All good points and depending on one’s investment time horizon and risk apatite, no one is right or wrong in the market.
As far as I’m concerned I generally don’t go as much by narrative or future speculation as the management pedigree, their ambition and execution skills. Most of the PSU’s tend to have none. Their CEOs and top leaders rotate every 3-4 years and merit is not always the first criterion in their selection. They will only get as ambitious as government allows them to and having worked in a PSU like ONGC at the start of my career I know they are miles behind the private players like Reliance in execution.
And that will never change regardless of whichever government comes into power. And since government actions (OFS, price regulations, dividend increase etc) are always an overhang for PSUs, their multiples will always be lower than their private counterparts.
As PSU stocks have done very well in last 2 years, many investors who got into market in 2022 and invested in PSUs have reason to feel good about them. Recent price action has more or less closed the valuation gap and from here on any further price action will now be driven by earnings.
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