steepest declines among large company groups on Dalal Street, as investors adjust positions amid concerns over steep valuations.

Major PSU entities including Cochin Shipyard, Garden Reach, and MMTC have seen substantial drops in their stock prices. Cochin Shipyard fell 44.6% from its August peak, while Garden Reach and MMTC declined by 38.8% and 36.6% respectively. Other significant fallers include Rail Vikas Nigam, BHEL, and SCI, with PE ratios ranging from 43.4 to 154.1.

“The recent correction has cleared the excess, making valuations have been reset to highly sought after driven by their low valuations, cash-rich status, high dividend yields, and low float,” noted Runal Mehta, associate director at Equirus.

The decline has particularly impacted the PSU bank sector, with most public sector banks recording notable drops. Analysts and institutional investors have begun reassessing their exposure to lending businesses, including PSU lenders, in light of these developments.

This market correction comes amid broader concerns about valuation sustainability and business environment changes affecting the public sector landscape. However, experts suggest this reset might present new opportunities for investors looking at fundamentally strong PSU companies.