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Indian stock markets have reached record highs, and some Gujarat-based PSUs have done better than the Sensex and nifty indices.
In three years, the Sensex and the Nifty are expected to return 75%, but Gujarat’s public sector undertakings have returned up to 342%.
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Gujarat Mineral Development Corporation (GMDC), Gujarat Narmada Valley Fertilisers and Chemicals Ltd. (GNFC), Gujarat State Fertilisers & Chemicals (GSFC), and even Gujarat Alkalies are all PSUs that do well.
During the same time period, other state-run PSUs like GSPL, Gujarat Gas, and GIPCL did not do better than Sensex and Nifty.
Stock market analysts say that earlier this year, the state government revealed a new policy of bonuses, dividends, stock splits, and share buybacks. This made investors more confident in these PSUs and caused their stock prices to rise.
Hitesh Somani, the managing director of a stock research company, explained this by saying, “Most state-owned enterprises (PSUs) have done very well over the past three years, thanks to their growth during the covid period. Those who invested in 2020 are making a lot more money now than those who invested in 2018. In the last three years, GMDC, GNFC, GSFC, and Gujarat Alkalies have all done better than the market.
Gujarat Gas and GSPL both have better five-year returns than their three-year returns. Somani also said, Gujarat gas has given 201% in 5 years, in contrast to 59% in 3 years, and GSPL has provided 55% in 5 years, in relation to 38% in 3 years.
The growth of Gujarat PSUs has also been helped by the sectoral growth of many of the state PSUs. Gunjan Choksi, the director of a stock brokerage company, said, “Gujarat PSUs are mostly in the chemical, fertiliser, mining, and energy businesses, and they have had good business cycles.” Long-term investors like these companies because they have strong foundations and pay out good dividends.
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