Saturday, September 24, 2011

PSU Stocks

Long long ago I used to travel in my company bus and I had a companion and we would speak about shares and mutual funds, at that time I was not into shares.
He once said, “Sundaram has launched PSU find”
I replied, “But how can anyone buy a PSU, it’s Govt company and they cannot really work only for profit”
He replied, “PSUs have good cash flow, stable business and many are monopoly”
Then why should Govt sell it, Govt was initially planning to sell sick units but now they are selling just about everything.
There are many star performing PSUs with Navratna, maha ratna status, but its still a govt company and it will have bureaucracy and they will not be as nimble as pvt company.
Govt is still a major stakeholder and they will be taking decisions based on what is good for nation, lets say the profit is low, they will not restructure the organization, they will not lay off. Lets say 1 of the vertical is a losing business, they might not shut it down. Govt will be worrying about communist and vote banks.
But, PSUs are still giving dividend, yes they are, but its may be because of the pending FPOs
Its good to buy Govt bonds, but not PSUs.