Investors are flocking to PSU stocks again, but can they retain the momentum?


The total market capitalization of the PSUs where the government holds more than 51% was Rs 16.9 lakh crore as on December 29 compared with Rs 12.5 lakh crore at the end of June 2020.

Synopsis

Over the past decade, the BSE PSU index contracted by 38% whereas the benchmark Nifty 50 rose by 128%.

ET Intelligence Group: Cheaper valuations relative to their return ratios have attracted investors to the PSU counters over the past few weeks. The current trailing price-earnings (P/E) multiple of the BSE PSU index at 11 is at 40% discount to the 10-year average valuation and at a decade high 67% discount to the Nifty’s P/E. Over the past decade, the BSE PSU index contracted by 38% whereas the benchmark Nifty 50 rose by 128%. However, due to

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