CPSE index at 3-year high; REC, PFC, CIL, Power Grid up 5%

CPSE index at 3-year high; REC, PFC, CIL, Power Grid up 5%

Shares of public sector undertaking (PSU) companies were in focus as the S&P BSE CPSE index rose to a three-year high after a strong rally in REC, Power Finance Corporation (PFC), Coal India and Power Grid Corporation. percentage in an otherwise weak market.

At 11:14 am, the S&P BSE CPSE index was up 2.3 per cent, while the benchmark Sensex was down 0.45 per cent. The CPSE index was trading at its highest level since June 2018.

The S&P CPSE Index is designed to measure the performance of Central Public Sector Enterprises (CPSEs) listed on the BSE. CPSEs are companies in which 51 percent or more of the direct holding is with the Central Government of India.

Shares of Oil and Natural Gas Corporation (ONGC), PFC, Coal India, Indian Oil Corporation and NTPC were trading at their respective 52-week highs on the BSE from the CPSE index.

ONGC hit a new 52-week high of Rs 142.45, up 2 per cent, amid a rally in global natural gas prices. Shares of state-owned electric utilities company NTPC also registered a 52-week high at Rs 132.10, up 4 per cent on the BSE in intra-day trade on Tuesday, after the company confirmed that it has sold under Central Public Sector Undertakings. 1.9 GW solar projects have been won. Undertaking (CPSU) Scheme.

Coal India rose 5 per cent to hit a 52-week high of Rs 176.30 on a better outlook. The stock has gained 26 per cent in the past one month, compared to a 7 per cent rise in the S&P BSE Sensex. Coal India dominates India’s coal mining sector and the scenario is unlikely to change in the near future. According to analysts, even after the Indian government opens up the coal sector to private commercial mining, the coal supply ratio from Coal India is likely to dominate the Indian market.

“Demand has improved with coal demand reporting 33 per cent year-on-year growth for 1QFY22. With offtake and realizations improving, we see operating leverage at play in FY22. Against any further downside shocks. Regardless, we expect coal profitability to recover (+24 per cent YoY) in FY22E. The capex run-rate is likely to increase in the near term, but higher remittances and some normalization in receivables should aid cash generation and Dividend (dividend yield: 12 per cent) should be maintained,” brokerage firm Motilal Oswal Financial Services said in its June quarter results update.

According to a report in Business Standard, the National Land Monetization Corporation will soon be set up under the Companies Act and will be 100 per cent owned by the government. The entity will be able to rent, lease and develop assets to monetize them for a fee.

Apart from renting and leasing land and other assets, new Special Purpose Vehicles (SPVs) for monetization of assets of public sector enterprises may also get powers to acquire and develop on a case-by-case basis . As the SPV will have the power to acquire and develop the idle land assets of PSUs which cannot be sold, it will consider converting such land into revenue generating and financially viable projects, as may be prescribed. that has been suggested in the report. Click here for the full report

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