Helping You Build Wealth With Honest Research
Since 1996. Read On...

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Revealed
India's Third Giant Leap

This Could be One of the Biggest Opportunities for Investors




Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.

AD

Capex onus on cash rich PSUs?
Thu, 20 Dec Pre-Open

Some public sector companies in India are sitting with hoards of cash on their balance sheets. This includes the likes of Oil and Natural Gas Corporation Ltd. (ONGC), Coal India, Bharat Heavy Electricals (BHEL), National Thermal Power Corporation (NTPC), Steel Authority of India (SAIL) and National Mineral Development Corporation (NMDC). The plans to put the funds to use are but nonexistent. Most are twiddling their thumbs and waiting for the external environment to improve. Now the country's leading bankers want these cash rich PSUs to lead the way and kick-start capex investments.

According to the State Bank of India (SBI), Chairman Pratip Chaudhuri, growth has to come in from sectors which are capital intensive like power, fertilizer, steel and metals. Without these companies leading the way it will be difficult for India to progress and develop. Since they have the support of the government they should lead the way.

India's structural story from a medium to long term perspective is still intact. Especially given the resilience of high savings and consumption rates. Thus, the opportunity for investment still exists. India has a large population base that is relatively underpenetrated. Its banking system caters to only half the population and it has extremely favourable demographics. However, the country needs to see more action from the grass root level. Existing projects need to reach full completion and regulations need to be more favourable before the investment cycle turns.

High interest rates, were keeping a number of investors at bay. Firms were converting their rupee liabilities into dollar liabilities as the overseas interest rates were at benign levels. But, they weren't factoring in the cost of hedging in this calculation. But, interest rates in India may soon be taking a turn for the better. In its latest monetary policy review, the Reserve Bank of India (RBI) maintained status quo. However there is an indication that the new calendar year will usher in a rate cut or two. Well, the only way to ensure that growth goes back to the erstwhile 8-9% levels is to encourage productive investment and capital spending.

Whether PSUs or private sector; well funded companies confident of growth prospects must build capacities before competition catches up.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Capex onus on cash rich PSUs?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited).

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.