PSU Follow-on candidates:: Business Line

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The public offers of disinvestment candidates until 2009 were received with much enthusiasm.

This led to a run-up of most of the prospective FPOs from May 2009, when the present political alliance came back to power.

However, two years hence, not only have FPO stocks disappointed retail investors, FPO announcements have begun to cast a shadow on PSU stock prices.

BHEL and SAIL are classic examples in recent times, where the news of disinvestment partly contributed to the fall in stock price.

BHEL, for instance, fell 4.2 per cent on day of announcement of a possible FPO. This gives long-term investors an opportunity to enter them.

Five out of six companies that raised FPOs which tapped the market since January 2010 are trading at or below their FPO prices. A few IPOs have also suffered a similar under-performance in the recent past.

Barring a few IPOs, such as Oil India and Coal India, many others failed to attract investor interest and are languishing below their offer price. Cases in point are NHPC and SJVN.

Among the above FPO stocks, investors can consider Manganese Ore India and NTPC for investment.

NTPC, given its stable margins cost plus tariffs, is hedged against various risks, even as huge capacity additions are expected over the next year