This time bubble likely in PSU stocks, be careful in choosing railway stocks: Vallum’s Bhandari

The blistering rally in PSU stocks has the market divided. Give the poor track record of shareholder value creation for a long time, one section of the market feels the current upswing could be an aberration.

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26 Aug, 2025 12:21

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The time the stock market bubble could likely be in shares of public sector undertakings (PSUs), particularly in shares of railway stocks, Manish Bhandari, chief executive officer of Vallum Capital. He was speaking at the PMS AIF WORLD's fifth annual summit.

Also read: Enough bottom-up opportunities amid structural bull-run, say Chockalingam, Divam Sharma, Hitesh Zaveri

Bhandari said that investors should be careful while looking to invest in shares of railway PSU companies.

The BSE PSU Index has been one of the star performers among sectoral indices, doubling to 18761 over the last one year.

Railway PSU stocks like Rail Vikas Nigam Limited and Ircon International have surged 319 percent and 337 percent in the last one year respectively. Similarly, stocks like BEML and Railtel have rallied 123 percent and 276 percent in the last one year respectively.

The blistering rally in PSU stocks has the market divided. Give the poor track record of shareholder value creation for a long time, one section of the market feels the current upswing could be an aberration. Proponents of PSU stocks argue that the tide has turned and that the government has now woken up to the benefits of creating value for shareholders.

According to Bhandari, every bull market has a new leader, and sectors that shine the most during a particular bull run will not do as well in the subsequent one.

Bhandari gave the example of Infosys which rallied between 1999 to 2000 and then took eight years to come back to its original market cap levels.

Also read: Indian IT cos could gain from woes of Atos, Temanos, says Nilesh Shah

New themes

As the GDP and per capita income of the population grows substantially, the consumption spending on the luxury goods and travel will also grow, said the chief executive officer.  "We will have companies coming up with a good compounding story from this cohort," said Bhandari.

Bhandari said that another trend building up is digital infrastructure and many companies in this sector will give superlative returns. However, Indian large-cap companies will not be a significant compounder in digital infrastructure theme, said Bhandari.

PMS AIF WORLD is an alternates focused investment and wealth platform for HNIs and NRIs.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.