Last Updated on Dec 6, 2024 by Anjali Chourasiya
Public Sector Undertakings (PSUs) play a crucial role in India’s economic landscape. These government-owned companies, whether fully or partially, operate in key industries such as energy, infrastructure, and finance, ensuring the delivery of essential services to the public. With a government stake of at least 51%, PSUs are known for their stability and long-term investment potential. Investing in PSU stocks offers exposure to these critical sectors, often providing reliable dividend income and less market volatility compared to private-sector stocks. In this article, we will explore the various aspects of PSU stocks, their features, benefits, risks, and how they differ from regular stocks.
Table of Contents
Top Listed PSU Stocks in India – Updated 2024
| Name | Sub-Category | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | 5Y CAGR (%) | Debt to Equity (%) |
| Hindustan Aeronautics Ltd | Aerospace & Defense Equipments | 302,376.58 | 4,559.65 | 39.68 | 64.10 | 0.00 |
| Bharat Electronics Ltd | Electronic Equipments | 228,686.43 | 313.75 | 57.39 | 55.78 | 0.00 |
| Bharat Dynamics Ltd | Aerospace & Defense Equipments | 44,566.67 | 1,219.80 | 72.74 | 51.97 | 0.00 |
| National Aluminium Co Ltd | Metals – Aluminium | 45,026.86 | 248.26 | 22.64 | 41.84 | 0.01 |
| Indian Railway Catering and Tourism Corporation Ltd | Online Services | 66,612.00 | 830.60 | 59.95 | 36.63 | 0.02 |
| NBCC (India) Ltd | Construction & Engineering | 27,013.50 | 103.62 | 67.27 | 35.25 | 0.00 |
| Moil Ltd | Mining – Manganese | 6,977.51 | 355.35 | 23.79 | 21.33 | 0.00 |
| RITES Ltd | Business Support Services | 13,834.18 | 296.20 | 30.38 | 16.17 | 0.00 |
| Engineers India Ltd | Construction & Engineering | 11,481.96 | 204.53 | 25.79 | 14.74 | 0.01 |
| India Tourism Development Corp Ltd | Tour & Travel Services | 5,650.06 | 672.60 | 80.32 | 14.04 | 0.00 |
Note: The data in the list of the best 10 PSU stocks in India is taken from the Tickertape Stock Screener on 5th December 2024. It is based on the following filters:
- 5Y CAGR: Sorted from highest to lowest
- Debt to Equity: Set to Low
🚀 Pro Tip: Use Tickertape’s Portfolio Analysis to assess your investment portfolio’s diversification and performance.
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.
- 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.
- Disclosures for PSU Banks for SIP smallcase
- Disclosures for Quantace PSU Stars smallcase
What is PSU?
PSU full form stands for Public Sector Undertaking. A PSU is a government-owned corporation or company in which the central or state government holds a majority stake of 51% or more. These companies operate across various industries in India, such as energy, infrastructure, banking, and manufacturing. The key objective of a public sector undertaking in India is to undertake commercial activities while contributing to economic development. Prominent examples of government company shares include Indian Oil Corporation, Bharat Petroleum, and Coal India.
PSUs in India are categorised into three types based on their financial strength and market presence: Maharatna, Navratna, and Miniratna. The government categorises these PSU listed companies to determine their level of autonomy and decision-making power. The Maharatna company list includes some of the largest and most profitable Indian government stocks, while Navratnas and Miniratnas operate on a smaller scale.
Overview of the Top PSU Stocks to Invest in India
Hindustan Aeronautics Ltd
Hindustan Aeronautics Ltd (HAL), established in 1940, is a premier aerospace and defence company in India. It is primarily engaged in designing, manufacturing, and maintaining aircraft, helicopters, and related systems for the Indian Armed Forces.
As of 5th December 2024, Hindustan Aeronautics Ltd has a market capitalisation of Rs. 3,02,376.58 cr. and a closing price of Rs. 4,559.65. The company has a PE ratio of 39.68 and a 5-year compound annual growth rate (CAGR) of 64.10%. Its debt-to-equity ratio is 0.00%, indicating no long-term debt.
Bharat Electronics Ltd
Bharat Electronics Ltd (BEL), established in 1954, is a leading public-sector company specialising in electronic equipment for defence and civilian use. It develops a wide range of products, including radar systems, communication equipment, and electronic voting machines.
As of 5th December 2024, Bharat Electronics Ltd has a market capitalisation of Rs. 2,28,686.43 cr. and a closing price of Rs. 313.75. The company has a PE ratio of 57.39 and a 5-year CAGR of 55.78%. It maintains a debt-to-equity ratio of 0.00%.
Bharat Dynamics Ltd
Bharat Dynamics Ltd, founded in 1970, is a key player in India’s aerospace and defence industry, specialising in the production of missile systems and related defence equipment for the Indian Armed Forces.
As of 5th December 2024, Bharat Dynamics Ltd has a market capitalisation of Rs. 44,566.67 cr. and a closing price of Rs. 1,219.80. The company has a PE ratio of 72.74 and a 5-year CAGR of 51.97%. Its debt-to-equity ratio stands at 0.00%.
National Aluminium Co Ltd
National Aluminium Co Ltd (NALCO), incorporated in 1981, is a prominent public-sector enterprise involved in aluminium production. It operates across the aluminium value chain, from bauxite mining to aluminium smelting.
As of 5th December 2024, National Aluminium Co Ltd has a market capitalisation of Rs. 45,026.86 cr. and a closing price of Rs. 248.26. The company has a PE ratio of 22.64 and a 5-year CAGR of 41.84%. Its debt-to-equity ratio is 0.01%.
Indian Railway Catering and Tourism Corporation Ltd
Indian Railway Catering and Tourism Corporation Ltd (IRCTC), established in 1999, is a government-owned enterprise that provides catering, tourism, and online ticketing services for the Indian Railways.
As of 5th December 2024, Indian Railway Catering and Tourism Corporation Ltd has a market capitalisation of Rs. 66,612.00 cr. and a closing price of Rs. 830.60. The company has a PE ratio of 59.95 and a 5-year CAGR of 36.63%. Its debt-to-equity ratio is 0.02%.
NBCC (India) Ltd
NBCC (India) Ltd, established in 1960, is a government-owned construction and engineering company involved in infrastructure development, project management, and real estate services.
As of 5th December 2024, NBCC (India) Ltd has a market capitalisation of Rs. 27,013.50 cr. and a closing price of Rs. 103.62. The company has a PE ratio of 67.27 and a 5-year CAGR of 35.25%. Its debt-to-equity ratio is 0.00%.
Moil Ltd
Moil Ltd, founded in 1962, is India’s largest producer of manganese ore. It plays a crucial role in supplying manganese to the steel and other metallurgical industries.
As of 5th December 2024, Moil Ltd has a market capitalisation of Rs. 6,977.51 cr. and a closing price of Rs. 355.35. The company has a PE ratio of 23.79 and a 5-year CAGR of 21.33%. Its debt-to-equity ratio is 0.00%.
RITES Ltd
RITES Ltd, established in 1974, is a government-owned engineering consultancy company offering transport infrastructure services, including railways, highways, and ports.
As of 5th December 2024, RITES Ltd has a market capitalisation of Rs. 13,834.18 cr. and a closing price of Rs. 296.20. The company has a PE ratio of 30.38 and a 5-year CAGR of 16.17%. Its debt-to-equity ratio is 0.00%.
Engineers India Ltd
Engineers India Ltd, established in 1965, is a public-sector engineering consultancy firm providing services for projects in the oil, gas, and petrochemical sectors.
As of 5th December 2024, Engineers India Ltd has a market capitalisation of Rs. 11,481.96 cr. and a closing price of Rs. 204.53. The company has a PE ratio of 25.79 and a 5-year CAGR of 14.74%. Its debt-to-equity ratio is 0.01%.
India Tourism Development Corp Ltd
India Tourism Development Corp Ltd (ITDC), established in 1966, is a government enterprise focusing on the development and promotion of tourism in India. It operates hotels, restaurants, and tourism services.
As of 5th December 2024, India Tourism Development Corp Ltd has a market capitalisation of Rs. 5,650.06 cr. and a closing price of Rs. 672.60. The company has a PE ratio of 80.32 and a 5-year CAGR of 14.04%. Its debt-to-equity ratio is 0.00%.
Features of PSU Stocks
When you invest in PSU stocks, you are essentially purchasing shares of companies that the government partially or fully owns. These stocks come with certain features that differentiate them from private-sector stocks:
- Government Ownership: In a PSU, the government holds a significant portion of the company’s shares, often ensuring stability and long-term viability.
- Stable Dividend Payouts: Many PSU stocks tend to offer consistent dividend payouts as a result of their steady cash flows and government backing. These payouts can provide regular income to investors.
- Lower Volatility: PSU stocks in sectors like energy and utilities may show lower volatility compared to some private-sector companies due to their essential services and government control.
- Public Sector Involvement: Many PSUs operate in key industries that are crucial to national development. This public sector involvement can make these companies less susceptible to market disruptions.
- Strong Asset Base: Most PSU companies have a strong asset base and access to natural resources, which contributes to their long-term profitability.
PSU Vs Regular Stocks
One question that often arises is: “How are PSU stocks different from regular stocks?” The primary distinction lies in the ownership and control of the companies. Here’s a comparison between PSU stocks and regular (private sector) stocks:
| Feature | PSU Stocks (Public Sector Undertakings) | Regular Stocks (Private Sector) |
| Ownership | The government holds a majority stake | Private individuals or entities |
| Dividend Payouts | Generally higher and more stable | Varies based on company policy |
| Volatility | Relatively lower | Can be high depending on sector |
| Government Involvement | High government intervention | Minimal to no government involvement |
| Risk | Generally lower risk | Varies; could be high-risk high-reward |
Why Invest in PSU Stocks?
People often wonder, “Why should you invest in PSU stocks?” There are several reasons why investors consider public sector undertakings in India to be a solid choice, especially in the context of long-term, low-risk investments.
Stable Dividends
Central public sector enterprises often provide higher dividends, making them attractive to investors seeking regular income. Many public sector undertakings in India have well-established businesses with consistent cash flows, allowing for reliable payouts. For those looking for steady returns, exploring the list of all PSU stocks in India can help identify companies offering stable dividends.
Lower Volatility
Given the government’s majority control and intervention, PSU stocks may offer more stability during economic downturns. The essential services provided by PSUs, such as utilities, oil, and gas, can also shield them from drastic market fluctuations. This is particularly true for central public sector undertakings operating in critical industries.
National Importance
PSUs operate in strategic sectors such as defence, energy, and infrastructure. These sectors are critical for the economy, making failure relatively unlikely. For example, many investors consider best government stocks in India and best PSU bank stocks to buy now for their reliability and role in nation-building.
Valuation
Some PSU stocks may be available at lower valuations compared to their private counterparts, offering investors good value for money. Reviewing the list of government stocks in India is an excellent starting point for identifying undervalued opportunities in the market.
Long-Term Growth
Although PSU stocks might not provide exponential growth in the short term, they may offer steady, long-term appreciation as the government continues to develop sectors like energy, banking, and infrastructure. If you’re considering long-term investments, focusing on the best government shares to buy in India could lead to consistent growth over time.
Investing in PSU stocks offers a unique combination of stability, national importance, and attractive valuations. By evaluating the list of all PSU stocks in India and prioritizing the best government stocks in India, investors can balance their portfolios with reliable, low-risk investments.
Types of PSU companies
Central Public-Sector Enterprises (CPSE)
These companies are where the central government holds a stake of more than 15%. Such companies are further classified into strategic CPSEs and non-strategic CPSEs. Companies engaged in strategic sectors like defence (arms and ammunition, military aircraft, military hardware, and other related commodities), railways, atomic energy, and others are strategic CPSEs.
Types of CPSEs
Based on their financial autonomy, CPSEs are further classified into three types:
1. Maharatna stocks
There are 11 Maharatna companies in India. In the past, these entities have been Navratna companies. Maharatna companies enjoy the greatest financial and authoritative autonomy of the lot. They don’t have to seek the government’s approval for every decision. This reduces their dependency and hastens the decision-making process. It also aids their growth and helps them compete at a global level.
Maharatna companies enjoy the liberty of choosing their investments; they can invest 15% of their net worth. Since these companies operate on a larger scale, they have an investment ceiling of Rs. 5,000 cr.
2. Navratna stocks
Navratna companies have more operational flexibility and freedom compared to Miniratna companies. These companies will have enjoyed the status of a Miniratna company having four independent board members. This status gives companies complete autonomy.
Although Navratna companies can invest without the government’s approval, there are certain restrictions on the amount that can be invested. Such companies can invest up to Rs. 1,000 cr., or 15% of their net worth on a single project, or 30% of their net worth in the entire year, whichever is less. Together, these benefits have given Navratna companies financial freedom and have increased their efficiency and growth prospects.
3. Miniratna stocks
There are 78 Miniratna companies in India. These companies are further divided into two categories – categories I and II. Miniratna status is given to companies that improve efficiency and competitiveness. Such companies are free to use funds based on predetermined limits. Miniratna category I companies can invest up to Rs. 500 cr. or a sum equal to their net worth, whichever is less.
On the other hand, Miniratna category II companies can invest Rs. 300 cr. or 50% of their net worth, whichever is lower. They don’t require prior approval from the government to make investments. This has opened up many opportunities for organisations, making way for expansion.
State-Level Public Entities (SLPE)
State-Level Public Entities (SLPE) are companies in which a state government or another state-owned SLPE holds more than 51% of the ownership stake. These entities are similar to central PSUs but are managed and controlled by individual state governments. SLPEs typically operate within sectors critical to state-level infrastructure, utilities, and services such as transportation, power generation, and local industries. Their primary goal is to contribute to the state’s economic development while fulfilling public service obligations.
Public-Sector Banks (PSB)
Public-Sector Banks (PSB) are financial institutions where the central government or another public-sector bank holds more than 51% of the voting shares. These banks play a significant role in India’s financial system, providing services like loans, savings accounts, and deposits while supporting government initiatives like financial inclusion. The Nifty PSU Bank Index tracks the performance of major PSBs, giving investors a snapshot of the overall health of this sector. Banks like the State Bank of India (SBI) and Punjab National Bank (PNB) are prominent PSBs.
Joint Ventures (JVs)
Joint Ventures (JVs) are business arrangements where two or more parties come together to undertake a specific project or business activity, with each party contributing resources like capital or expertise. In the case of public-sector JVs, the government partners with private companies or other public entities to form a joint venture, typically to achieve large-scale projects. These ventures help pool resources, manage risks, and leverage the strengths of both the public and private sectors for mutual benefit.
How to Invest in PSU Stocks?
If you are wondering how to invest in PSU stocks, you can follow these simple steps:
- Stock Market: PSU stocks are listed on the major stock exchanges in India, such as NSE and BSE. You can invest in them via any investing platform.
- Mutual Funds: Several mutual funds focus on public sector undertakings, which allow investors to gain exposure to PSU stocks without directly purchasing shares.
- ETFs: Exchange-Traded Funds (ETFs) track the PSU index, allowing investors to invest in a basket of PSU stocks.
- Government Disinvestment Programs: The government periodically sells its stake in PSUs through disinvestment programs. These offers allow retail investors to purchase shares at potentially attractive prices.
How to Choose the Best PSU Stocks to Invest in?
When you are looking at the best PSU stocks, there are certain factors you should consider:
- Financial Performance: You can analyse a company’s financial statements, such as revenue, profit margins, and debt levels, to gauge its performance.
- Dividend History: If consistent dividend payouts are important to you, check the company’s dividend track record.
- Sector Outlook: Since PSUs operate in critical sectors, it’s essential to look at the overall sector performance and future growth prospects.
- Government Policies: Government initiatives and policy changes can significantly impact PSU stocks. You might want to stay updated on any policy changes related to disinvestment or sector reforms.
- Market Capitalization: Investing in larger, more established PSUs can provide more stability. You can check the PSU company list to find the biggest players in the sector.
Advantages of Investing in PSU Stocks
Investing in PSU stocks offers several potential benefits:
Government Backing
Since the government has a vested interest in public sector undertakings in India, these companies often receive support during times of financial trouble. This makes government sector share list options a reliable investment for stability.
Stable Dividends
As mentioned earlier, PSU companies listed in NSE are known for their best PSU stocks for dividends, providing a regular income stream to investors. These stocks are an excellent choice for those seeking stable and consistent payouts.
Lower Risk
Public sector stocks, particularly the top PSU stocks in India, are inherently less risky due to their government backing and strategic importance. Stocks in the government company share list offer a buffer against extreme volatility compared to private-sector peers.
Long-Term Investment Potential
While PSUs may not provide explosive short-term growth, they are ideal for long-term investors. The top 10 government stocks or best PSU stocks to buy in 2024 often include companies in critical sectors like energy and infrastructure. For steady appreciation, explore PSU shares list options, particularly the top 5 PSU stocks in India for 2024.
What Are the Risks of Investing in PSU Stocks?
Despite the benefits, investing in government companies in stock market comes with certain risks:
Bureaucratic Control
Many PSU companies in India face slow decision-making due to bureaucratic procedures, which can affect profitability. This is something investors should consider before selecting from the PSU stocks list NSE.
Lack of Innovation
PSUs may lag behind private companies in adopting new technologies, limiting growth potential. When exploring Indian PSU stocks, this lack of innovation may present challenges in rapidly evolving industries.
Political Influence
Indian PSUs are often subject to political pressures, leading to decisions that might not align with shareholder interests. This is particularly relevant for stocks in the govt sector shares category.
Disinvestment Risk
The government’s decision to sell its stake in PSUs can unlock value but may also create volatility. Monitoring stocks from the government share list or PSU sectors can help navigate such fluctuations.
Things to Know Before Investing in PSU Stocks
Here are a few points to consider before investing in public sector company stocks:
- The government has set disinvestment targets to reduce its stake in PSUs and encourage private participation. Tracking PSU stocks list NSE helps in understanding the impact of these policies.
- PSU stocks are closely tied to core economic sectors. Key indicators such as GDP growth and employment generation can provide insights into the performance of PSU companies in India.
- Govt company shares are known for stability and high dividends but may lag in capital appreciation. The top PSU companies in India are often slow movers in terms of price growth.
As in any case, you should only invest in PSU stocks after analysing them thoroughly. Use Tickertape’s Stock Pages to access a wealth of information about PSU companies. You can access details on financials, holdings, and corporate actions to make data-backed investment decisions.
To Conclude
Investing in PSU stocks provides a combination of government backing, stable dividends, and long-term growth potential. By focusing on the top PSUs in India and reviewing the PSU stocks list, investors can make informed decisions that offer stability and consistent returns. Whether you’re looking at the best PSU stocks to buy in 2024 or exploring the list of central government companies, PSU stocks remain an excellent option for balanced portfolios.
However, as with any investment, there are potential risks, including political influence and bureaucratic control, which investors should consider. Whether you’re looking for long-term value or a stable income source, understanding the PSU sector and making informed choices can help you navigate this space effectively. Always remember to assess financial performance, sector outlook, and government policies before investing in public sector undertakings in India.
Frequently Asked Questions (FAQs)
What is PSU stock?
Public Sector Undertakings (PSUs) are companies where the government holds most of the stake. Stocks of such companies are called PSU stocks.
Do PSU stocks have a long-term future?
Yes, PSU stocks have a long-term future as they are government-backed. Most of the time, these companies are not allowed to fail.
Is investing in PSUs a wise idea?
It depends on personal factors such as investment objective, risk tolerance, and return expectation. PSUs are known to be slow-growing but stable. They are known to offer attractive dividends; however, the capital appreciation is typically lesser than growth stocks. If these align with your preferences, you can invest in PSUs after thoroughly analysing them.
How to check PSU share price?
Checking PSU share price is no different than the usual stocks. One of the ways to do this is by visiting the respective Stock Page on Tickertape. In addition to a live price chart, the Stock Pages have a wealth of information on the PSU’s financials, price forecast, corporate actions, and so on.
How to find PSU bank stocks?
Step 1: Go to Tickertape Stock Screener
Step 2: Under ‘Sector’, select ‘Public banks’
Explore other popular stock collections on Tickertape –
Here’s are some of the popular stock collections across different sectors in India:
