PSU stocks still on shaky ground as call for privatisation intensifies

Skirmishes at the border between India and China have put the spotlight on state-owned firms. This is because many business leaders have asked for the privatisation of behemoths like BHEL and BEML to enable India Inc to compete with Chinese firms in the capital goods space.

The call for privatisation has, however, come at a time when PSU firms have witnessed a sharp drop in their stocks and market capitalisation, and continue to underperform the broader market. In the last 10 years, the combined m-cap of the top 17 PSUs that were part of the BSE200 index (excluding banks and financials) has declined 41 per cent, compared to a 91 per cent rise in the Sensex.

These 17 PSUs had a combined m-cap of Rs 7.7 trillion as on June 17, down from Rs 13.04 trillion as of April 2010, and Rs 12.2 trillion as of June 2019.