New Delhi: The valuation of Public Sector Undertaking (PSU) stocks has become a concern for retail investors. As the sector has rallied so much in the past, investors are worried about whether the industry has made its high or not at least in the near term. Small investors are now desperately looking for undervalued PSU stocks to invest in. To address such concerns, we spoke to Kishore Ostwal, CMD, CNI Research. According to whom, despite of the meteoric rise in share prices, the PSU stocks are still undervalued. There are still gems that retail investors can cherry-pick from this sector.
Sail is undervalued
According to Ostwal, despite of the phenomenal rise in share prices, the PSU sector still has cases of value unlocking. He said, “PSU stocks are not at all overpriced.” He gave examples of Maharatna companies, Steel Authority of India (Sail) and Bharat Petroleum Corporation Limited (BPCL). Throwing light on the low valuation of Sail, Ostwal, said that the steel manufacturer’s iron ore production capacity is not priced in its current share price. Ostwal said, “SAIL has ore mines equivalent to NMDC or TISCO which is not in the price as of now.” On an average, the steel manufacturing giant’s iron ore capacity is 19 MTPA. Plus, it operates eight iron ore mines in the country.
On Monday, the company’s scrip opened at Rs 153 apiece on the Bombay Stock Exchange (BSE). In the last six months, the stock has run up 51 per cent. But it’s still 16 per cent lower than its 52 Week (Wk) High of Rs 175.
BPCL’s capex is not priced in
Ostwal also sounded optimistic about the valuation of another Maharatna company, BPCL. According to him, the old marketing company’s future operations are not fully priced at its current price. Highlighting the company’s capital expenditure (capex), Ostwal said, “Look at BPCL, the company is doing capex of Rs 1.75 cr and it is has announced bonus issue of 1:1 also.” According to Ostwal, “BPCL’s capex should bring Rs 5 lakh crore business over period of time. This is not reflected in price.”
BPCL’s bonus issue’s record date is June 21, 2024. On Monday, BPCL opened at Rs 602 apiece on the BSE. The stock is still 13 per cent lower than its 53 Wk High of Rs 687.
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PSU stocks to buy: CNI Research, CMD, Kishore Ostwal, has said that BPCL and Sail are still undervalued. He added, that, the PSU stocks are not at all overvalued despite the meteoric rise in the past. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
