Top PSU Stocks in India

What are Public Sector Undertakings (PSU)?

PSUs are government-owned companies in share market operating in key sectors of the economy. The PSU full form in the share market is “Public Sector Undertaking,” which includes companies providing essential goods and services under government control. PSUs are vital for economic growth, resource distribution, and advancing government policies. 

Latest Updates in the PSU Sector

• Planned Government Stake Sale: The government may sell up to 20% stakes in five public sector banks, including Indian Overseas Bank, Punjab & Sind Bank, and others, over the next six months.
• Regulatory Compliance: The stake sale aims to meet SEBI’s rule requiring at least 25% public shareholding in listed companies by August 2026.
• Increased Public Shareholding: Higher public float is expected to improve liquidity in these stocks.
• Capital Infusion for Banks: Funds raised through stake sales can support the banks’ capital needs.
• Market Reaction: News of the stake sale has contributed to positive price movement across PSU bank stocks.

About the Top PSU Stocks India

1. Coal India Ltd: Established in 1975, Coal India Ltd is responsible for more than 80% of India’s coal production, with a wide network of mines and subsidiaries across the country.
2. Bharat Petroleum Corporation Ltd: Bharat Petroleum Corporation Ltd (BPCL), founded in 1952, is a major public sector undertaking in the refining, marketing, and distribution of petroleum products. 
3. Hindustan Petroleum Corporation Ltd: Hindustan Petroleum Corporation Ltd (HPCL) is a major oil and gas company in India. It focuses on the refining, marketing, and distribution of petroleum products.
4. Indian Railway Catering and Tourism Corporation Ltd: Indian Railway Catering and Tourism Corporation Ltd (IRCTC) was established in 1999 and is a public sector company that manages the catering, online ticketing, and tourism services for the Indian Railways. 
5. Mazagon Dock Shipbuilders Ltd: Mazagon Dock Shipbuilders Ltd is a premier shipbuilding company in India. This company specialises in building warships and submarines for the Indian Navy and commercial vessels for various clients.

How to Invest in PSU Stocks?

Here is how one can invest in PSU stocks in NSE in India:

1. Open a demat/trading/stockbroker account. You can open a demat account with smallcase!
2. Conduct thorough research into the Indian PSU stocks that are of interest to you. Investors can use tools like the Tickertape Stock Screener to do this. The screener offers 200+ built-in filters to choose from, and investors can choose the parameters to research. 
3. Place a ‘Buy’ Order on the PSU stocks of your choosing. 

Explore these PSU smallcases

1. PSU Banks for SIP: This smallcase managed by Stoxbazar has a basket of PSU banks that are trading below their fair value.
2. 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, 

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

Categorisation of PSUs in India

Central Public Sector Enterprises (CPSEs):

• Maharatna: To qualify as a Maharatna, a company must have an average annual turnover of over ₹25,000 cr. over the past three years, a net worth exceeding ₹15,000 cr., and be listed on the stock exchange. Maharatna PSUs enjoy the ability to invest up to ₹5,000 cr. in a single project without seeking government approval.
• Navratna: These companies must achieve a minimum score based on six financial and performance parameters. Navratnas are permitted to invest up to ₹1,000 cr. without government clearance and are granted greater operational freedom to expand and compete in both domestic and international markets. 
• Miniratna: Miniratna CPSEs are required to have made profits for three consecutive years and maintain a positive net worth. These companies can invest up to ₹500 cr. or the equivalent of their net worth, whichever is lower. Miniratna Category-II PSUs must also be profitable but have fewer financial requirements and enjoy limited autonomy compared to Category-I PSUs. 

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. 

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. 

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.

Benefits of Investing in PSU Stocks

• Stable Returns: Government PSU stocks are generally less volatile and offer stable returns, making them ideal for risk-averse investors.
• Long-Term Growth: The top performing PSU stocks in India often operate in essential sectors like energy, telecom, and infrastructure, contributing to sustainable long-term growth.
• Government Support: With the government’s direct involvement, PSUs benefit from policy support, making them more resilient during economic downturns.
• Diversification: Adding PSU stocks to your portfolio provides diversification, spreading risk across different sectors and reducing exposure to market volatility.

Risks of Investing in PSU Stocks

• Bureaucracy and Inefficiency: PSUs’ bureaucratic processes can slow decision-making, hindering their ability to adapt and innovate. This inefficiency can impact the performance of even the top PSUs in India.
• Market Reaction to Disinvestment: Government stake sales in PSUs can create uncertainty and affect stock performance. This may influence the best PSU bank stocks for 2025.
• Government Interference: Political and bureaucratic influences can affect even the top PSU stocks with highest dividends. Changes in policies or leadership might not always align with investor interests, impacting stock performance.
• Limited Focus on Shareholder Value: Government priorities may extend beyond shareholder interests, impacting dividends, mergers, and overall investment attractiveness.

Factors to Consider Before Investing in PSU Stocks

• Financial Performance: Assess the company’s financial health by reviewing revenue growth, profit margins, and debt levels. Consistent profitability indicates stability and potential for growth. 
• Government Policies: Policy changes can greatly impact government company shares and PSU listed companies. Monitoring PSU stocks for long-term investments on the list of all PSU stocks in India provides insight into how policies affect stock performance.
• Market Position: Evaluate a PSU’s market share and growth prospects. Checking the PSU companies listed in NSE and comparing them with other government companies in the stock market helps identify the top 10 PSUs in India for investment.
• Valuation: Compare stock valuations with industry peers by reviewing the list of PSU stocks in India and government stocks in the share market to identify the best opportunities.