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State-run companies Cochin Shipyard Ltd., Housing & Urban Development Corporation (HUDCO), Rail Vikas Nigam (RVNL) and IFCI have outperformed the broader market in the first five months of 2024, with their shares more than doubling in value.
Cochin Shipyard's net profit surged by over 157% in 2024, driven by a 62% growth in net revenue. The company's strong order book and improving fundamentals have attracted investors.
HUDCO, with its focus on affordable housing and urban infrastructure, is considered a niche player in the financial sector. Analysts expect the company to benefit from a potential NPA downcycle in the coming years.
RVNL, a leading player in the railway infrastructure sector, has also witnessed strong growth in its order book and revenue. The company's expertise in executing complex projects has positioned it well to capitalize on the government's focus on infrastructure development.
IFCI, a leading financier to the infrastructure and manufacturing sectors, has also delivered strong returns in recent years. The company's prudent risk management and focus on project finance have contributed to its resilience.
While the government holds a majority stake in these companies, all four have adequate free float in the market. This has allowed investors to participate in their growth story and benefit from their strong fundamentals.
The outperformance of these four PSUs underscores the growing investor interest in state-owned companies. As the government continues to prioritize infrastructure development, PSUs with strong execution capabilities and robust order books are likely to continue attracting investor attention.
In contrast to the broader market, which has witnessed modest gains, the Nifty PSE Index, which tracks the performance of state-owned companies, has rallied by as much as 38% since January 2024. This outperformance reflects the positive sentiment towards PSUs and their potential for value creation.
Going forward, the performance of these PSUs will depend on their ability to execute projects efficiently, manage costs, and adapt to the evolving market landscape. Investors should carefully assess their financial performance, order books, and management quality before making investment decisions.
Source: RVNL, Cochin Shipyard: Four PSUs that doubled in 2023 and are already up 100% in 2024