Top PSU stock to Invest in 2024

youtube thumb alt
 
Top PSU stock to Invest in 2024

by Tanushree Jaiswal Last Updated: Feb 23, 2024 - 09:04 am 2.3k Views
Listen icon

After years of colonial rule, India's economy faced challenges, necessitating focus on planned development through public-sector units (PSUs) to foster self-reliance & economic growth. These entities, predominantly government-owned, played pivotal role in sectors like steel, oil, & banking, driving employment & competitiveness. As part of financing & regulatory strategies, many PSUs were listed on stock market, delivering commendable returns & contributing to indices like BSE PSU Index, which surged over past five years.

What are PSUs? 

PSUs, or public sector undertakings, are companies where government holds majority stake, aimed at fostering economic growth & development, particularly in core sectors such as finance, energy, & infrastructure. They are further categorized as Central Public Sector Undertakings (CPSUs), State Public Sector Undertakings (SPSUs), & public sector banks (PSBs), each with varying levels of government control.

How PSUs are Classified?

PSUs in India are classified based on ownership & government control, with distinctions like Maharatna, Navratna, & Miniratna based on financial autonomy & performance criteria. These entities contribute significantly to sectors like energy, mining, & infrastructure, reflecting stable & lucrative investment opportunities influenced by government policies & privatization trends.

Among top PSU stocks in India to Invest in 2024 are following stalwarts 

1. REC
REC is Central Public Sector Undertaking under Ministry of Power involved in financing projects in complete power sector value chain from generation to distribution.

Key Financial Highlights for 9M FY24
1. Total Income stands at Rs. 34,571 crores (19% YoY)
2. Net Profit stands at Rs. 10,003 crores (24% YoY)
3. Total Comprehensive Income Rs. 9,880 crores (53% YoY)
4. Loan book reached to Rs. 4.97 lakh crores (21% YoY)
5. Assets Quality improved with Net Credit impaired Assets at 0.82%(vs. 1.12% YoY)
6. Net-worth stands at ₹ 64,787 crores (18% YoY)
7. Capital Adequacy Ratio at 28.21% (Tier – I : 25.35% & Tier – II : 2.86%)
 
2. Power Grid 
Power Grid Corporation of India Limited is Maharatna CPSU & India’s largest electric power transmission company. GoI holds 51.34% stake in company as on March 31, 2021. PGCIL was incorporated in 1989 to set up extra-high voltage alternating current & high-voltage direct current (HVDC) transmission lines.

The company moves large blocks of power from central generating agencies & areas that have surplus power to load centres within & across regions. It is under administrative control of Ministry of Power, GoI.

Key Financial Highlights for 9M FY24
1. In Dec 2023, company reported total revenue of ₹ 11,550 crore, showcasing slight increase from ₹ 11,267 Cr. in Sep 2023, indicating positive trend in sales performance. 
2. Moreover, operating profit margin remained stable at 88% in Dec 2023, compared to 86% in Sep 2023, reflecting efficient cost management & operational effectiveness.3. Furthermore, net profit for Dec 2023 stood at ₹ 4,028 crore, showing moderate rise from ₹ 3,781 Cr. in Sep 2023, suggesting steady growth trajectory. 

Additionally, comparing Dec 2023 with Dec 2022, company exhibited significant improvement in both revenue & profitability, with revenue increasing from ₹ 11,262 Cr. to ₹ 11,550 crore, & net profit escalating from ₹ 3,645 Cr. to ₹ 4,028 crore, demonstrating robust financial performance & enhanced operational efficiency over year.

3. Coal India 
Coal India is another Maharatna company. CIL accounts for almost 40% of commercial energy requirements of India. It is largest coal producing company in world & enjoys near-monopoly status in India. CIL has set ambitious target of 1 billion tonne coal production in 2024-25.

Key Financial Highlights for 9M FY24
1. Total revenue in Dec 2023 increased by ₹ 3,378 Cr. compared to Sep 2023, reaching ₹ 36,154 crore. Compared to Dec 2022, it saw rise of ₹ 985 crore.
2. Operating profit for Dec 2023 surged by ₹ 3,236 Cr. from Sep 2023 to ₹ 11,373 crore. In comparison to Dec 2022, it increased by ₹ 1,984 crore.
3. Net profit in Dec 2023 experienced significant increase of ₹ 2,280 Cr. compared to Sep 2023, totalling ₹ 9,094 crore. Compared to Dec 2022, it rose by ₹ 1,375 crore.

4. NTPC
NTPC along with its subsidiaries & joint ventures is largest power company in India engaged in generation of electricity. It is also involved in engineering, project management, construction management, & operation & management of power plants.

Key Financial Highlights for 9M FY24
1. Total revenue in Dec 2023 slightly decreased to ₹ 42,820 Cr. compared to Sep 2023, which stood at ₹ 44,983 crore.
2. Operating profit for Dec 2023 decreased marginally to ₹ 11,362 Cr. compared to Sep 2023, which was ₹ 12,680 crore.
3. Net profit in Dec 2023 showed slight increase to ₹ 5,209 Cr. compared to Sep 2023, which was ₹ 4,726 crore.
4. Comparing Dec 2023 to Dec 2022, total revenue decreased by ₹ 1,163 crore, operating profit decreased by ₹ 1,458 crore, & net profit increased by ₹ 383 crore.

5. ONGC
ONGC is largest crude oil & natural gas Company in India, contributing around 71 per cent to Indian domestic production.

Key Financial Highlights for 9M FY24
1. Total revenue in Dec 2023 decreased to ₹ 165,569 Cr. compared to Sep 2023, which stood at ₹ 146,874 crore.
2. Operating profit for Dec 2023 decreased to ₹ 20,024 Cr. compared to Sep 2023, which was ₹ 28,255 crore.
3. Net profit in Dec 2023 decreased to ₹ 10,748 Cr. compared to Sep 2023, which was ₹ 16,553 crore.
4. Comparing Dec 2023 to Dec 2022, total revenue increased by ₹ 18,695 crore, operating profit decreased by ₹ 8,231 crore, & net profit increased by ₹ 1,145 crore.

Summary of Top PSUs Financial

Sr.No. Stock Name ROE ROCE Stock P/E Return on assets Int Coverage
1 REC Ltd 20.4 % 9.14 % 9.24 2.55 % 1.58
2 Power Grid 19.6 % 13.1 % 16.7 6.21 % 3.01
3 Coal India Ltd 56.0 % 70.5 % 9.36 14.4 % 51.6
4 NTPC Ltd 12.0 % 9.83 % 16.9 3.99 % 3.2
5 ONGC 14.1 % 13.9 % 7.54 6.38 % 8.69

Each demonstrating resilience & growth potential despite market fluctuations & regulatory challenges. Factors such as revenue growth, profit margins, & dividend yields are key indicators driving investor interest & confidence.

Conclusion

While PSU stocks offer attractive valuations & dividend yields, investors must conduct thorough research to identify most promising opportunities, considering factors like financial performance, government policies, & industry outlook. Despite potential hurdles like bureaucratic inefficiencies, ongoing wave of privatization & reforms is reshaping PSU landscape, presenting avenues for long-term investment & growth.

How do you rate this blog?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

oda_gif_reasons_colorful

About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.

Disclaimer

Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
Enjoy 0%* Brokerage with 5paisa
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Vodafone Idea FPO Allotment Status

About the Vodafone Idea FPO The stock of Vodafone Idea Ltd has a face value of ₹10 per share and the price band for the book building FPO (follow-on public offer) has been set in the range of ₹10 to ₹11 per share. The FPO of Vodafone Idea Ltd will entirely be a fresh issue of shares with no offer for sale (OFS) component. The fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive.

Market Outlook for 23 April 2024

Nifty started the week on a positive note above 22300 mark. The index consolidated within a range throughout the day and ended around its day’s high above 22350 with gains of a percent. Nifty Today:

Market Outlook for 22 April 2024

Our markets corrected sharply in the week gone by mainly due to uncertainty over global geopolitical tensions and selling by the FIIs which resulted in the index breaking the 22000 mark. However, we witnessed recovery from the low of 21780 in the last trading session and Nifty ended around 22150 with a weekly loss of over one and a half percent.