Shares of public sector companies are on the rise. Bharat Heavy Electricals (BHEL), Power Finance Corporation (PFC) and REC rose to their record high levels today in a market that otherwise ended flat. Last week, Ircon International and Indian Railway Finance Corporation hit their 52-week high levels.
Analysts said many more PSU( Public Sector Undertakings) stocks will set records in the coming days as the cyclical trend is in their favour. They further observed that PSU stocks will deliver good returns as prices are likely to double in the short- to medium term. The renewed investor sentiment in state-owned companies is also attributed to enhanced capital expenditure which will benefit these companies.
BHEL rose 10 per cent 52-week high of Rs 82.25 on hectic buying today. The stock pared some of the gains to end the day at Rs 81.95.
BHEL in the year-to-date period has risen 35.12 per cent against a 16.20 per cent jump in BSE Capital Goods index and a 5.26 per cent gain in broader index Sensex.
PFC gained close to 6 per cent to record high of 136.90 on BSE. The company had reported a net profit of 2,998.75 crore for the September quarter of this fiscal on a revenue of 10,078.11 crore.
A navratna company REC, formerly Rural Electrification Corporation, hit a record high of 109.85 on frenetic buying. The stock recorded heavy volumes too as more than 52 lakh shares exchanged hands on BSE.
Last week, another government-run infrastructure finance company, Indian Railway Finance Corporation (IRFC), had set a new 52-week high of Rs 28.70.
IRCON International, a railway stock, too jumped last week to its 52-week high Rs 62.10 on BSE.
Railway stocks got a boost as they will reap the fruits of government's enhanced capital expenditure on infrastructure, stock brokers had said.
"Railways stocks like IRCON, IRFC, RAILTEL will be in traders' radar as the government intends to hike its capex by 19 per cent and these stocks will benefit the most," said Rahul Sharma, Research head, Equity 99 advisors.
Observing a cyclical trend in PSU stocks, Bonanza Portfolio's Research Head Vishal Wagh said this cycle has turned bullish since the lows of 2020 and more of them are headed to set record high levels.
"There is a 10-year cycle in PSU stocks. From 1990-2000, there was a majorly bearish trend. From 2001-2010, there was a majorly bullish trend, and from 2011-2020 there was again a bearish trend," he noted.
The said cycle is observed in more than 90 per cent of the PSU stocks, keeping a one-year plus-minus.
"Now, this cycle is slowly gaining in momentum. Down the line, we will see many PSUs hitting 52-weeks high," he said.