StatsGuru: 20-January-2014

Coal India is the jewel in government's PSU crown

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The outsizeD dividend handed out by Coal India Limited recently has led to considerable attention being given to its finances, and to those of other natural-resources public sector units (PSUs). The government has privatised some such companies, and has varying stakes in others, as shown in Table 1. Coal India has seen steadily increasing dividend yields, as Table 2 shows, since

2011. The upstream oil majors and National Mineral Development Corporation have paid higher dividend in percentage terms. But Coal India was always a tempting target, as Table 3 shows: It has by far the largest cash pile among natural-resource PSUs. The question that many people are asking is whether returning this cash to shareholders will cramp the companies' re-investment plans. But, as Table 4 shows, Coal India is actually in a more comfortable position than its peers when it comes to financing capital expansion out of revenue. Oddly, fellow coal PSU Neyveli Lignite is the worst.

NMDC, which also has a reasonably sized cash pile, is possibly the government's next target for revenue. As Table 5 shows, it is earning handsome profit margins after tax - unlike the tiny margins of the three oil marketing companies. What does the market think of all this? As Table 6 shows, this year, most major PSUs' shares have fallen, the exact opposite of what happened last year. Table 7 shows the movement within the past year of these stock prices - a dip in the middle coinciding with fears of a "taper" of the US' loose monetary policy. Finally, Table 8 shows price-earnings (P/E) ratios for the resource PSUs; Coal India is at the top in terms of P/E while the three oil marketing companies are at the bottom