Value emerging in beaten-down railway, PSU stocks: Spark Private Wealth’s Devang Mehta

A sharp correction of 30–50% in several railway and public sector undertaking (PSU) stocks is beginning to create selective value opportunities, especially as the fall has been significantly steeper than that seen across the broader market, according to Devang Mehta, Deputy Managing Director & CIO - Equity (NDPMS) at Spark Private Wealth Management.

Mehta flagged this divergence as the most important reason to reassess the sector, stating that while the median stock has corrected meaningfully, railway and PSU names have seen disproportionately deeper drawdowns that are now throwing up valuation comfort.

Explaining why this matters, Mehta contrasted the sell-off in these stocks with the wider market, saying, “The median fall from the 52-week high for 1,510 companies is roughly around 24% and a lot of these companies have corrected 30, 40, 50%.” In his view, this sharper correction has pushed several businesses into a zone where valuations are becoming attractive, provided the underlying fundamentals remain intact.

Mehta stressed that the investment case for railway and PSU companies has evolved beyond short-term pre-budget seasonality. “Gone are the days when there was only a railway budget type of trend in this type of business,” he said, adding that these companies are now being driven by core metrics such as revenues, earnings growth and healthy order books, rather than sentiment-led rallies.

On the broader market setup, Mehta stated that midcap and small-cap stocks have shown signs of recovery over the past week. He expressed cautious optimism that the market’s “complexion” could improve over the next three months, potentially supported by the return of foreign institutional investors (FIIs).

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However, he concluded with a clear filter for investors looking at beaten-down railway and PSU stocks. Any renewed interest, he said, must be anchored in fundamentals, with earnings visibility and cash-flow generation remaining the most critical determinants of sustainable value.

For the entire interview, watch the accompanying video

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