Gujarat PSUs' market capitalization soars by Rs 5,000 crore in a day!

AHMEDABAD: The new policy announcement on higher dividends to be doled out by state-owned public sector undertakings in Gujarat proved to be a boon in disguise for these companies as their stocks registered a bull run in the Indian equity markets, reports Parag Dave. With share prices going up, the market capitalization of seven Gujarat's PSUs increased by Rs 5,000 crore in a single day on Wednesday. GSFC stock prices rallied by 20% on Wednesday whereas GMDC went up by over 19.98% on the same day on BSE. Even share price of GIPL went up by 20%. State PSU companies registered a bull run in the stock market on Wednesday due to a new policy implemented by the Gujarat government. Under the new policy, these companies must declare at least 30% of their profit after tax or 5% of their net worth as dividends for shareholders. As a result, seven listed state-owned companies saw a total increase in market capitalization (m-cap) of approximately Rs 5,000 crore in just one day, with some stocks increasing by as much as 20%.During the trading session on Wednesday, the stock price of GSFC and GIPCL rose by 20% in a single day, while GMDC's stock price increased by 19.98%.According to research analyst Hitesh Somani, the Gujarat government has introduced a new policy on bonuses, dividends, stock splits, and share buybacks that could lead to better governance and more liquidity for Gujarat PSU companies. "Several companies, including GSFC and GSPL, saw their market capitalization increase by Rs 1,000 crore in a day, while GMDC, GNFC, and Gujarat Alkalies saw their market cap increase by around Rs 800 crore each. Overall, the market cap of all seven listed PSU companies increased by Rs 5,058 crore in a day," he added. Experts predict that this decision by the state government will make investing in PSU stocks more profitable under the new rules, leading to increased interest in these stocks.Bhavik Patel, a senior research analyst at a stockbroking firm, said the new policy directive from the Gujarat government would benefit PSU companies by generating shareholder value and increasing confidence in their stocks. "Till now, Gujarat-based PSUs had a low dividend yield, but this policy change is expected to raise their market value and attract more investors," he added.According to sources, GSFC is predicted to be the biggest beneficiary of this change, with Rs 4,200 crore invested in other Gujarat PSUs and a cash balance of Rs 2,360 crore, including subsidies from the government. The new policy allows any state PSU with a net worth of at least Rs 2,000 crore and a cash and bank balance of Rs 1,000 crore to buy back their shares.