PSU Stocks Surge Up To 6%; IRFC, BHEL, PFC Rally On Revised Dividend And Buyback Norms

Public Sector Undertaking (PSU) stocks on Tuesday (November 19) saw a significant uptick after the after the Union Finance Ministry announced revised guidelines for capital restructuring in state-run companies. This revised changes with an aim to improve the capital management include new norms for dividend payouts, share buybacks, and stock splits.

The BSE PSU Index climbed 2 per cent during the session, with individual stocks surging between 2 per cent to 6 per cent.

Major gainers included Indian Railway Finance Corporation (IRFC), Bharat Heavy Electricals Ltd (BHEL), Power Finance Corporation (PFC), and Cochin Shipyard.

Top Performers in Focus

Indian Railway Finance Corporation (IRFC)

IRFC shares surged 4.96 per cent to Rs 145.15 by 1:20 PM IST. The stock opened at Rs 140.30, hit a high of Rs 146.96, and traded near its 52-week peak.

Bharat Heavy Electricals Ltd (BHEL)

BHEL gained 3.42 per cent, trading at Rs 230.29 in the afternoon session. The stock, has a 52-week high of Rs 335.35.

Power Finance Corporation (PFC)

PFC rose 3.20 per cent to Rs 473.90, with intraday highs reaching Rs 479.50. The P/E ratio of company stands at 7.38 and a dividend yield of 2.58 per cent.

Cochin Shipyard

Cochin Shipyard jumped 4.68 per cent to Rs 1,362.30, trading close to its intraday high.

Other notable gainers included Housing & Urban Development Corporation (HUDCO) and Indian Renewable Energy Development Agency (IREDA), which rose by 2 to 5 per cent, further fueling the PSU rally.

Revised Guidelines: A Game Changer for PSUs

The government's revised guidelines for Central Public Sector Enterprises (CPSEs) are as follows:

Dividends - CPSEs are mandated to pay a minimum annual dividend of 30 per cent of their profit after tax (PAT) or 4 per cent of net worth, whichever is higher. Financial sector PSUs, such as PFC, are expected to particularly benefit from these norms.

Buybacks - Companies with a market price consistently below book value over the last six months, a net worth of at least Rs 3,000 crore, and cash reserves exceeding Rs 1,500 crore are now eligible for share buybacks.

Stock Splits and Bonus Shares - The guidelines also address restructuring measures such as issuing bonus shares and splitting stocks to attract broader investor participation.