And the winners are BSNL, Air India and Oil India. All 3 of them are Public Sector Units (PSU). This is in line with the new government’s push to divest stakes in many of the PSU’s. And they promise to unlock some 3 lakh crores of money to the government.
Most importantly a public listing gives some kind of accountability for these companies through shareholders as the traditional ‘government servant’ thing did not work.
BSNL which was the biggest telecom company until recently would be one of the biggest IPO’s ever if it comes alive. The trade union of BSNL still opposes the IPO as it would hurt them the most. But, large corporations which are not PSU’s do not take the inputs of employees. And BSNL will be better served to not listen to the employees and just list.
Air India : This is a tricky one. Aviation industry in Indian and every where else in the world is run with the backing of the government. It would be a funny statement if I said they are run as a mere corporate social responsibility from the respective companies. But, if we look deeper that statement is not that funny as never made a profit. Not in the last 6 years.
Air India is a government company profit making is not its motive. If it is listed then profit making will become its motive and we might actually see some efficiencies and innovations in Indian aviation. Would I subscribe to this IPO if it comes? No, I will not. But, history suggests otherwise and the PSU IPO’s provide better returns. I cannot argue with that.
Oil India : Oil is gold until we get some alternative fuels. Until then oil rules and so will Oil India. It is the second largest PSU oil explorer and is planning tap the markets in September. A 11% fresh equity will be divested in addition to the government’s 10% equity. This money would meet its capital expenditure plans.
If and when these IPO’s come out, this would be my order of preference.
BSNL – Fully subscriber ( may be till 1 lakh limit)
Oil India – Subscribe (around 50K)
Air India – NO.
What’s your order?
My bets will be on Bharti, Shyam Telecom and SpiceJet. As these IPOs of BSNL and Air India hit markets, these sectors (telecom and aviation) will get revalued as per the valuations these newly listing firms get, and that will add to the price of Bharti, Shyam and SpiceJet (best bets in resp. sectors).
But frankly, I am not too optimistic about these PSUs getting listed in near future.