'Potential multibagger gains from our PSU shares...': Expert on DIPAM's latest plan for PSU stocks

The Department of Investment and Public Asset Management (DIPAM) on Wednesday said it aims to promote the inclusion of public sector undertaking (PSU) stocks in the core investment portfolios of mutual fund houses. This initiative highlights the compelling value and dividend returns offered by state-run firms in the fiscal year 2025.

DIPAM noted that in the fiscal year 2025, Central Public Sector Enterprises (CPSEs) reported a historic dividend payout of Rs 1.5 trillion, leading to the government receiving Rs 74,016 crore in dividends. This significant achievement is credited to the CPSEs' robust performance and commitment to delivering consistent returns to their shareholders.

Reacting to this development, eminent investor Basant Maheshwari said the potential multibagger gains from our PSU shares should be spread across the board. 

"This is a very pragmatic step. The potential multibagger gains from our PSU shares should be spread all across.  BTW this type of news should not be leaked because then investors will know where their money is going," Maheshwari wrote on X. 

Public Sector Undertaking (PSU) shares refer to equity stocks of companies in which the government (central or state) holds a majority stake—typically over 51%. These enterprises operate across various sectors such as banking, energy, defense, infrastructure, and mining.

According to DIPAM secretary Arunish Chawla, Central Public Sector Enterprises (CPSEs) in FY25 announced dividends totaling Rs 1.5 lakh crore. The government's portion of this amount came to Rs 74,016 crore, showcasing the CPSEs' strong performance and commitment to providing consistent returns to shareholders.

The department also spoke about the government's financial restructuring of CPSEs and works on attracting investments in these enterprises through the capital market. Chawla emphasized the successful value creation strategy of PSUs.

Chawla said: “While the market capitalisation of PSUs is only 10 percent of overall market cap, they have distributed 25 percent of overall dividends. We would suggest to fund managers to include PSU stocks in their portfolios so that common investors, senior citizens and minority shareholders can deploy their savings productively and partake in the value created by the PSUs.” 

Chawla detailed how DIPAM has created an internal policy framework known as the 'DIPAM Model' to ensure a unified strategy across the ministry backed by empirical data and market performance. "We have updated our strategy and introduced a new framework focusing on capital asset pricing. This framework considers the balance between dividend payouts and asset values, and monitors market activity, PSU stock settlements, and volume-weighted averages," he explained.