MUMBAI: The Union Budget may have failed to enthuse Dalal Street investors who were expecting a lot from the newly-installed NDA government, but ironically less-fancied stocks of public sector companies are poised to fire up sentiments once again.There are many things going for PSU companies at the moment: they are likely to benefit the most from government policies, which are expected to be announced in the coming months. Despite a sharp run-up this year, PSU stocks are still trading at over 40 per cent discount to their peak valuations of 2010. Also, performance of PSU companies is inextricably linked to economic growth, which is expected to revive in the coming quarters with rating agency Fitch projecting a 6.5 per cent growth in FY16.Investment advisors are bullish on PSU stocks despite the BSE PSU Index’s crash of 8.9 per cent in the last 5 trading sessions, led by companies such as BHEL, Power Finance Corporation, Bharat Electronics that have plunged 15-20 per cent during this period.The NDA government, led by Narendra Modi, is expected to unveil a raft of reforms to turn around a moribund economy. Modi had done the trick in Gujarat by reviving lossmaking PSUs, and it is widely believed that he will repeat this act at the national level. “There are many investors waiting in the wings to buy PSU stocks on hopes of bold reforms. We see a lot of value in such stocks, and with the likely economic revival, these stocks may see a rerating,” said Alex Mathews, head of research at Geojit BNP Paribas.Analysts say some stocks such as Coal India, which had fallen by about 9 per cent over the last 5 days, are considered good buys, as coal demand is expected to double this decade. The shares are trading at about 12.5 times to forward earnings, which sounds like an attractive proposition. The power sector should continue to see strong demand because of a huge energy deficit in India. BHEL, given its strong order book, high profitability and net cash balance sheet, is seen as an attractive bet with its shares trading at about 17 times to forward earnings.The valuation of BSE PSU Index is currently at striking levels of 9.20 times to its 12-month forward earnings; the index is trading at 40 per cent discount to its January 2010 peak valuation of 15.7 times. The BSE PSU Index closed at 7,981 points on Monday after hitting a 52-week high in June, but the index is still about 29 per cent below its lifetime peak of 11,205 points it touched in January 2008, which leaves room for further runup, say analysts.“We would like to advise investors to accumulate quality PSU stocks at current levels since we expect substantial improvement in their earnings. We are positive about the new government as it has demonstrated the right intent about reforms and growth,” said Pankaj Pandey, research head at ICICI Securities.The BSE PSU Index has rallied about 85 per cent between August 2013 and June 2014, and some stocks such as BEML, State Trading Corporation and Engineers India have more than doubled during this period. Hence, the ongoing correction is seen as healthy for PSU stocks, and after a period of consolidation, investors can consider buying PSU stocks, say money managers.India has been logging low growth for several years now, but with a regime change at the Centre, economic growth is likely to recover over the next few years to its normalised levels of 7 per cent-plus, say analysts.“Large-cap and quality mid-cap PSU stocks must be on investors’ radar to take advantage of any uptick in the economy from the second half of the current fiscal,” said Ajay Bodke, head - investment strategy & advisory at Prabhudas Lilladher.PSU companies in sectors such as energy, power, metals and mining have high quality fundamentals, and may see rerating once growth gathers pace. Shares of state-owned companies will come under renewed focus as the new government plans divestment in blue-chip companies like Coal India, SAIL, ONGC, NHPC, REC and Power Finance Corporation, etc., this fiscal.