PSU issues shine: IRCTC IPO, Bharat 22 ETF see strong response despite tepid stock market

Between July 5 and September 19, the Sensex gave up nearly 10% of its value, eroding investor wealth to the tune of Rs 15.04 lakh crore.

While the broader stock market has remained muted in the previous week, PSU issues IRCTC IPO and Bharat 22 ETF saw stellar response for their public offer. Notably, IRCTC IPO was subscribed by a whopping 112 times, while Bharat 22 ETF was subscribed by more than 12 times, even as Sensex and Nifty registered their worst losing streak since July. With such a bumper response, IRCTC IPO became the most subscribed PSU IPO ever. While the government had targeted to raise up to Rs 645 crore, IRCTC’s IPO saw bids amounting to a whopping Rs 72,000 crore.

Also read: Rakesh Jhunjhunwala says these are two best companies in India; extremely bullish on PSU stocks

The fourth tranche of Bharat-22 ETF which was open for investment on October 3rd and 4th got subscribed nearly 12 times on the final day of offering on Friday, with the issue seeing bids worth Rs 23,500 crore. Through the Bharat-22 ETF FFO, the government looked to raise a base amount of Rs 2,000 crore, along with a green-shoe option of around Rs 5,000 crore. Notably, the government has decided to exercise the green-shoe option and retain the additional Rs 4,368 crore worth bids received, the Department of Investment and Public Asset Management (DIPAM) said in a tweet. “We believe investing in this ETF is one of the ways of owning jewels of corporate India which seek to provide growth and stability,” Nimesh Shah, MD and CEO, at ICICI Prudential AMC said.

Taking stock of the renewed interest in the space, Nilesh Shah of Kotak AMC said that there could be a re-rating in the space in case of strategic disinvestment by the government. “If there is a strategic divestment, then certainly there will be rerating of these PSUs. A case in point is Hindustan Zinc when before divestment was making 1 lakh tons of zinc, today it makes 1.5 million tons of zinc, it has grown 15 times in the last 18 years odd. That is the potential of PSUs, the moment there is a strategic divestment, I am sure PSUs will get re-rated,” Nilesh Shah, MD, Kotak AMC said in an interview to ET Now.