ET Intelligence Group: Fiscal deficit higher than budgeted may prompt government to push PSUs for buybacks or higher dividends.The gap between government expenditure and revenues at end of November stood at Rs 6.48 lakh crore against budgeted Rs 6.24 lakh crore (3.3 per cent of GDP).
Going by fiscal trend and latest data points, it looks highly likely that deficit could be breached.NMDC, NHPC, Oil India, BHEL, NALCO, NLC, Cochin Shipyard, KIOCL and ONGC have already announced buybacks.
IOC recently announced (December end) an interim dividend.
On day of announcement, stock traded at a dividend yield of 5 per cent.There could be more buybacks or dividends in pipeline, allowing investors to make good returns on dividends and buybacks in current volatile markets.Based on cash reserves and debt and dividend/buyback history of PSUs, ETIG has identified more PSUs that could announce dividends or buybacks soon.Coal India, HAL, RITES, NBCC, Engineers India, NBCC and MOIL have given interim dividends, but final dividends could be huge from these companies.
The gains may vary on amount of cash these PSUs give out.