The Union government can unlock nearly Rs 1.9 lakh crore if it plans on monetising its excess stake in over 20 state-run companies ranging from Mazagon Dock Shipbuilders to IRFC and many state-run banks.

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Excess stake implies those companies in which government shareholding is more than 75 percent. Companies, both private and PSUs, need to have promoter shareholding of 75 percent or less in order to comply with the Securities and Exchange Board of India's (SEBI's) minimum public shareholding norms.

When CNBC-TV18 had last addressed this on July 28, that excess stake was worth nearly Rs 1.5 lakh crore. Since then, the rally in PSU stocks has boosted that value by over 20 percent.

As per CNBC-TV18's calculations, the excess stake in 21 companies is now worth Rs 1.86 lakh crore as per September 15's closing price of these companies. The list does not include MRPL as ONGC and HPCL, not the President of India, are classified as the company's promoters.

Among these 21 companies, there are nine such firms where the government has a stake of 90 percent or more.

The excess government stake in India's largest insurer, LIC is worth nearly Rs 90,000 crore as of September 15's closing price.

The government had offloaded only 3.5 percent stake in India's largest IPO in 2022, leaving it with a 96.5 percent stake. Shares of LIC are currently well below their IPO price of Rs 949.

The government still owns more than 75 percent stake in stocks like Mazagon Dock Shipbuilders and IRFC, which have seen a strong rally this year.

Shares of the shipbuilding company have nearly tripled in 2023 and are trading close to a record high. The government still holds an 84.8 percent stake in Mazagon Dock, with the excess stake valued at close to Rs 4,000 crore.

Mazagon Dock had its IPO in 2020 at an issue price of Rs 144, in which the government had offloaded a 15.7 percent stake. Its three-year lock-in period ends in October, wherein 20 percent of the overall equity will be eligible for trading.

IRFC, the Indian Railway financier, has also seen its stock triple from its IPO price of Rs 26. The government still has an excess 11 percent stake in the company, which in case it plans to offload, will now fetch them a handsome Rs 10,150 crore.

There are other stocks as well, like SJVN, which have doubled in value this year, for the first time in their history. The excess government stake in the hydropower company is also worth Rs 3,000 crore after the rally.

"I will be more on the conservative camp on the PSUs, I think a lot of them have had a miraculous run and while there are reasons for that run, I think now valuation-wise things are reaching near their peak," Nilesh Shah of Kotak Mahindra AMC told CNBC-TV18 on September 11.

Shah said that probably there is a time for consolidation in the PSU space. "But there will be always some exceptions to the rule because some PSUs which haven’t run may participate, but overall, should there be a sector rotation from PSU into non-PSU? It's quite possible," he said.

But has the rally in these PSU stocks run its course for the time being? Read this piece to know more.

(Edited by : Amrita)

First Published:Sept 18, 2023 8:57 AM IST