|
The shares of the PSEs listed on the stock exchanges are currently heavily
under valued. This is primarily because of the indifferent performance
of the PSEs as well as the market perception that the Government is not
prepared to let go its control over the PSEs and introduce corporate governance
therein. The Price / Earning (PE) ratios of most of the PSEs are in single
digits, generally around 4 or 5 - very much below the comparable companies
in the private sector in India and abroad. The Table below shows the comparison
between the recent PE ratios of some companies in the public and private
sectors.
Price
/ Earning per Share (P/E) Ratios of Indian Public & Private Sectors
(Source:
Business Standard - 27.2.2001)
|
Public
Sector
|
Private
Sector
|
|
PSE
|
P/E
Ratio
|
Price
|
Company
|
P/E
Ratio
|
Price
|
|
Aluminium
Nalco
|
7.2
|
56.70
|
Hindalco
|
8.3
|
775.60
|
|
Banking
SBI
Bank of Baroda
Corporation Bank
UTI Bank
|
6.9
03
4.6
4.8
|
224.75
58.65
110.90
35.70
|
HDFC Bank
ICICI Bank
IDBI Bank
|
30.7
20.7
27.3
|
250.90
155.05
24.00
|
|
Financial
IDBI
|
2.7
|
29.40
|
ICICI
|
07
|
94.65
|
|
Gas
GAIL
|
4.4
|
56.25
|
Gujrat Gas
|
15.8
|
668.55
|
|
Heavy
Engg.
BHEL
|
7.5
|
164.95
|
ABB
|
24.3
|
316.95
|
Housing
Finance
GIC Housing Finance |
3.9
|
9.35
|
HDFC
|
16.8
|
592.85
|
|
InfoTech
CMC
|
59.4
|
362.35
|
Infosys
Wipro
|
64
91.7
|
5,695.35
2368.65
|
|
PetroChem
IPCL
|
8.6
|
69
|
RIL
|
15.1
|
402.75
|
|
Petro-Marketing
IBP
|
15.7
|
316.9
|
Castrol
|
24.2
|
262.85
|
The
adverse market perception about the PSEs, which is reflective of their
indifferent performance and Government control, is also obvious from the
following Table which shows the comparisons between the book values and
the market prices of the listed PSEs. As the Table shows, the market prices
of most of these PSEs are either below or just about equal to their book
value.
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MAJOR ISSUES IN DISINVESTMENT
