Defying trend: Earnings growth no match for rally in CPSU stocks

Valuation rerating largely behind surge in mcap

Central public-sector undertakings (CPSUs), such as State Bank of India, Bharat Petroleum Corporation, Oil & Natural Gas Corp, Coal India, NTPC, and Hindustan Aeronautics, have been leading performers on the bourses in recent quarters. The BSE PSU index, which tracks the share price of 56 listed CPSUs, has doubled in the past year, compared to a 23 per cent rise in the BSE benchmark Sensex during the same period. 

This boom in CPSUs share price, however, is not in line with their quarterly results. Most of the gains on CPSUs’ market capitalisation have come from valuation rerating, rather than higher