Cochin Shipyard - No more Cheap

[sambandham82]

@akash_das

@sambandham82

never to be treated as a reason while analyzing a company fundamentally for long term.

Marcellus

How PSU stocks disprove the Efficient Markets Hypothesis - Marcellus

The Efficient Market Hypothesis (EMH) posits that all stocks always reflect all available information in their prices, making it impossible to find or buy undervalued stocks. With stock selection being redundant, the one way to increase portfolio…

Quote from the article
“So why are PSU stocks serial underperformers? The usual answers to relatively weaker financial fundamentals of PSUs include ‘public sector inefficiency’ or ‘constraints of working under the 3 Cs – CAG, CVC and Courts’. A key reason, however, is that as minority shareholders, investors play on an uneven field with the government on the other side as a dominant shareholder as also as a customer of these PSUs. This duality of the government’s role puts at risk the efficient use of capital by PSUs, as well as the longevity of their earnings, which then reflect in the low multiples.”

As a minority shareholder it will be good if the promoter and our goals are same. These things should be taken into consideration while deciding on long term investment. It will increase conviction and one will be able to hold the position longer.

Yes. It is 9.1% sales growth from 1420 Cr in FY10 to 3392 Cr in FY20 and PAT has increased from 233 Cr in FY10 to 596 Cr in FY20 which is 9.85% but Nifty is 6%. How do you claim it is poor ?

Let us not compare apple to orange. we are discussing about CSL with reasonable growth rate and cash flow. ONGC, BHEL, SAIL,etc., do not fall in this category. It is not that all PSUs are wealth destructors and all MNCs are wealth creators. Even Gillette has grown at this rate only but only a speculative overvaluation has lead to higher returns which will get corrected in the next decade.

Why don’t we consider BPCL which has given steller performance ?

Also it is the valuation at which we buy determines our returns and not just growth rate.