Government’s continuous disinvestment

The Government’s continuous disinvestment program through ETFs and other ways has kept the valuations of PSU companies at very low levels. The Government should find an alternative route to hand over a major chunk of stake to a private player, get them on board to mange the company professionally. So, Government can remain a passive shareholder and let the
private sector do the management. This is the best way if some of the top well managed corporates can be convinced to take a strategic stake.

However Government is doing the disinvestment in bits and pieces destroying shareholder value as of now. Even the strategic disinvestment initiative for BPCL, Concor and more is taking a very long time. PSUs like GAIL, Powergrid, OMCs, Power PSUs, Metal PSUs are quoting at abysmal prices, much much lower than their asset value or sector PEs or any other valuation model. There is opportunity here, if the strategic disinvestment gets going for a few ones and then we have a series of further strategic disinvestments.

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