Returns from PSU Equity Offerings
October 1, 2010
Analyzing the Performance of PSU stocks on listing (28 companies) , the returns look reasonably good. 17 Companies have offered >10% returns, 10 companies >20% returns and only 2 companies have seen erosion between 0-8%.
It is worth noticing, that although returns have not been exorbitant, a majority of offering have provided over 10% listing gains (17 out of 26 companies) with 10 companies managing over 20% listing gains which are not mediocre by any means.
It is important to notice that of the 3 companies with negative returns as on today; all of the 3 companies have tapped the market during the last 13 months (NHPC, NMDC and SJVN). If we exclude these companies considering their limited performance history; we arrive at a conclusion that ALL PSU offerings in the medium to long term have offered significant positive returns irrespective of listing day performance.
17 companies out of the 25 PSU offerings which provided positive returns have generated over 100% returns. 13 companies have delivered over 200% returns.
TO sum it up, if investors hold on to PSU offerings, history suggests that probability of multiplying their returns is significantly high. Moreover, such offering also safeguards investor wealth, and provides sense of security as being offered by the GoI.
Coal India Ltd. is scheduled to open on October 18, 2010. Don’t Miss the opportunity this time if you have missed till date.