While I used to avoid PSU stocks as risky due to reasons which all of us talk about such as inconsistent growth in revenue and profit, frequent Govt policy changes etc,
However, over a period of time in the market, i realised that stock investment itself is risky whether it is PSU or non- PSU stock.
Even best of the reputed pvt corporates (Non-PSU stocks) with very high P/E also had Corporate Governance issues , tax raids , CFO / Auditor resigning all of a sudden , Inconsistent growth in revenue and profit qoq/yoy and such events were leading to steep fall in share prices. There are many such examples- not taking names here.
Moreover , in spite of excellent growth in revenue and profit , dividend yield of such corporates are extremely low. And some of them were not at all paying dividend over several years
So , i realised there is no reason to be happy with a sound balance sheet.
keeping this in mind I started investing in select PSU stocks with high dividend yield since Covid days of 2020.
Apart from dividend yield , I was trying to identify PSU stocks which have potential for capital appreciation.
During this process , identified some PSU stocks made 3 baskets- one for Defence , another for Railway and the 3rd one for Renewables ( my renewables include PFC & REC)
Happy to share that the entire PSU basket which consists of 30% of my portfolio has given me 3X return ( capital appreciation only - dividend additional) over last two and half years which I am trying to prune now.
In my view , If the Govt continues with it’s current policy of Capex spends for infrastructure building , sticks to made in India theme, the PSU stocks may continue to do well. However , the valuations may not sustain if the Govt makes a u turn in its policy.
Disclaimer: Not a buy or sell recommendation. please do your own assessment before investing.
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