After the Union Finance Ministry updated guidelines for dividend payments, share buybacks, and stock splits at state-run businesses to enhance capital management and support the performance of their stocks, several PSU stocks, including Indian Railway Finance Corporation (IRFC), Bharat Heavy Electricals (BHEL), and Power Finance Corporation (PFC), saw robust increases, rising as much as 6% in morning trading on the BSE on Tuesday, November 19.
The Indian Renewable Energy Development Agency (IREDA), Housing & Urban Development Corporation (HUDCO), Cochin Shipyard, and IFCI all saw their shares rise to 5%.
Stocks increased 2–6% during the session, while the BSE PSU index increased 2%.
“PSU stocks are trading in the green today after DIPAM revised the dividend, buyback and bonus issue norms for CPSEs and included financial sector CPSEs in the norms,” said Manish Chowdhury, the head of research at StoxBox.
As previously reported by sources, the government has changed the rules governing dividend payments, share buybacks, and stock splits for PSUs (public sector undertakings) to enhance capital management and support the performance of their stocks.
According to recommendations released Monday by the Department of Investment and Capital Asset Management (DIPAM), the government has requested that state-run non-banking financial companies (NBFCs) pay a minimum yearly dividend of 30% of their profit, subject to legal limitations.
Low-level buying after sharp selloff
Since October, most PSU equities have seen steep declines due to profit-booking in the face of high valuations and poor Q2 earnings. Indraprastha Gas, CPCL, MOIL, Gujarat Gas, and IOCL are notable decliners; between October 1 and November 18, their shares fell between 26% and 42%.
In the same time frame, stocks like SAIL, IREDA, SJVN, RVNL, BPCL, GAIL, Hindustan Copper, and NBCC have dropped by more than 20%.
“Several PSU stocks were beaten down heavily in the recent past. They are now rising, maybe due to lower-level buying,” said Saurabh
Jain is the assistant vice president of research (retail equities) at SMC Global Securities.
Speculations about OFS, and QIPs lift PSU banks
Amid growing rumours that the government will sell its minority share in a few PSU banks, several PSU banking stocks are increasing.
“PSU bank shares are scaling new heights on speculation that the government is to offload its minority stake in Central Bank of India, Indian Overseas Bank, UCO Bank, and Punjab and Sind Bank to meet the mandated minimum public shareholding (MPS) norms of SEBI,” said Atul Parakh, CEO of Bigul.
“The Centre is set to move the Cabinet for stake sale through OFS in four PSU banks with over 93-98 per cent stakes. Alternatively, QIPs can be resorted to by these banks; their fundraising potential may go up to ₹30,000 crore,” Parakh said.
“Five out of twelve public sector banks will have to comply with the 25 per cent public shareholding norm by August 2026. The dual advantage that capital raising through QIPs provides to the benefit of banks by boosting the capital base and net worth, coupled with the ability to toggle between OFS and QIP routes depending on market conditions, is driving investor interest in these stocks,” said Parakh.
