Mumbai: India's state run companies were trading higher on Monday after government approved sale of its entire shareholding in four public sector companies.
A Reuters report said that the government plans to sell its stake in Bharat Petroleum Corp, Shipping Corp Of India, THDC India and NEEPCO. The government will also sell 30% stake in Container Corp Of India, Reuters report added.
The government currently holds 53.3% stake in BPCL and with current market price center may get around ₹54,000 crore. From SCI where government holds 63.8% stake, will get ₹1,283 crore while from CONCOR it will get ₹6,056 crore from 30% stake sell.
The stake sell will help the government to keep its fiscal deficit target in check after weak tax revenues and expected loss of ₹1.45 trillion due to cut corporate tax.
"We see limited upside to BPCL stock, post the recent sharp outperformance against other OMCs, which effectively prices in potential rerating of valuation multiple from strategic privatization; any further upside will be contingent on improvement in earnings that may take time to percolate. A non-strategic privatization or transaction like ONGC-HPCL may optimize time/value equation for the government but may lead to de-rating of the stock", said Kotak Institutional Equities in a 25 September note. The brokerage has reiterate its sell rating amid adverse risk reward balance.
Among PSU stocks, Shipping Corp of India rose 7.8%, BPCL gained 6.6%, Hindustan Petroleum Corp 5.8%, MRPL 4.7%, RCF 4.3%, Indian Oil Corp 4.1%, Concor 4%, ITDC 3.3%, MMTC 3%. BSE PSU Index rose 1.6%.
