Sekhar, in his Youtube channel ithoughtwealth, said this year’s disivestment would be very different from those done in the past and that the public sector undertakings are set to see a perception reset.
The Chief Ideator at the Chennai-based iThought Advisory said wherever the government is undertaking an outright divestment or transfer of management control, there would be some interesting probabilities. The ESG trade has affected PSU stocks, but even the West has started rethinking over its shortcomings amid a rise in cost of energy,” Sekhar said, adding that it may have a ruboff on the valuations of PSU stocks.
“We are set for a perception reset and we expect markets to view the PSUs afresh. If the divestment process is delayed, all bets are off. But if we see some success in one or more companies, the market is going to revise its opinion. The prospect of a positive outcome is higher. We are heading for an interesting phase and one must keep an open mind. Look where the change is imminent and a rerating is a distinct possibility,” Shekhar said.
Sekhar said the way the government manages OFSes will be critical.
He said ONGC and Coal India, in the past, were victims of ETF issues, but now the government has suggested that it would go slow on stake sale via ETFs.
“The ETF threat to valuation is slowly receding, but the government needs to take out the OFS process in such a way that it does not depress shareholder value because of supply overhang,” Sekhar said.
In the case of Air India, Sekhar said, the government is selling only the airline with its planes and other aviation-related assets, while other Air India assets will be moved to another undertaking, whose value will be monetised later. “We would see the sale of just the airline business, with the people and the goodwill,” he said.
Sekhar said the BPCL sale process is also at a fairly advanced stage and Concor divestment is also progressing as per plan.
“The government is also planning to sell stake in a few companies in an interesting way, a case in point is the proposed 26 per cent stake sale in defence companies, along with management control,” he said.
“We are set for a new ownership entering several PSUs, which will eventually be able to create better shareholder value by improving operating metrics of PSUs,” he said.
