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10 PSU Companies in which Government is planning diversification

 From a long time the news of diversification of Coal India and Air India was in headline. Now, the name of some more Government companies are coming out in which Government is planning to reduce its stakes. According to the reports, in some of these companies Government may reduce its stakes to less than 50%, Which directly means that Government is planning to Privatize these companies. 

Psu companies in which government is planning diversification





Privatization is a good sign for companies shareholders as in public maximum shares are hold by government and a small part of shares are traded on stock exchange. Also, the business of the public companies are not doing well which results in no returns or fewer returns in public companies. After, private players enter the companies investors expects good returns and good business growth due to intelligent and experienced boards and other members.

After this news came out, the share price of these companies have recorded a good jump. Such type of jump we have seen in the past In public sector banks, which prices were risen by 15-20 percent due to news of privatisation. e.g. Bank of Baroda (BOB), Bank of India (IOB), Central Bank of India (CBI) etc. Also, we are seeing every day upper circuit in PNB Housing Finance due to entering of Private players. The share price of PNB Housing finance have doubled in a week. 

In this article we are going to cover 10 PSU companies in which Government is planning diversification. 

Table of Contents:

List of PSU Companies in which Government is Planning Diversification:

SEBI NEW RULES AND REGULATIONS WHICH YOU HAVE TO KNOW:


The SEBI has made it mandatory for all the companies listed in any stock exchange to maintain a adequate shareholding pattern. According to this rule's promoter can hold only 75% shares of the company and not more than it. The company have to maintain this pattern before completion of 4years by listing on stock exchanges. 



1) Neyveli Lignite Corporation Limited (NLC): 


NLC India Ltd was incorporated in the year 1956. The company is engaged in mining operations and power generation. In NLC Government holds 79.2% stakes and remaining part is trading in stock market. As per the new rules and regulations of the SEBI, the Government have to reduce its holdings to 75%. But, as per the reports Government is planning to Privatize the NLC. 

2) Housing and Urban Development Corporation of India (HUDCO) :


The HUDCO was incorporated in the year 1970. In HUDCO Government holds  89.81% stakes and the managerial rights are in the hands of Ministry of Housing and urban affairs. 

The company deals in finance sector. It provides financial assistance for infrastructure development. Also, company is providing consultancy services. 

3) Metals and Minerals Trading Corporation of India (MMTC):


MMTC was established on 26 September 1963. The company is engaged in trade business. The company deals in Import an export of various mining commodities such as coal, iron, agro, ore various types of metal, industrial products, different types of chemical and agricultural fertilizers etc. 

The company is one of the highest foreign exchange earner for India. In MMTC Government holds around 89.93% stakes which government is planning to reduce it

4) Satluj Jal vidyut Nigam Limited (SJVNL):


SJVNLWas incorporated on May 24,1988. The company is works in hydroelectric power generation business. The company have aggregate power generation capacity of 1912 MW. This is a joint of Indian Government and Government of Himachal Pradesh. 
 
SJVNL is now a listed company witb equity contribution of 59.92%, 26.85%, 13.23% respectively from Indian Government, Himachal Pradesh Government and public under its share holding pattern. The aggregate stake of Government is 86.77%.

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5) Kudremukh Iron, Ore Company Limited (KIOCL):


The KIOCL was established in 1976. The company is works in mining business. This is the wholly subsidiary of Government of India. Government holds almost 100% stakes of the company. The ownership of the company is in the hand of Ministry of  Steel, Government of India. 

6) General Insurance Corporation Of India (GIC):


GIC was incorporated on 22 November 1972. Its headquarter is in Mumbai. As name suggest company the company works in insurance sector. Before entering of foreign players in insurance sector company enjoys the monopoly in its business. The Government holds 85.78% stakes in the company. The ownership of the company is in hands of Ministry of Finance, Government of India. 

7) New India Assurance Limited (NIA) :


NIA was founded by Dorabji Tata in 1919. The company deals in insurance sector. The company offers services such as general insurance,health insurance,vehicle insurance,marine insurance,Property insurance and crop insurance etc. The government holds 85.44% stakes in the company. It is owned by ministry of finance, Government of India. It is the largest Indian Government owned insurance company of India. 

8) Mazagon Dock Shipbuilder (MDL) :


Mazagon Dock limited is a shipyard, Mazagon. The company operates in manufacturing of warships and submarines for Indian Navy. The company also manufactures tankers, passenger ships, cargo bulk carriers and ferries. 

The company was incorporated in 1934. The Government holds 84.83% stakes in the company. 

9) Indian Railway Finance corporation Limited ( IRFC):


IRFC is recently listed on stock exchange on January 29, 2021. The company was incorporated in 1986. The company is providing finance for railways construction works. The company is subsidiary of Indian Railways. The government holds around 84% stakes in IRFC. The Government is planning to reduce its stakes to 75% through OFS. 


10) Railway Vikas Nigam Limited (RVNL) :


RVNL is the wholly owned subsidiary of Indian Railways. The company is works in infrastructure development of railways. The company was incorporated in 2003. The Government have already reduced its stakes from 87.8% to 78.21% by OFS in same year. AS per the rules more 3% of Stakes government have to reduce. 

Financials of the companies:


Company Market
Cap
PE ROE EPS
NLC 8,853cr 8.32 11.23% 7.74
HUDCO 10,219cr 6.84 14.66% 10.39
MMTC 8,835cr NA -26.57% -2. 87
SJNL 10,983cr 7.74 14.38% 4.19
GIC 35,202cr 17.84 -0.75% 12.20
NIA 28,708cr 18.79 4.29% 10.14
MDL 4,614cr 10.75 15.18% 20.62
IRFC 30,972cr NA 14.90% NA
RVNL 6,375cr 7.45 15.84% 4.31




The news is came out from reports it is not confirmed by the government. If Government gives the confirmation of this news then we can see a great jump in these companies stocks especially in the above 7 companies in which government may reduce its stakes to less than 50% and in other 3 companies government only fulfill the criteria of SEBI. So, keep watch on these stocks and news related to these stocks. 

I hope you like this article, to read such articles be in touch with us. If you have any query write in comment box. Also,you can contact us by filling contact form given below. 

Happy Investing 😃! 





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