Gujarat PSU stock rally fizzles out; GMDC, GSFC, Gujarat Alkalies, GNFC, Gujarat State Petronet drop up to 5%

Seven Gujarat PSU stocks fell up to 5 per cent in Thursday's trade after rallying up to 20 per cent in the previous session, even as the new capital restructuring plan announced by the Gujarat government is expected to increase dividend payouts and bonuses by state-run companies.

Shares of Gujarat Industries Power Company were trading 1.18 per cent lower at Rs 90.25.  Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) declined 1.54 per cent to Rs 577.85. Shares of Gujarat State Fertilisers & Chemicals (GSFC) fell 2.61 per cent to Rs 149.30 while those of GMDC plunged 4.6 per cent to Rs 152.40. Gujarat State Petronet also fell 1.3 per cent to Rs 280.10. Gujarat Alkalies & Chemicals tanked 4.06 per cent to Rs 705. Gujarat State Financial Corporation slipped 1.60 per cent to Rs 6.15.

Gujarat Industrial Power, GSFC, GMDC, GNFC: 7 Gujarat PSU shares rally up to 17% today. Here's why

IIFL Securities said biggest beneficiary of the policy change would be GSFC, which has Rs 4,200 crore invested in other Gujarat PSUs and has a cash of Rs 2,360 crore, including subsidy receivable from the government. "The available cash is 40 per cent of the current market cap. Eventually, all the dividend and buy back benefits from the State owned PSU are likely to come to GSFC. Due to this policy change, GSFC and GSPL are our top picks," it said.

Gujarat PSU stocks rally: GSFC, GSPL are biggest beneficiaries of new policy on dividend, share buyback . Here's why

S Ranganathan, Head of Research at LKP Securities said while a few of the Gujarat state run entities may be facing temporary headwinds in few of business verticals, almost all of them are expanding in their product lines and looking to grow.

"Hence the New Policy in our view would go a long way towards boosting the confidence of minority shareholders since most of them are cash-rich even after their annual capex requirements with robust free-cash generation," Ranganathan said.

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