No major spark in divestment-bound PSU stocks ahead of Budget, 5-year history shows

The start to the new year won’t be one to cheer about for shares of divestment-bound public sector companies if their historical performance a month ahead of the Union Budget is anything to go by.

Some of the big-ticket divestment plans of the government include Bharat Petroleum Corporation Limited (BPCL), Shipping Corporation of India, Container Corporation of India (CONCOR), IDBI Bank, and BEML, most of which, are stuck due to multiple reasons.

Shares of BEML, BPCL, and Mahanagar Telephone Nigam have given negative returns in the 1 month period prior to the Budget in four out of the last 5 years, data by Ace Equity showed.

Shares of IFCI and Shipping Corp of India have given negative returns in the 1 month period prior to the Budget in the last 5 years.


The year 2022 was a good one for the public sector pack as several pockets, including banks and rail-related companies registered stellar gains.

However, stocks of companies that are divestment candidates have largely given negative returns in 2022.

The government will release the Union Budget for 2023-24 (April-March) on February 1.

In its Union Budget for 2022-23 (April-March), the government had set a divestment target of

Rs 65,000 crore. However, it has managed to mop up less than half of this target so far.

A lion’s share of the proceeds came from the largest-ever initial public offer for Life Insurance Corporation of India (LIC), which garnered Rs 20,500 crore for the Centre.

While IDBI Bank is in the process of divestment, with the government having already invited bids for strategic sale, the completion of the same in the current fiscal year remains doubtful.

Meanwhile, regulatory issues and macro headwinds have been major roadblocks for the divestment of BPCL and CONCOR.

What should investors do?
Most analysts see muted action in these stocks in the run-up to the Budget as they don’t expect any significant surprises on the divestment front.

“Our fiscal situation based on the collection and expenditure data is well under control as against the FY2023e budgeted estimates..The corporate profits and GST collections have

been ahead of expectations which would enable the government to meet its FY2023e

estimates, despite any possible shortfall in capital receipts,” said Manish Jeloka, co-head of products and solutions at Sanctum Wealth Management.

Viraj Mehta, the managing director - PMS at Equirus Wealth sees the possibility of a lower disinvestment target for the next fiscal.

“But it won’t be meaningful enough to impact the fiscal deficit numbers given the buoyancy in tax collections,” he said.

(Data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)