After shares of the Life Insurance Corporation of India or LIC on Wednesday scaled a lifetime record peak of Rs 1,050.50 on the BSE following a 71% spike seen in the last 3 months, Prime Minister Narendra Modi said the Opposition used to spread fake stories like ‘bhootiya bangla’ (haunted house) about the insurance behemoth.

“They (Opposition) used to make all kinds of statements on LIC. They said all negative things about LIC. The trick is if you want to destroy someone, spread rumours and false stories. In a village, if someone has a big bungalow and someone else wants to acquire it, people spread rumours that it is a ‘Bhootiya Bungalow’ (haunted house). When nobody else buys, they buy it,” PM Modi said in his Lok Sabha speech while accusing the Congress of spreading fake news.

“I say this with my head held high that today LIC shares are at a record high,” Modi said, while blaming Congress for “destroying” BSNL, MTNL and other PSUs.

“What did you do with HAL? Who destroyed Air India? Congress and UPA cannot shy away from taking responsibility for destroying HAL and Air India,” PM Modi said, adding that HAL is now showing record revenue generation and has become Asia’s largest helicopter manufacturing factory as the government has turned it around.

Tejas-maker Hindustan Aeronautics (HAL) is one of the many PSU stocks that have given multibagger returns in the last couple of years.

LIC, which was struggling to cross its IPO price of Rs 949 in 2022, has now breached the Rs 1,000 mark with analysts gunning for more gains ahead on expectations of growth revival in FY25. The possibility of a steep change in dividend will continue to support its share price performance.PM Modi informed the House that the number of PSUs in India has increased from 234 in 2014 to 254 today, and most of them are giving record returns drawing the attention of investors. He further added that the PSU Index has witnessed a two-fold rise within the last year. In the last 10 years, PSU’s net profit saw an increase from Rs 1.25 lakh crore between 2004 and 2014 to Rs 2.50 lakh crore, and the net value of PSUs rose from Rs 9.5 lakh crore to Rs 17 lakh crore.Back in August last year, Modi had openly told investors to freely bet on PSU stocks. As it was probably the first time that a PM had reassured investors about the future outlook on PSU stocks and that too in the Parliament, it had triggered a fresh wave of buying in PSU bank stocks as well as other ‘sarkari’ stocks the very next day.

The BSE PSU index has delivered a compound annual growth rate (CAGR) of 28% (including dividend reinvestments) over a five-year period and has risen by approximately 60% last year.

“The prevailing perception attributes this success to a clear government mandate and a hands-off management strategy for these PSUs, enhancing investor confidence. However, underlying data suggests that the operating performance of the PSUs already indicated a turnaround. Typically, substantial re-rating occurs when Return on Equity (ROE) exceeds the cost of capital. Hence, it’s not surprising that the stock performance for PSUs surpassed the underlying profit growth for these companies,” DSP Mutual Fund said.

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