PSUs basket was the darling of 2023. Will it be a repeat in 2024? A Balasubramanian answers

A Balasubramanian, MD & CEO, ABSL AMC, says “PSUs have been the biggest supporters of the government in every respect to ensure that they do participate in the overall growth momentum. My own belief is that we will see the public sector companies selectively continuing to remain in the radar and will be part of the market in terms of price momentum, purely on the basis of the fact that the fundamentals of all these companies are getting better.

The Big budget event is done and dusted. Does the fact that there was a lot of brevity in the finance minister's announcement this time around, speaks volumes in terms of the clarity going forward in the vision statement for India?
A Balasubramanian: What you said is right, the confidence of the finance minister comes on the back of a huge success that we have seen on various programmes that the government has rolled out, mainly to uplift the Indian economy to where we are today. And it also reflects on per capita income, which has been rising, appeal on the basis of various social benefits they have given.

Second, the huge emphasis that they have given on the infrastructure investment in the country has been yielding the right results, both in terms of the economic growth going past as 1%, and tax collections have been showing a continuous improvement. Month on month, we have seen GST collections improving. Plus, various compliance parts are now getting more or less fulfilled, putting this fiscal target for next year, which is what probably reflects the confidence of the finance minister that how the tax collections have been shaping up in the country, which is one of the big agenda of the government is to make the tax to GDP ratio to keep going up each year.


I think that shows the confidence of the finance minister to set the target for fiscal to 5.1%. And last but not the least factor is continuing to keep high focus in terms of the government spending, for which Rs 11.11 lakh crore have been earmarked, a 11% increase. People are saying the 11% increase is small. I think we have to look at this from the context that initially when the government was pushing it, they were alone. There was no private sector participation coming in, private capex improvement.

Now, in the last one and a half years, thanks to PLI schemes, the government kept asking why private capex is not picking up. Now, private capex today is growing faster than the public capex. In a vote on account, generally we do not keep any expectations. In fact, the 58 minutes speech of the finance minister threw up a lot of things which all of us should feel happy about as also the sudden growth momentum as we move forward.

The entire PSU basket was clearly the darling of 2023. How are you reading into the fact that the divestment target has been set at Rs 50,000 crore and all the announcements made on that front? What is that spell ahead for the PSU space as a whole?
A Balasubramanian: The PSU sector is going to continue to be one of the beneficiaries for two reasons. One, the efficiency of each of the public sector companies has been on the way up from the leadership point of view. Second, the huge potential that they have been having as a business per se are now being unleashed given the fact that fund spending has been rising.

Third, of course, is the re-rating. Most of the companies were trading below the one-time price-to-book or trading at half-time pre-multiples. Some bit of re-rating is also happening. Finally, each of these public sector companies have been making huge investments, both in making the future ROI look much better. At the same time, they are making huge investments in technology space.

Lastly, they have been participating in the overall India growth story, being public sector companies. They have been the biggest supporter of the government in every respect to ensure that they do participate in the overall growth momentum. My own belief is we will see the public sector companies selectively continuing to remain in the radar and will be part of the market in terms of price momentum, purely on the basis of fundamentals of all these companies are getting better.

Maybe the time will come when we will hardly find a difference between the private sector and public sector from the management capability point of view, as well as from the business execution capability point of view.