PSU Stocks: Shares of government companies listed in the Indian stock market have given strong returns to their shareholders after the Covid period. Whether we talk about defense stocks or railway stocks or shares of banks or power sector companies. In recent times, especially since the last week of September, these shares have also taken a beating due to selling by foreign investors in the market. But brokerage house Elara Capital has released a report in which the brokerage house said that it is overweight on SBI, NTPC, Bharat Electronics, Coal India, GAIL, BPCL and HPCL and investors should not invest in the stocks of these government companies. It has been advised to do so.
Elara Capital’s Model Portfolio
Elara Capital has included shares of 18 government companies in its model portfolio. This includes SBI (State Bank Of India), Power Finance Corporation, REC and HUDCO from financial sectors. From utility, NTPC, Coal India, NHPC and NLC India, from industrial are Bharat Electronics (BEL), Hindustan Aeronautics and RITES. Energy includes Indian Oil (IOCL), GAIL, BPCL, HPCL and Oil India. NMDC stock from the metals sector is included in the model portfolio of Elara Capital Research.
Elara Capital has said in its report that out of 59 stocks listed on the stock exchange, 18 stocks fit our investment criteria due to policy support, funding, visibility, execution capability and operation efficiency. The brokerage house said, among PSU banks, it is overweight on SBI as it is at par with large private banks on excellent savings deposit metrics.
In the energy sector, Elara Capital is overweight on GAIL and government oil marketing companies HPCL and BPCL. But due to higher share in the sales of petrol and diesel, HPCL shares are more liked by the brokerage houses. Also, the stock of NTPC and Coal India is included in the top picks of the brokerage house. According to the brokerage house, shares of NTPC and Coal India are ready to cash in on the expansion of the thermal asset cycle. Elara Capital is also overweight on GAIL’s share in Oil & Gas PSU stocks.
Strong jump in income of PSU companies expected
Economist Garima Kapoor of Elara Capital has prepared a report on public sector companies titled India PSU Cycle: Resurgent & Secular. In this report, he said, we remain structurally and cyclically positive on the PSU sector as we expect a strong improvement in the asset cycle, which will lead to earnings growth for these companies for the next three years. hopefully. According to the report, PSU asset creation has still not reached its peak and the talk of slowdown in the government’s capital expenditure is baseless. According to the note, the capital expenditure pipeline in strategic sectors like defence, railways, electricity remains strong.
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