As many as 7 PSU stocks shot up on Wednesday’s early trades, logging up to 20 percent gains after the Gujarat state government announced a new policy of compulsory dividends and bonus shares. Moreover, it set guidelines for when to go in for a stock split and a share buyback.
Gujarat Mineral Development Corporation gained the most in the pack. Its share price spiked 19.98 percent higher on Wednesday. It was followed by Gujarat Industries Power Company which soared 19.95 percent higher and hit the upper circuit.
A few other counters that registered massive gains were Gujarat State Fertilizers & Chemicals (up 18.70 percent), Gujarat State Petronet (up 10.43 percent), Gujarat Alkalies And Chemicals (up 12.66 percent), Gujarat Narmada Valley Fertilizers & Chemicals (up 8.85 percent), and Gujarat State Financial Corporation (up 4.13 percent).
According to a release, Gujarat mandated a minimum of 30 percent of profit after tax or 5 percent of net worth, whichever is higher to be a minimum level of dividend declared for shareholders.
As far as buybacks are concerned, every state PSU having a net worth of at least ₹ 2,000 crores and cash and bank balance of ₹ 1000 crores is mandated to exercise the option to buy back their own shares.
Moreover, the new policy suggested that the PSU would be required to split shares when the market price or book value of the PSU exceeds 50 times its value, provided that the face value of the PSU is more than ₹ 1. PSUs that declare reserves and surplus in excess of 10 times the paid-up share capital are required to issue bonus shares to their shareholders.
The Gujarat government has set up approximately 100 PSUs across various sectors, tasked with specific objectives. These guidelines would apply to all corporates where the Gujarat government and the government-controlled body corporate have a controlling interest. These guidelines are meant to comprehensively address the capital restructuring needs of PSUs. Interestingly, the Central government also has similar guidelines.
Written by Simran Bafna
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
