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Stocks To Buy:6 Quality PSU Stocks Trading Close To 52-Week Low- Should You Buy?
In the market meltdown which is further said to prolong amid the global headwinds, as the US indices- the most watched market shall feel the heat and its repercussion shall be felt over, currently only some of the otherwise good PSU counters have fallen or are trading close to their 52-week low.
6 PSU Stocks trading close to 52-week low
| PSU stock | 52-week low price | LTP | % gap from 52-week low |
|---|---|---|---|
| BPCL | 324 | 329.5 | 1.70% |
| NMDC | 124.5 | 128.1 | 2.89% |
| REC | 113.25 | 118.2 | 4.19% |
| Power Finance | 104.25 | 107.95 | 3.43% |
| SAIL | 71.7 | 73.95 | 3% |
| IRFC | 20.9 | 21.3 | 1.88% |
Should you be investing in these beaten down good PSU stocks?
As for BPCL, its previous divestment plan has been withdrawn and the centre shall come up with fresh plan. Also, after the recent excise duty cut on auto fuel, while there is a view that post such a move, OMCs shall be a given a headroom to increase fuel rates to retain margins. So, while Motilal Oswal maintains a neutral outlook on the stock, Emkay has a 'Buy' with a target price of Rs. 460 per share.
NMDC is engaged in the mining of iron ore. The Company's business segments include Iron Ore and Other minerals & services. The company also suffered steep loss owing to the recent hike of duty on iron ore by up to 50%. As per ICICI Securities ""We see this as an extremely negative development for the steel sector and expect broad-based multiple de-rating. We downgrade steel/stainless equities under our coverage to either hold/reduce/sell".
As for REC which is involved in the financing activity and is a Navratna CPSE could be bought as the stock is undervalued and offers a high dividend yield. For the Fy22, the company has declared dividend of Rs. 6 and final dividend recommended is Rs. 4.8 that means a total dividend of Rs. 10.8 per share, so a dividend yield of over 9%.
PFC is another government entity providing financing solution to power entities. The company is also high on dividends and is again an undervalued scrip. The company's earnings are expected on May 25 and as for Fy21 dividend, the company's dividend yield is at 9.29%.
SAIL- The Maharatna company from the steel space at the current timing given the sector related development can be given a miss despite trading close to its 52-week low. ICICI Securities in its recent evaluation of the stock post the duty hike has downgraded it to 'Reduce'. As per Indian Steel Association (ISA), the imposition of export duty on steel would send a negative signal to investors and adversely impact the sector's capacity utilisation.
IRFC is an expensively priced scrip considering its TTM PE which is at a higher side. Also, the company's profitability has been coming lower. This is as the company issue of high interest in contrast to its earnings. Also, another concern is the increasing trend in non-core income. This is even as the company's revenue have been on a consistent increase.
PFC, REC make for a good buy available at decent price and offering high dividend yield
So, while has been recommended for even BPCL, we really cannot foresee its status going ahead as its divestment has been shelved, nonetheless, PFC and REC with steady financials, available at cheap valuations and offering high dividend yield are a good buy.
