Best PSU Stocks in India 2024 – Top Government Sector Shares to Consider

Public Sector Undertakings (PSUs) are companies majority-owned by the government and often attract investors seeking stability, consistent dividends, and growth potential. Investing in PSU stocks can be strategic for portfolio diversification due to their lower risk profile and attractive valuations. Backed by government support, these companies operate in crucial sectors and offer long-term growth opportunities. In this guide, you will find a detailed list of some of the best PSU stocks to consider in 2024, including why one must invest in government-owned companies in India, how to invest, factors to consider before investing, risks, benefits, and more about PSU stocks in India.

Top Performing PSU Stocks in India Based on 1-yr Returns

The following government company share price list has curated the best stocks in this sector for you! Here is a list of government shares based on their 1-yr returns:

Name	Sub-Sector	Market Cap (Rs. in cr.)	Close Price (Rs.)	PE Ratio	1Y Return
Rail Vikas Nigam Ltd	Specialized Finance	₹1,12,267	₹518.15	71.31	310.90%
Indian Railway Finance Corp Ltd	Specialized Finance	₹2,36,435	₹179.79	36.87	267.67%
Oil India Ltd	Oil & Gas - Exploration & Production	₹99,686	₹643.95	15.74	247.08%
Bharat Heavy Electricals Ltd	Heavy Electrical Equipments	₹1,05,227	₹302.20	372.86	193.26%
Mazagon Dock Shipbuilders Ltd	Shipbuilding	₹99,187	₹4,917.80	51.21	182.42%
REC Limited	Specialized Finance	₹1,53,661	₹586.90	10.86	161.66%
SJVN Ltd	Renewable Energy	₹54,749	₹139.32	60.07	150.35%
Hindustan Aeronautics Ltd	Aerospace & Defense Equipments	₹3,12,174	₹4,723.90	40.96	149.22%
Power Finance Corporation Ltd	Specialized Finance	₹1,62,414	₹500.65	8.22	136.99%
Bharat Electronics Ltd	Electronic Equipments	₹2,18,014	₹302.20	54.72	128.85%

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 government stocks in India is from 9th August 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

Here is a brief overview of the best PSU Stocks to buy now in India from our PSU stock list based on 1-yr returns:

Rail Vikas Nigam Ltd

Rail Vikas Nigam Limited focuses on building rail infrastructure in India. It develops and implements rail projects and helps mobilise financial resources. The company handles a range of projects, such as new rail lines, line doubling, gauge conversion, electrification, workshops, metro systems, bridges, and cable-stayed bridges. Rail Vikas Nigam serves Indian Railways, central and state government ministries, departments, and public sector undertakings. Over the last 5 years, the company’s revenue has grown at a yearly rate of 17.31%, higher than the industry average of 12.66%, and its market share increased from 8.64% to 11.19%. The company is ranked at the top in the list of top PSUs in India.

Indian Railway Finance Corp Ltd

Indian Railway Finance Corporation Limited (IRFC) leases rolling stock and railway infrastructure assets across India. The company lends money and borrows funds from financial markets to finance the acquisition or creation of these assets, which are then leased to Indian Railways. It functions as a non-deposit-taking non-banking financial and infrastructure finance company. Over the last 5 years, the company’s revenue has grown at a yearly rate of 19.08%, higher than the industry average of 12.66%, and its market share increased from 9.22% to 12.87%.

Oil India Ltd

Oil India Limited focuses on exploring, developing, and producing crude oil and natural gas both in India and abroad. This PSU company in India operates through several segments: Crude Oil, Natural Gas, Liquefied Petroleum Gas (LPG), Pipeline Transportation, Renewable Energy, and Others. It handles the transportation of crude oil and natural gas and produces LPG. It is one of the top performing PSU oil stocks on our list. Over the last 5 years, the company’s revenue has grown at a yearly rate of 16.37%, higher than the industry average of 7.39%, and its market share increased from 3.57% to 5.34%.

Bharat Heavy Electricals Ltd

Bharat Heavy Electricals Limited (BHEL) is an engineering and manufacturing company that operates in India and abroad. The PSU company in India functions in two main areas: Power and Industry. BHEL provides a range of products and services, including coal, gas, nuclear, hydro power plants, and solar power systems. Its offerings extend to transmission systems, defence and aerospace products, industrial systems, energy storage solutions, and e-mobility technologies. As of 9th August 2024, the largecap company has a market capitalisation of Rs. 1,05,227 cr., and a PE ratio of 372.86.

Mazagon Dock Shipbuilders Ltd

Mazagon Dock Shipbuilders Limited, founded in 1774 and based in Mumbai, India, specialises in constructing and repairing ships, submarines, and related engineering products. It operates in two main segments: Shipbuilding and Submarines. The PSU company in India builds naval platforms such as destroyers, conventional submarines, frigates, corvettes, missile boats, offshore patrol vessels, and floating border outposts. Over the last 5 years, the company’s net income has grown at a yearly rate of 29.47%, higher than the industry average of 25.24%.

REC Limited

REC Limited and its subsidiaries provide financing services for power projects in India, covering generation, transmission, and distribution. The company offers a range of financial products, including long-, medium-, and short-term loans, debt refinancing, and equity financing. It also finances equipment manufacturing for the power sector and coal mines, offers funding against regulatory assets, provides a revolving bill payment facility, and issues letters of undertaking as substitutes for bank guarantees. Over the last 5 years, the company’s revenue has grown at a yearly rate of 13.33%, higher than the industry average of 12.66%, and its market share increased from 21.07% to 22.97%.

SJVN Ltd

SJVN Limited, along with its subsidiaries, focuses on generating and selling electricity in India, Nepal, and Bhutan. The company operates in various sectors, including thermal, hydro, wind, and solar power, as well as power transmission. It runs the Nathpa Jhakri Hydro Power Station with a capacity of 1500 MW in Shimla District and the Rampur Hydro Power Station with a capacity of 412 MW in Kullu District, Himachal Pradesh. The company has a net profit margin of 30.79% and a cash flow margin of 49.54%. As of 9th August 2024, the company’s market capitalisation is Rs. 54,749 cr. 

Hindustan Aeronautics Ltd

Hindustan Aeronautics Limited (HAL) designs, develops and manufactures a range of aerospace products, including aircraft, helicopters, and engines. The company also handles repairs, overhauls, upgrades, and servicing for these products. HAL offers basic trainer aircraft, light combat aircraft, light transport aircraft, intermediate jet trainers, light utility and combat helicopters, maritime utility helicopters, and various engines. Over the last 5 years, the company’s revenue has grown at a yearly rate of 9.65%, higher than the industry average of 8.49%, and its market share increased from 84.91% to 88.67%.

Power Finance Corporation Ltd

Power Finance Corporation Limited is a non-banking finance company based in India. It provides a range of financial products and advisory services to the power, logistics, and infrastructure sectors. The company offers various financial solutions, including project term loans, corporate loans, debt refinancing, and lease financing for equipment and wind power projects. It also provides lines of credit for coal imports, power purchases through exchanges, short- and medium-term loans, buyer’s credit, and debt underwriting. As of 9th August 2024, the largecap company’s market capitalisation is Rs. 1,65,219 cr. 

Bharat Electronics Ltd

Bharat Electronics Limited designs and produces electronic equipment for both defence and civilian sectors in India. Their defence range covers communication systems, land-based radars, naval systems, electronic warfare equipment, avionics, and electro-optics. Over the last 5 years, the company’s revenue has grown at a yearly rate of 11.34%, higher than the industry average of 11.28%. As of 9th August, the largecap company’s market capitalisation is 2,18,014 cr.

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

• Disclosures for PSU Banks for SIP smallcase
• Disclosures for Quantace PSU Stars smallcase

What are Public Sector Undertakings (PSU)?

PSU stocks mean government-owned companies or corporations that operate in various sectors of the economy. These entities are established by the government to undertake commercial activities. The PSU full form in share market is “Public Sector Undertaking,” referring to companies that provide essential goods and services to the public. Public sector stocks meaning refers to the shares of these government-owned companies that are available for trading in the stock market, and they are often considered government stocks in India.

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. Some of the best PSUs in India are well-known for their stability and contribution to the economy. Investors often look for the government company list in the stock market to identify potential investment opportunities in govt company shares. The govt company share price can fluctuate based on market conditions, performance, and government policies. PSU stocks India offers a unique opportunity for investors interested in buying government stocks. Keeping track of the govt stocks list can help investors make informed decisions about adding government stocks to their portfolios.

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 best performing PSU shares 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

Best public sector shares 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. Here are a few types of PSU stocks in India:

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. The best government shares to buy in India 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 best Indian government stocks can be a lucrative opportunity for those 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 detailed guide on how you can 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 that you 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 of the best PSU stocks for 2024 in India that also aligns with your investment goals and risk tolerance. You can utilise online tools such as  Tickertape Stock 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 you invest. 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 top PSU in India and conducted due diligence, it’s time to place an 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. You may 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 you are choosing the best PSU stocks in India, it might be helpful to explore various avenues to make informed decisions. Here are some steps you could consider:

Peer Comparison

You can compare the performance of PSU stocks with their industry peers to identify relative strengths and weaknesses. This comparison may help you understand how a particular PSU stock stands in relation to its competitors.

Sector Analysis

Conducting in-depth research on specific sectors within the PSU domain can help you identify promising investment opportunities. You can look into sector-specific dynamics to gauge which sectors might offer the best growth prospects.

Government Policies

Analysing government policies and initiatives that directly impact PSU sectors can be beneficial. Understanding these policies may help you anticipate the future growth trajectory of PSU stocks, as government actions often influence these sectors significantly.

Historical Performance

Evaluating the historical performance of low price PSU stocks, including revenue growth, profitability, and stock price trends, can provide insights into their long-term potential. Historical data might help you assess how these best govt stocks in India have performed over time and what their future performance might look like.

Market Sentiment

Considering market sentiment and investor sentiment towards government-owned top PSU companies in India can be essential. You can monitor news, analyst reports, and market trends to understand how the market views these stocks. Market sentiment can often influence stock prices and your investment decisions.

Risk Assessment

You might assess the risks associated with investing in PSU stocks, including regulatory risks, political risks, and macroeconomic factors. Understanding these risks can help you make more informed investment decisions.

What Are the Risks of Investing in PSU Stocks?

When you are considering investing in PSU stocks, it might be helpful to be aware of several potential risks. Here are some key factors you could consider:

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. This inefficiency may affect the overall performance of PSU listed companies in India.

Earnings Volatility

Many PSUs operate in cyclical industries like commodities, leading to fluctuating earnings during economic downturns. This volatility might make it challenging to predict the financial performance of top PSU stocks in India.

Market Reaction to Disinvestment

A government stake sale in a PSU can create market uncertainty and impact the stock’s performance. The market reaction to such disinvestment may affect the price and stability of the best PSU bank stocks to buy now for 2024.

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 might influence the dividend amounts and frequency, even for the best dividend stocks.

Government Interference

Government-owned listed PSU stocks can encounter political and bureaucratic influences. These influences might not always align with investors’ interests, and changes in policies or leadership may impact their operations and market performance.

Market Performance

Certain Indian PSUs might underperform compared to private companies due to inefficiencies, outdated technologies, or a lack of strategic focus. This could affect the competitiveness of the top PSU stocks in India.

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, making it harder to manage investments in PSU stocks.

Limited Focus on Shareholder Value

Government priorities can expand beyond shareholder value, impacting investment decisions, dividends, and mergers. This limited focus on shareholder interests might affect the attractiveness of PSU company investments.

Factors to Consider Before Investing in PSU Stocks

When you are investing in the best government stocks, several factors might be important to consider to make informed decisions. Here are some crucial aspects you could evaluate:

Financial Performance

You can assess the financial health of a public sector company in India by looking at revenue growth, profit margins, and debt levels. A track record of consistent profitability may indicate stability and future growth potential. Reviewing the list of all PSU stocks in India can provide insights into which companies have shown strong financial performance over time.

Government Policies

Understanding how government policies and regulations impact a public sector company’s operations is essential. Changes in policies can influence stock performance, especially during times of political instability. For example, government ownership or decision-making may be affected by policy shifts. Checking the government stocks list, government share price, and PSU share prices can provide valuable insights into how policy changes might affect your investments.

Market Position

Evaluating the PSU’s market share, competitive advantage, and growth prospects in its sector might help you gain an in-depth understanding of the investment. This analysis can reveal the company’s strengths and potential for future success. Reviewing the list of PSU stocks and comparing their market positions can help identify the best PSU in India for investment.

Management Quality

You can analyse the management team’s experience, strategies, and transparency in decision-making. Effective and transparent management may contribute to the PSU’s long-term success and stability. The quality of leadership is often a decisive factor when choosing the best PSU company to invest in.

Risk Tolerance

Understanding your risk tolerance and investment horizon is crucial before committing to PSU stocks. Different PSUs, such as those listed in the PSU stocks list NSE, come with varying levels of risk. Aligning your investments with your risk tolerance may help you achieve your financial goals, especially when considering government stocks in India.

Valuation

Assessing the stock’s valuation compared to its earnings, book value, and industry peers can provide an idea of whether you’re making a profitable investment. This evaluation might help you determine if the stock is undervalued or overvalued. Reviewing the government company list in the stock market can help you compare valuations. It can also help in selecting the best PSU stocks for dividends, adding value to your portfolio.

To Wrap It Up…

Investing in PSU stocks involves unique risks and considerations, including bureaucratic inefficiencies, earnings volatility, and government interference. To navigate these complexities, you might conduct thorough research on the financial health, market position, and management quality of PSUs. Staying informed about government policies and market sentiment can also provide valuable insights. By understanding these challenges and opportunities, you may make more informed decisions that align with your investment goals and risk tolerance. It can potentially enhance your chances of a favourable investment outcome in the top PSU stocks in India.

Frequently Asked Questions on PSU Stocks