Mr Ramesh Damani has been very big on PSUs and people call him PSU bull. But then he has made good money on a very few PSU stocks like BEL who have been consistent compounders and not 1-2 year wonder. But most of his wealth has come from stocks like Infy, Bajaj Finance etc. Even he himself has highlighted execution and capital allocation problem in PSU companies and advised to be very selective in PSU even if valuations are cheap.
CEO change in PSU companies is always motivated by desire to bring new people but it’s often political. It’s not always the best guy who is getting the top post. We also see CEOs’ being changed after 1-2 years. Plus many of these top guys are near their retirement age and they really have no motivation to change things around.
Again if we build narrative for PSU based on two year performance of these stocks and if that’s my time horizon and I have made my money then I will be absolutely right.
If I am looking to be in the market for a very long time and compound my wealth, I would be careful with PSUs.
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