From ONGC to Coal India, PSUs set to pay higher dividend with tax savings

The public sector units listed in BSE500 (ex-financials) will save around Rs 19,300 crore in taxes based on the actual profits in FY19. Much of the tax windfall of around Rs 10,000 crore is likely to flow back to the government in the form of dividend and dividend distribution tax. 

The PSU stocks, though, could see risk due to greater disinvestment for fiscal 2020, global financial firmBank of America Merrill Lynch said. The government, the BoFA said, is well behind its revenue target for FY20.

 According to the Department of Investment & Public Asset Management (DIPAM), only Rs 12,300 of divestment revenue has come in FY20 so far, as compared to a target of Rs 1.05 trillion. “We, therefore, see further pressure on PSU stocks due to rushed government stake sales in the rest of the financial year ending March 2020,” it said.