Home Collections Best PSU Stocks: Find the List oTop PSU/Government Shares in India

Best PSU Stocks: Find the List oTop PSU/Government Shares in India

Best PSU Stocks: Find the List oTop PSU/Government Shares in India
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PSU stocks have long stood as pillars of stability and growth in India. Public Sector Undertakings were the government’s solution to the developmental needs after colonial rule. These undertakings offer investors a unique blend of government backing and market potential. In this article, we will study a list of the best PSU stocks in India based on their dividend yield.

List for the Best PSU Stocks in India

The following list of PSU Stocks has curated the best stocks in this sector for you! Here is a government shares list of India’s best PSU stocks.

Company NameSub-sectorMarket Cap (in Cr)Share PriceDividend Yield (%)Return on Equity (%)
Indian Oil Corporation LtdOil & Gas – Refining & Marketing₹2,38,366₹175.306.93%7.04%
Coal India LtdMining – Coal₹3,08,752₹512.355.09%55.32%
Oil and Natural Gas Corporation LtdOil & Gas – Exploration & Production₹3,56,336₹284.104.32%12.13%
Power Grid Corporation of India LtdPower Transmission & Distribution₹2,96,503₹337.653.53%19.36%
Bharat Petroleum Corporation LtdOil & Gas – Refining & Marketing₹1,41,890₹666.153.15%4.04%
REC LimitedSpecialized Finance₹1,45,893₹604.502.89%20.41%
Power Finance Corporation LtdSpecialized Finance₹1,62,249₹554.802.75%15.26%
NMDC LtdMining – Iron Ore₹78,510₹267.902.71%27.55%
Gail (India) LtdGas Distribution₹1,34,427₹230.802.69%8.68%
Oil India LtdOil & Gas – Exploration & Production₹71,776₹669.352.38%23.27%
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data in the list of best penny stocks is from 31st May, 2024. This data is derived from Tickertape Stock Screener.

🚀 Pro Tip: You can use Tickertape’s Stock Screener to research and evaluate stocks with over 200+ filters and parameters.

Overview of the Top 10 PSU Stocks List for 2024

The following is a top 10 government stock list based on dividend yield (%). Here is a brief overview of the best PSU Stocks in India 

Indian Oil Corporation Ltd

Indian Oil Corporation Limited (IOCL), known as IndianOil, is a major government-owned company in the oil and gas sector. As the largest state-owned oil producer, it leads in both capacity and revenue. Established on June 30, 1959, as Indian Oil Company Ltd., it merged with Indian Refineries Ltd on September 1, 1964, to form Indian Oil Corporation Ltd.

Coal India Ltd

Coal India Limited (CIL), the world’s largest coal producer, was established in November 1975 and is owned by the Ministry of Coal. Awarded ‘maharatna’ status in April 2011, CIL is a major employer with 239,210 employees as of April 1, 2023. Contributing about 82% of India’s coal production, CIL surpassed its annual target in FY23 by producing 700.4 million tonnes of coal by March 30, 2023. It is ranked among the top 20 companies on the ‘Fortune India 500’ list for 2022. 

Oil and Natural Gas Corporation Ltd

The Oil and Natural Gas Corporation Limited (ONGC) is India’s largest crude oil and natural gas company. Established in August 1956 as a government-owned entity, ONGC is headquartered in New Delhi. Over the years, it has become one of the world’s leading oil and gas explorers. As a public sector undertaking under the Ministry of Petroleum and Natural Gas, ONGC produces about 70% of India’s crude oil and 84% of its natural gas. In recognition of its importance, the Government granted ONGC Maharatna status in November 2010.

Power Grid Corporation of India Ltd

Power Grid Corporation of India Ltd, a major electricity transmission utility with Maharatna status, has the Government of India owning 51.34% and public shareholders owning 48.66%. Established on October 23, 1989, under the Company Act as the National Power Transmission Corporation Ltd, it was tasked with constructing and operating India’s high-voltage transmission systems. The company was renamed Power Grid Corporation of India in October 1992.

Bharat Petroleum Corporation Ltd

Bharat Petroleum Corporation Limited (BPCL), a Maharatna public sector enterprise under the Ministry of Petroleum and Natural Gas, boasts a market capitalization of ₹97,399 crore and operates around 21,000 fuel stations across India. BPCL’s journey began in the early 1900s as an oil and gas company and has since evolved into a Fortune 500 conglomerate. The company originated when Shell Transport, Royal Dutch, and Paris Rothschilds formed the Asiatic Petroleum Company (APC) to market petroleum products in South Asia. 

REC Limited

Rural Electrification Corporation Limited (REC) is a Maharatna Central Public Sector Enterprise (CPSE) under the Ministry of Power. REC provides funding for electrification projects across India. It is registered with the Reserve Bank of India (RBI) as a non-banking finance company (NBFC), public financial institution (PFI), and infrastructure financing company (IFC). Incorporated in 1969, REC was listed on the National Stock Exchange and the BSE on March 12, 2008.

Power Finance Corporation Ltd

Power Finance Corporation Ltd. (PFC) is one of the central government sector stocks specialising in financial products and services for the power sector. Founded in 1986 by the Ministry of Power, PFC focuses on financing large-scale power projects and developing related industries. On July 28, 2010, the RBI designated PFC as an Infrastructure Finance Company. In 2023, PFC ranked 378th globally in assets, according to Forbes.

NMDC Ltd

The National Mineral Development Corporation (NMDC), one of India’s renowned Public Sector Undertakings (PSUs), is a Navratna company under the Ministry of Steel. As the largest iron ore producer in India, NMDC has a significant presence in the mining industry. Founded in November 1958, NMDC operates mines in Karnataka and Chhattisgarh. It also mines diamonds from the Majhgawan mine in Panna, Madhya Pradesh, which it acquired in 1966. 

Gail (India) Ltd

GAIL (India) Limited, a major Indian public sector enterprise in the natural gas sector, received the prestigious Navratna status from the Government of India in 1997-98. Incorporated in August 1984, GAIL was tasked with the construction, operation, and maintenance of the 1,800-km long Hazira-Vijaypur-Jagdishpur (HVJ) pipeline project, one of the largest cross-country natural gas pipelines globally.

Oil India Ltd

Oil India Limited, a prominent Government of India Maharatna company, explores, produces, and transports crude oil and natural gas. Founded in 1889 following the discovery of crude oil in Digboi, Assam, it has become India’s second-largest national oil and gas company. Originally established as a private limited firm in 1959, focusing on newly discovered fields in Moran and Naharkatiya, it evolved into a joint venture between the Government of India and the UK’s Burmah Oil Company in 1961. 

Confused About Which PSU Stock to Invest in? Explore these PSU smallcases

  • PSU Banks for SIP: This smallcase managed by Stoxbazar has a basket of PSU banks that are trading below their fair value.

PSU BANKS FOR SIP smallcase by StoxBazar

  • Quantace PSU Stars: This smallcase managed by Quantace Research is a concentrated basket of 3-15 stocks selected from NSE Listed Universe where the direct holding of the Central Government, State Government or of other CPSEs is 51% or more, excluding PSU Banks.

Quantace PSU Stars smallcase by Quantace Research

However, if you’re confused about which stocks to pick, you can explore smallcases:

  1. smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
  2. They’re created and managed by SEBI-registered experts
  3. smallcase.com offers over 200+ stock portfolios, created by 180+ managers
  4. Some of the popular smallcases among new investors are as follows:

Equity & Gold smallcase by Windmill Capital

Top 100 Stocks smallcase by Windmill Capital

All Weather Investing smallcase by Windmill Capital

Disclosures for aforementioned smallcases

What are Public Sector Undertakings (PSU)?

Public Sector Undertakings, which is the full form of PSUs, are government-owned companies or corporations that operate in various sectors of the economy. These entities are established by the government to undertake commercial activities. Their goal is to provide essential goods and services to the public.

PSUs play a significant role in promoting economic growth, ensuring equitable resource distribution, and advancing government policies. They operate under the government’s control and can be involved in industries such as energy, telecommunications, finance, manufacturing, and more. 

Why Invest in PSU Stocks?

Now that we know what is PSU stocks, here are a few features of PSU Stocks that make them a potentially attractive investment for investors:

  • Stability and Reliability: Investing in PSU stocks or shares offers stability and reliability owing to their government ownership and support. The government’s backing provides a certain level of assurance, making them an attractive option, especially during times of market uncertainty.
  • Dividend Income: PSU stocks are attractive due to their consistent dividend distribution history. Many PSUs have a tradition of sharing a portion of their profits with investors, which provides a regular income stream and potentially enhances the overall returns on investment.
  • Long-Term Growth Potential: PSU stocks often provide gradual and sustainable long-term growth. This can be especially beneficial for investors prioritising a steady appreciation of their investments over time.
  • Economic Growth Catalyst: Investing in PSU stocks contributes directly to sectors critical for a country’s economic development. These government stocks can encompass a wide range of industries, including energy, telecommunications, infrastructure, and more, all of which play pivotal roles in driving economic progress.
  • Diversification Benefits: Diversification is a cornerstone of a well-balanced investment portfolio. By adding PSU stocks to your investment mix, you are diversifying your portfolio beyond privately-owned companies. This diversification can help mitigate risks associated with sector-specific downturns, providing a more resilient portfolio overall.
  • Government Support and Ownership: Government ownership lends an additional layer of stability to government stocks in India. It implies that these companies have the government’s support and backing, which can act as a stabilising force even in times of market turbulence. 
  • Resilience in Volatile Markets: PSU stocks in India tend to weather market volatility relatively well. Government ownership, conservative management, and an essential service focus enhance their resilience to market turbulence.

The Categorisation of PSUs in India

Public Sector Undertakings (PSUs) in India are classified based on various criteria, reflecting their ownership, role, and strategic importance. 

Central Public Sector Enterprises (CPSEs)

CPSEs are PSUs owned and controlled by the Central Government of India. They are crucial to the country’s economic growth and development across diverse sectors. CPSEs can further be categorised into three groups:

  • Maharatna: These are the most significant CPSEs with extensive operations and high profitability. They have greater financial autonomy, can make substantial investments, and take important decisions without government approval. For example, in May 2010, the Indian government granted Maharatna status to NTPC Ltd, established on November 7, 1975. NTPC operates from 70 locations in India, one in Sri Lanka and two in Bangladesh. 
  • Navratna: These CPSEs also hold considerable operational and financial autonomy. They are profitable and have the flexibility to invest in strategic initiatives. For example, Container Corporation of India Limited (CONCOR), a Navratna PSU under the Indian Ministry of Railways, was established in March 1988 and began operations in November 1989 by acquiring seven inland container depots (ICDs) from Indian Railways as per the Companies Act.
  • Miniratna: Miniratna CPSEs have a more modest level of autonomy. These low price government shares are further classified into Category-I and Category-II, with differing levels of operational independence. For example, the Airports Authority of India (AAI), a Miniratna Public Sector Unit (PSU), operates under the Ministry of Civil Aviation, Government of India. It plays a crucial role in developing, maintaining, and upgrading civil aviation infrastructure across the country. 

State Public Sector Enterprises (SPSEs)

SPSEs are PSUs owned and controlled by state governments. They operate at the state level and contribute to regional economic growth. SPSEs are present across various sectors, such as power, transport, and agriculture. For example, GRIDCO Limited, Odisha Hydro Power Corporation Limited and Odisha Power Transmission Corporation Limited, under the Odisha State Government.

Joint Ventures (JVs)

JVs are collaborations between public and private sector entities, often with the government holding a significant stake. Such partnerships harness both sectors’ strengths for shared goals like infrastructure development or resource extraction. For example, a Public-Private Partnership (PPP) involves collaboration between a government or statutory entity and the private sector to deliver public assets or services. The private sector contributes through investments or management responsibilities.

PSU Bank Stocks

PSU bank stocks refer to Public Sector Undertaking (PSU) banks in India. The government owns and operates these banks, playing a crucial role in the country’s financial sector.

How to Invest in PSU Stocks?

Investing in Public Sector Undertaking (PSU) stocks can be a lucrative opportunity for investors seeking stability and long-term portfolio growth. With the government’s backing and often serving essential sectors of the economy, PSU stocks offer a unique investment avenue. Here’s a step-by-step guide on how to invest in PSU stocks effectively:

  • Open a Trading or Demat Account: The first step towards investing in PSU stocks is to open a trading or Demat account with a reputable brokerage firm. This account will be your gateway to the stock market, allowing you to buy and sell securities, including PSU stocks. Ensure to choose a brokerage that offers competitive fees, reliable customer service, and a user-friendly trading platform.
  • Research Lists of PSU Stocks: Conduct thorough research to identify potential PSU stocks that align with your investment goals and risk tolerance. Utilise online tools and resources like the Tickertape Stocks Screener to explore different lists of PSU stocks based on various criteria such as market capitalisation, dividend yield, and financial ratios. Narrow your options to a select few with strong fundamentals and growth prospects.
  • Check Stock for Proper Credentials: Verifying the credentials of any PSU stock is essential before investing in it. Ensure the stock is listed on reputable stock exchanges such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE). Additionally, confirm that the company is registered with regulatory authorities like the Securities and Exchange Board of India (SEBI) to safeguard your investments against potential fraud or malpractice.
  • Place an Order: Once you’ve identified a promising PSU stock and conducted due diligence, it’s time to order. Log in to your trading platform and enter the relevant details such as the stock symbol, quantity, and order type (market or limit order). Consider current market conditions, price trends, and your investment horizon before executing the trade. Review your order carefully before confirming to avoid any errors.
  • Monitor Your Investments: After investing in PSU stocks, it’s crucial to monitor your portfolio regularly to track performance and make informed decisions. Keep abreast of market developments, company news, and economic trends that may impact the performance of your investments. Consider setting up alerts or notifications on your trading platform to stay informed about any significant changes or events related to your holdings.

How to Choose the Best PSU Stocks to Invest in?

When choosing the best PSU stocks to invest in, explore various avenues to make informed decisions:

  • Peer Comparison: Compare the performance of PSU stocks with their industry peers to identify relative strengths and weaknesses.
  • Sector Analysis: Conduct in-depth research on specific sectors within the PSU domain to identify promising investment opportunities based on sector-specific dynamics.
  • Government Policies: Analyze government policies and initiatives that directly impact PSU sectors to anticipate their future growth trajectory.
  • Historical Performance: Evaluate the historical performance of PSU stocks, including revenue growth, profitability, and stock price trends, to assess their long-term potential.
  • Market Sentiment: Consider market sentiment and investor sentiment towards PSU stocks by monitoring news, analyst reports, and market trends.
  • Risk Assessment: Assess the risk associated with investing in PSU stocks, including regulatory risks, political risks, and macroeconomic factors, to make risk-adjusted investment decisions.

What are the Factors to Consider Before Investing in PSU Stocks?

The following factors must be considered when investing in PSU Stocks:

  1. Financial Performance: Assess the PSU’s financial health, including revenue growth, profit margins, and debt levels. A track record of consistent profitability is a positive sign.
  2. Government Policies: Understand how government policies and regulations impact the PSU’s operations. Changes can influence stock performance. This understanding is important in times of political instability, in case government ownership or decision-making is impacted. Check out the Indian government share list and government share prices on there. 
  3. Market Position: Evaluate the PSU’s market government share, competitive advantage, and growth prospects in its sector. This will give you an in-depth understanding of what you are getting into.
  4. Management Quality: Analyse the management team’s experience, strategies, and transparency in decision-making.
  5. Risk Tolerance: Understand your risk tolerance and investment horizon before committing to PSU stocks.
  6. Valuation: Assess the stock’s valuation compared to earnings, book value, and industry peers. This allows you to get an idea about whether you’re making a profitable investment.

What Are the Risks of Investing in PSU Stocks?

However attractive PSU Stocks may be, there are a few potential risks to consider when looking at a list of all PSU stocks in India:

  1. Bureaucracy and Inefficiency: PSUs’ bureaucratic nature often leads to sluggish decision-making, which can impede their ability to adapt to market shifts and drive innovation swiftly.
  2. Earnings Volatility: Many PSUs operate in cyclical industries like commodities, leading to fluctuating earnings during economic downturns.
  3. Market Reaction to Disinvestment: A government stake sale in a PSU can create market uncertainty and impact the stock’s performance.
  4. Dividend Surprise: While PSUs often offer dividends, the consistency of these payouts can be uncertain. The government’s dividend distribution policy and the company’s financial performance can influence the dividend amounts and frequency.
  5. Government Interference: Government-owned PSU stocks, which are the best dividend stocks, can encounter political and bureaucratic influences. These influences might not always align with investors’ interests, and changes in policies or leadership can impact their operations.
  6. Market Performance: Certain Indian PSUs might underperform compared to private companies. This could be due to inefficiencies, outdated technologies, or a lack of strategic focus.
  7. Low Trading Liquidity: Certain public sector stocks could have low trading volumes, causing liquidity problems. This might impact the ease of buying or selling shares.
  8. Limited Focus on Shareholder Value: Government priorities can expand beyond shareholder value, impacting investment decisions, dividends, and mergers.

To Wrap It Up…

Selecting the appropriate PSU stock is where many investors stumble, leading to unwise investment decisions. Yet, adopting a range of strategies can enhance your likelihood of securing a favourable investment outcome. These strategies encompass fundamental and economic analyses to assess the financial robustness of a PSU share.

Frequently Asked Questions on PSU Stocks

1. What are PSU stocks?

PSU stocks refer to shares of companies categorised as Central Public Sector Undertakings, which is the full form of PSU in the share market. These government-owned corporations or enterprises operate in various sectors, including energy, finance, manufacturing, and infrastructure.

2. Is it good to invest in PSU stocks?

Investing in PSU stocks depends on your financial goals, risk tolerance, and investment strategy. These stocks provide stability and dividends. However, it’s crucial to research extensively, evaluate potential risks, and consult financial experts before making any investment choices.

3. Why are PSU sector stocks rising?

The government and state-owned institutions hold a significant ownership stake in certain PSU stocks, ranging from 85% to 97%. This high ownership results in limited floating stock available in the market, leading to faster rises in the stock price.

4. What is the PSU full form in stock market?

The full form of PSU is Public Sector Undertaking. These are state-owned corporations or enterprises in India.

5. What are some of the best government shares to explore?

The best PSU Stocks to buy in 2024 for India are:
1. Indian Oil Corporation Ltd
2. Coal India Ltd
3. Oil and Natural Gas Corporation Ltd

Note: This government share list is for educational purposes only and is not recommendatory.