PSU stocks continued with their reign of gains as the market expects that most of these companies have done well in the just concluded quarter.
As a reflection of that vibrancy, ITI (up 5.28% to Rs 14.95), Bharat Electronics (up 4.48% to Rs 192.40), RCF (up 3.47% to Rs 13.40), Bharat Earth Movers (up 3.84% to Rs 59.45), Sail (up 2.76% to Rs 9.30), Shipping Corporation (up 3.41% to Rs 53), Container Corporation (up 1.83% to Rs 220), Gail (up 1.26% to Rs 76.50), Bhel (up 0.72% to Rs 225.25), Nalco (up 0.76% to Rs 73) and MTNL (up 0.91% to Rs 100.15) , all made significant gains in morning trades today.
However, the rise in PSU counters today is largely operator driven, as funds and domestic institutions are off today due to Gudi Padva, a local festival. Operators seem attuned to PSU counters on hopes that these companies will come out with impressive results as well as bring in huge receipts in terms of dividend (for FY 2002-03) for the government.
PSUs like Bharat Earth Movers (BEML) have already come out with impressive provisional results. BEML has shown turnover growth of 17.6% at Rs 1704 crore (Rs 1,675 crore) for fiscal 2002-03 with profit before tax (PBT) at Rs 31 crore (Rs 13 crore). Bharat Electronics recorded its highest turnover rise ever at Rs 2,750 crore (Rs 1,942 crore), up 32% with PBT at Rs 395 crore (Rs 285 crore). Bhel, too, registered a 9% rise in net profit to Rs 511 crore (Rs 468 crore) on a turnover of Rs 7,510 crore (Rs 7,287 crore).
In fact, the Public Enterprises Survey tabled in Parliament indicated that net profitability of public sector undertakings (PSUs) improved 66% to Rs 26,045 crore in 2001-02.
In fiscal 2000-1, net profit from these enterprises stood at Rs 15,653 crore. The survey said that investments in 240 Central public sector enterprises (including ten under construction) went up from Rs 2,74,198 crore in 2000-01 to Rs 3,24,632 crore in 2001-02, an increase of 18.39%. Central public sector enterprises have declared a dividend of Rs 8,067 crore in 2001-02 as against Rs 8,260 crore during 2000-01, a decline of 2.34%. The dividend pay out ratio has, gone down from 52.77% in 2000-01 to 30.97% in 2001-02, the survey noted.
In addition, the Divestment Minister Arun Shourie has stated that the number of asset sales due for approval had increased in recent months. This has also generated interest in PSU stocks on hopes that the divestment process could gather momentum. Dealers say before divestment takes place in some of these PSUs, they may make hefty dividends due to their cash-flush positions. A pointer to that, is the fact that the government asked VSNL to make a huge special dividend to shareholders before its divestment.
However, Shourie added that the government had not set a date for the privatisation panel's next meeting.
Another reason to believe that the divestment processes should catch pace is the reckoning that huge funds are needed by the government to offset its huge deficit. Till January 2003, India's fiscal deficit at Rs 1,12,782 crore, was 83.2% of the Union Budget's estimate of Rs 1,35,524 crore for the entire fiscal (2002-03). In the first 10 months of the previous fiscal, deficit was at 92.4% of the budgeted figure for 2001-02. The fiscal deficit till January works out to 4.4% as against 5.3% budgeted last year.
In the pre-budget Economic Survey, fiscal deficit was estimated at 5.5% for 2002-03, while the government pegged it at 5.6% during the next fiscal. The relatively lower deficit was on account of higher receipts at Rs 1,86,518 crore, although expenditure also climbed to Rs 2,99,300 crore till January 2003. Total receipts during April-January 2002-03 was 67.9% of the budgeted Rs 2,74,785 crore, which is an improvement over 61.8% in the same period of 2001-02.
Earlier, the government planned to mop up substantial revenues from its divestment programme, but sustained roadblocks, political as well as from labour, seems to have stalled the programme . The government, the largest shareholder in PSUs, sees dividend as a sort of means to offset the lack of funds generated as a result of its delayed divestment prgramme.
Between 28 February and 1 April 2003 (since the budget), the BSE PSU index lost 6.09% or 103.84 points to 1,599.13 to 1,702.97.