IRFC, BHEL, REC, and PFC Shares Rose on New Dividend and Bonus Norms

Shares of India’s state-run companies are seeing a significant surge on Tuesday, November 19, following changes to their capital restructuring guidelines. This marks the first update to these norms in 8 years.

Strong Gains on Nifty PSE Index

The Nifty PSE index, which tracks 20 state-run companies, is currently up by more than 2%. All index constituents are reporting gains ranging from 0.5% to 5.5%, reflecting investor optimism following the government’s move.

Top Performers: IRFC, BHEL, REC, and PFC Lead the Rally

Among the top gainers, Indian Railways Finance Corporation (IRFC) leads with a 5.5% jump. BHEL follows closely, gaining 4.3%, while both REC and PFC have seen their stock prices rise by 4% each.

Additionally, IRFC will begin trading in the Futures & Options segment starting November 29, adding further momentum to its share price.

Key Revisions in Capital Restructuring Norms

The government has introduced several key changes to capital restructuring norms for central public sector enterprises (CPSEs), impacting dividend payouts, bonus issues, and stock splits:

• Dividend Payouts: CPSEs are now required to pay 4% of their net worth as dividends, down from 5% previously.
• Bonus Issue Requirements: The reserves and surplus requirement for issuing bonus shares has been increased to 20 times the paid-up equity capital, compared to 10 times in 2016.
• Stock Split Norms: To qualify for a stock split, the market price must be 150 times the face value of the equity share, up from 50 times in 2016. Additionally, a mandatory three-year gap must exist between two stock splits for any given PSU.

PSE Index Faces Major Correction Since August Peak

Despite the current rally, the PSE Index has corrected nearly 20% from its recent high of 11,814, recorded on August 1. Many state-run companies have seen their shares fall between 20% to 50% from their respective record highs, contributing to a cautious sentiment even amid today’s gains.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.