List Of Best PSU Stocks in India 2024

Regardless of whether you are experienced or new in the stock market, PSU stocks offer some sense of safety. PSUs represent the backbone of India’s economy and, as a result, offer relatively high dividend yields and low risks. 

In today’s blog, we will discuss India’s best PSU stocks for 2024 based on the market capitalization. We will find out why these stocks have earned themselves popularity not only for a short period but also from a long-term perspective that can assist investors in fulfilling their investment objectives.

Overview of PSU Sector

PSUs (Public sector undertakings) are government entities actively contributing to India’s economic development. PSUs are involved in the most important sectors of the country, including energy, banking, and infrastructure, which, in turn, are the drivers of national progress and economic development. PSU stocks generally operate in critical sectors like power, banking, infrastructure, etc. At present, the investor community has a golden opportunity to invest in the PSU sector.

Top PSU Stocks in India Based on Market Capitalization

The top PSU stocks in 2024 are

Market Capitalization

Best PSU Stocks in India 2024 – An Overview

The best PSU stocks in India are given below, along with a brief overview of the services they provide:

1. Life Insurance Corp. of India

Life Insurance Corporation of India is an insurance and investment corporation. As an insurance company, it offers a wide range of insurance products and is India’s largest institutional investor, with a total of $630 billion of assets under management. It was established on 1 September 1956. LIC invests in various sectors of the Indian economy and helps drive its growth. 

2. Oil & Natural Gas Corp. Ltd.

Oil and Natural Gas Corporation (ONGC) is India’s biggest oil exploration and production company and is known for how much it adds to the country’s energy sector. Set up in 1956, ONGC searches for crude oil and natural gas fields on land and at sea. It has a key part to play in India’s energy security, with its operations ranging from finding to refining and selling, which makes it a major force in the nation’s economic scene.

3. NTPC Ltd. 

NTPC Ltd., India’s premier energy conglomerate, is highly regarded for its supremacy in power generation and associated endeavors. Boasting a diverse portfolio encompassing thermal, hydro, and renewable energy streams, NTPC influences the fulfillment of India’s escalating electricity requirements. Operational excellence and commitment to sustainable development propel NTPC, continually expanding its national and overseas footprint with valuable contributions toward energy security and the environment.

4. Hindustan Aeronautics Ltd.

Hindustan Aeronautics Limited (HAL) is one of the premier aerospace and defense companies in India. Founded in 1964, it undertakes the designing and building of aircraft, helicopters, and aerospace components. The major projects being undertaken by HAL are the Tejas Light Combat Aircraft and the Dhruv helicopter. It is currently involved in numerous modernization programs and international collaborations, which will substantially contribute to making India self-reliant in defense technology.

5. Power Grid Corp. of India Ltd.

Power Grid Corporation of India Ltd. is one of the leading state-owned electric utility companies that operates in the transmission of bulk power over India. The company was incorporated in 1989 and is responsible for more than 50% of India’s interstate and interregional electric power transmission. With robust infrastructure and efficient operations, the corporation plays a pivotal role in India’s power sector, ensuring reliable and quality electricity supply across the nation.

6. Coal India Ltd.

Coal India Ltd. (CIL), established in 1975, is undisputedly the world’s largest coal company. CIL contributes significantly to India’s energy demands and remains pivotal in the nation’s energy landscape by operating 430 mines and producing 997.25 million tons of coal during 2023-24. It assumes a huge responsibility to the economy, given that CIL is a supplier of coal to power generation, steelmaking, and other industries. 

7. Indian Oil Corp. Ltd.

Indian Oil Corporation Limited occupies the pride of place among petroleum refining and marketing companies. Incorporated in 1959, IOCL has built a formidable network across the length and breadth of the country to serve its customers. IOCL has been at the forefront of pursuing innovative and sustainable initiatives by building a portfolio in renewable energy and increasing its geographic presence across borders.

8. Indian Railway Finance Corp. Ltd.

Indian Railway Finance Corporation Ltd. (IRFC) is a finance arm of the Indian Railways. It raises financial resources from the market for the expansion of Indian railways through various borrowing mechanisms and leases out assets to Indian Railways. IRFC also provides advisory services to the Ministry of Railways on issues related to the development of railway projects and infrastructure financing.

9. Power Finance Corp. Ltd.

Power Finance Corporation Limited is one of the prime Indian PSUs, and it’s engaged in financing the power sector. The PFC was built in 1986 and gives financial support not only to projects connected with the generation of power but also to those on transmission and distribution. It plays a very prominent role in India’s power infrastructure development. The company also shows interest in renewable energy projects and strives to contribute to the implementation of various government initiatives. 

10. BHEL

Bharat Heavy Electricals Limited (BHEL) started in 1956 and is India’s biggest power generation equipment manufacturer. It focuses on making power plant gear such as turbines and boilers and also produces electrical and electronic goods. BHEL has a key role in India’s power creation, distribution, and green energy areas, helping India achieve economic growth.

Comparative Study of PSU Stocks

Performance of PSU Stocks

Key Performance Indicators

Benefits of Investing in PSU Stocks 

The benefits of investing in PSU Stocks are:

• Safe and Trustworthy: PSU stocks provide steady returns, as the government supports them.
• Dividend Income: Most PSU stocks are known to provide regular dividends to their investors, therefore making them attractive for people seeking additional cash flow.
• Diversification benefit: These PSUs have sectoral exposure to energy, finance, and infrastructure and can offer sector diversification under a single-investment theme to the investors.

Factors to Consider Before Investing in PSU Stocks

An investor must consider the following factors before investing in PSU stocks:

• Government Rules: Analyze the government’s rules that impact sectors like power, banks, etc. It can alter the performance of the stock.
• Performance: Check whether PSU is delivering on its commitments, what it owes, how much it makes, and the cash it has. 
• Industry Future: The performance of the industry can significantly determine the worth of the stock.

Future of PSU Stocks 

The outlook for PSU stocks in India is promising, as the government has changed gears toward privatization and strategic disinvestment. This has brought efficiency and, hence, higher profitability that will capture the attention of investors. Also, investors are getting attracted to PSUs because of better corporate governance and the likelihood of higher dividends. Market performance will depend upon political stability and the general economic climate. While investing in PSU stocks, one needs to take care of the various dynamics of the respective sectors and government policies.

Conclusion 

PSU stocks are, hence, among the most prominent segments of the Indian equity market and stand as a synonym for stability and government support. They generally offer steady dividends and are perceived as a safe investment owing to government ownership. PSU stocks are also riddled with bureaucratic inefficiencies and policy changes at the Central Government level, sometimes even having slow growth compared to their peers in the private sector. 

While they offer stability and dividend yield, investors must be cautious of factors like market conditions and economic policies before investing in PSU stocks. However, it is advised to consult a financial advisor before investing.

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