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Disinvestment-bound PSU stocks rally after Air India privatisation bid; BPCL, Container Corp shares gain

PSU stocks bound for disinvestment were trading with gains on Monday as investors cheered the long-pending Air India privatisation with hopes pinned on more such disinvestments soon.

In her Union Budget 2021-2022 speech, Finance Minister Nirmala Sitharaman had listed several PSUs that the government had targeted to divest this fiscal year. (Image: REUTERS)

PSU stocks bound for disinvestment were trading with gains on Monday as investors cheered the long-pending Air India privatisation with hopes pinned on more such disinvestments soon. Shares of Bharat Petroleum Corporation of India (BPCL) — another PSU firm marked for divestment — jumped 1% to trade at Rs 454.80 per share. Container Corporation of India and IDBI Bank stocks were also up in the green. The positive momentum towards PSU stocks comes as the government announced the privatisation of Air India, which will see the national carrier head back to the Tata Group after a 68-year gap. Air India’s divestment marks a major win for the government that had been working to sell the debt-laden carrier for years now.

On the divestment cart

In her Union Budget 2021-2022 speech, Finance Minister Nirmala Sitharaman had listed several PSUs that the government had targeted to divest this fiscal year. These included Bharat Petroleum Corporation of India (BPCL),  Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Limited, among others. From these Air India has now been cleared by the government.

BPCL: The stock price was up 1% on Monday morning to hit a high of Rs 454.80 per share. 10.49 lakh shares of BPCL have been traded on BSE today, above its 2-week average volume of 4.96 lakh shares.

Container Corporation of India: Container Corporation share price soared 3% on Monday to hit an intraday high of Rs 705.7 per share. 2.62 lakh shares of the company were traded on BSE, which is above the two-week average of 0.55 lakh. 

IDBI Bank: IDBI Bank was trading in the positive territory on Monday, hitting an intra-day high of Rs 49.4 per share. The stock was up 2%. 18.56 lakh shares of IDBI Bank exchanged hands on BSE on Monday. 

BEML: BEML stock price soared 4.5% on Monday to hit a 52-week high of Rs 1,584 per share. 

PSU Banks: The Finance Minister had also said that the government plans to divest two Public Sector Banks and one General Insurance company this fiscal year. The Nifty PSU Bank index was up 0.21% today, helped by the Indian Bank and Union Bank of India

PSU re-rating on cards?

Analysts at Motilal Oswal said that, with BPCL, Pawan Hans, Central Electronic Limited, Salem Steel Plant, SCI, BEML, and Neelachal Ispat Nigam Limited already in various stages of strategic divestment, there is likely to be further action on this front in this fiscal year. “It (government) is also looking to come up with EOIs for IDBI Bank, RINL, Concor, HLL Lifecare, PDIL, and IMPCL for strategic disinvestment,” they added. “ We believe this is a positive macro event for India and has the potential to re-rate the PSU disinvestment candidates, which anyway trade at attractive valuations, given the backdrop of a strong rally in the market.”

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