S&P foresees 'credit risks' for PSUs supporting govt exchequer via share buybacks
Updated : January 29, 2019 02:32 PM IST
In the past three months, 10 public sector undertakings (PSUs) have announced or executed buybacks for a cumulative amount of Rs 15,000 crore, which will count toward the government's target of Rs 80,000 crore from disinvestment of state-owned entities.
It said while extraction of existing excess capital in the form of dividends generally has an impact only on the short-term business of SOEs as dividends are discretionary and can be scaled back if future profitability is low.
The share buybacks announced so far, including the Rs 4,000-crore offering at Oil and Natural Gas Corp (ONGC), are manageable within the credit profiles of respective PSUs, it added.