Indian PSUs: Giant on business, small on stock returns

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Updated: Sep 05, 2017 2:44 PM

The biggest public sector companies in India are very small on stock returns versus their private competitors.

State Bank of India is the largest Indian bank by revenue and asset base. (Image: Reuters)

India business environment incorporates a mix of PSU (public sector undertaking) companies and private firms with major of them listed on the bourses. The big public sector companies such as State Bank of India and ONGC are as huge as they feature in the list of largest Indian companies in terms of revenue. But these state-run companies fail to cheer if their stock returns are taken into consideration versus the private peers, such as HDFC Bank and Reliance Industries. We take a look at the revenue for FY 2016-2017 and stock performance of last two years of three PSUs and private companies respectively.

SBI vs HDFC Bank

State Bank of India is the leader in Indian banking industry in terms of revenues but falls behind its private peer HDFC Bank in terms of market capitalisation and returns on stock. The total revenue of SBI for the financial year ended 31 March 2017 stood at Rs 2,10,979.17 crore as compared Rs 81,602.46 crore of HDFC Bank. Over the course of last two years, SBI shares have risen around 20% to the Friday’s close of Rs 277.85 while HDFC Bank had returned around 77% to Rs 1,767.6.

ONGC vs Reliance Industries*

Oil and Natural Gas Corporation is the largest oil producer in India but this PSU lags behind Mukesh Ambani led oil-to-telecom conglomerate Reliance Industries in terms of revenue and in stock returns also. ONGC clocked a revenue of Rs 84,560.24 crore for the financial year ended 31 March 2017 as compared to Reliance Industries total sales which stood at Rs 2,50,734 crore. On the other hand, Reliance Industries shares had returned about 89% to Rs 1,610.1 while ONGC shares have risen about 6% only in the last two years.

SAIL vs Tata Steel

Steel Authority of India Ltd – the largest steel producer in India is behind the Tata Group’s steelmaker Tata Steel in revenue and in stock returns too. The revenue of SAIL for the financial year ended 31 March 2017 was at Rs 44,998.02 crore versus Rs 48,407.48 crore of Tata Steel. Since September 2015 the shares of SAIL have risen around 34% to Rs 62.6 while Tata Steel shares had nearly tripled in the same period. The stock of Tata Steel had returned around 196% to Rs 651.2.

*The comparison is not on a like for like basis as ONGC majorly deals in production and marketing of oil and gas substituents while Reliance Industries is a much-diversified group having business interest ranging from oil, textile, retail and recently ventured into telecom sector with its flagship brand Reliance Jio Infocomm.

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