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Strategic disinvestment of PSUs a good initiative from govt: Sanjiv Bhasin

| September 16 2019 15 : 11 IST | The Economic Times

A lot of PSUs have very good value and strategic disinvestment would do a lot of good for the companies because their real value can be realised and new promoters will be happy to create more wealth, says Sanjiv Bhasin, Executive Vice President, IIFL Securities.

SCI, Concor, Pawan Hans are among the top names listed for a strategic divestment. What is your view on that?

It is a very positive move and the government has shown a lot of resolve and now it is the time to step on the accelerator. 20 years back, when Hindustan Zinc was sold strategically, there were hardly any suitors and for Vedanta it turned out to be dust becoming gold.

A lot of these PSU companies have very good value and a strategic disinvestment would do a lot of good for the companies because you will be able to get the real value and the new promoters will be happy to create more wealth.

The government cannot run these companies, keeping them at subpar valuations. It will set the cat amongst the pigeons given that globally there is a lot of liquidity which is waiting to find the right avenues and strategic disinvestment will be the way forward for the government. It shows their resolve and also their changing attitude. It will only mean you have very good news for the entire PSU pack.

The companies that we are identifying at this juncture are Concor, Pawan Hans. Are they likely to fetch good valuations?
There will always be a little bit of dichotomy on what the fair valuation is but at least you are showing the resolve to sell it. The new buyers are going to be in a very strategic location. Concor, according to me, is one of the bluest of blue chips. It is going to be one of the strategic plays. As far as logistics goes, it is a monopoly in that business. The government will still own a 25% stake but it will get a huge amount fillip once it goes to the right buyer.

SCI has not been in the best of shape. We are aware that the Baltic Freight Index global trade is at a low but you are looking at the next two, three, five years when the right buyer will be able to make a lot of headway on the business environment and so on.

We know that the Shipping Corporation has one of the best fleets and it will be able to encash on that. In aviation, it is a duopoly between Spice Jet and Indigo and Pawan Hans, if it finds the right buyer, can turnaround that company because the business environment for travel is continuously improving.

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