Best PSU Stocks in India 2024

Public sector undertakings, or PSUs, are the backbone of India's economy. This is because the majority stake (51% or more) in these companies belongs to the government. Investing in PSU companies offers great opportunities because they influence essential sectors of the economy like energy, banking, and infrastructure. 

Public Sector Undertakings (PSUs) play a crucial role in the stock market, often earning a reputation for reliability. In this article, we will reveal some of the best PSU stocks in India that stand out due to their strong performance and growth potential. With these insights, you can make more informed decisions to stabilize and diversify your portfolio. So let’s get started!

Public Sector Undertakings (PSUs) - Brief Overview

PSU plays a big role in shaping India’s economy. These are companies that make public welfare the priority over profits. They focus on generating employment and developing infrastructure that directly benefits you. PSU is prevalent in many sectors, be it energy, banking, or even telecommunications. These companies help impact daily life and economic stability.

These enterprises are the ones that create major jobs. They offer thousands of opportunities nationwide, and this makes them among the largest if not the largest, employers in India. In addition to all these, PSUs execute and shape government policies, especially the ones that are aimed at rural development, poverty alleviation, and all-round improvement to the socio-economic sector.

The financial health of PSUs varies from one sector to another. Although many have been consistent in profitability and resilience, others struggle because of competitive pressures and inefficiencies in operations. As an investor, you have to thoroughly research the performance and strategic outlook of different PSUs before you invest. This analysis will help you find the best PSU stocks in India to ensure they contribute positively to your financial portfolio. 

List of Best PSU Stocks in India 2024

Below is a list of all PSU stocks in India that stand out:

Best PSU Stocks - Overview

1. Coal India Ltd

Coal India Ltd (CIL) is the largest coal-producing company in the world that is owned by the government. Its headquarters is in Kolkata, and it operates under the Ministry of Coal. CIL contributes approximately 82% of the total coal production in India. With substantial annual output and revenue, CIL plays a pivotal role in the energy sector and the national economy of India.

Since 1975, CIL has been running more than 300 mines in eight states. The company is a giant with a special title “Maharatna”, which means it's one of the best-performing PSUs you can find.

If you have ever heard of the Indian Institute of Coal Management (IICM), that is Coal India's very own training institute. Apart from mining, they are also the ones in charge of nurturing brains to oversee those mines and the business in general. To add to this, they have some big names under their wing like Bharat Coking Coal Limited. Coal India is huge in its impact, and with a market cap of Rs. 3,12,082 Cr and ROCE of 63.6%, it is one of the best PSU stocks in India.

Here is an overview of the company's fundamentals:

• Market Cap: Rs 3,12,082 Cr.

• Return on Capital Employed (ROCE): 63.60%

• Stock Price: Rs 506

• P/E Ratio: 11.4

• Average ROI in 5 Years: 38.02%

• Debt-to-Equity Ratio: 0.076

• Average Net Profit Margin in 5 Years: 18.67%

• Dividend Yield: 5.03%

2. Indian Railway Catering and Tourism Corporation Ltd (IRCTC)

IRCTC was established in 1999 and is the premier service provider for Indian Railways. The company operates under the Ministry of Railways and offers comprehensive ticketing, catering, and tourism services. IRCTC has a good user base and daily ticket bookings. It is crucial in India's railway infrastructure and tourism sector.

They have revolutionized the sector, now you can just book train tickets online using your phone or PC. The company also owns Rail Neer, a brand of processed, purified, and bottled water.

They have a substantial market cap of ?74,012 crore, a PE ratio of 72.48, and an average ROI of 31.08% over the past five years. However, their debt stands at a ratio of 3.40, but it is nothing to worry about as it is well managed with its average profit margin of 25.66% which allows it to make it into the best PSU stocks list.

Here is an overview of the company's fundamentals:

• Market Cap: Rs 74,012 Cr.

• Return on Capital Employed (ROCE): 53.80%

• Stock Price: Rs 925

• P/E Ratio: 72.48

• Average ROI in 5 Years: 31.08%

• Debt-to-Equity Ratio: 3.4

• Average Net Profit Margin in 5 Years: 25.66%

• Dividend Yield: 0.70%

3. NMDC Ltd

NMDC Ltd, formerly known as National Mineral Development Corporation specializes in mineral exploration and production. As the largest iron ore producer and exporter in India, NMDC operates mechanized mines across different states. They extract various minerals like iron ore, copper, rock phosphate, limestone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, coal, etc. The company plays a crucial role in  India's mining sector and this is shown by its diverse portfolio and significant production capacity.

As one of India's best iron ore producers, they supply the steel used to build homes and offices. Their market cap is a solid Rs. 65,678 cr, and their PE ratio is at 12.84, which proves that their stocks are well-priced for what you get. The average ROI over five years is 24.48% and debt-to-equity is at 1.87. They also have good profit with a 31.43% average margin and a 2.94% dividend yield. These numbers make NMDC one of the best PSU stocks to buy.

Here is an overview of the company's fundamentals:

• Market Cap: Rs 65,678 Cr.

• Return on Capital Employed (ROCE): 31.90%

• Stock Price: Rs 224

• P/E Ratio: 12.84

• Average ROI in 5 Years: 24.48%

• Debt-to-Equity Ratio: 1.87

• Average Net Profit Margin in 5 Years: 31.43%

• Dividend Yield: 2.94%

4. NBCC (India) Ltd

NBCC (India) Ltd is a PSU under the Ministry of Housing and Urban Affairs. It is a premier construction company with diverse operations. They specialize in project management consultancy, engineering, procurement, construction, and real estate development. NBCC has a good presence at the national and international levels. 

Their headquarters is in New Delhi, and with 31 regional offices across India, the company has executed landmark projects in many sectors. NBCC also extends its expertise to implement key government initiatives and serve as an extended engineering arm for multiple ministries and state governments.

The company has been in charge of construction involving the government since 1960. They are a big player in the sector, with a market cap of Rs. 30,263 cr. 

Their PE ratio of 72.74 indicates that they have attained a premium status. They are good with money, proven by an ROI of 13.29% over five years, and their debt is almost nonexistent at a ratio of 0.02. However, profits are slim, with margins around 2.74%. Their dividend yield is also 0.32%. Given these figures, NBCC (India) Ltd earns its place in the list of top PSU stocks

Here is an overview of the company's fundamentals:

• Market Cap: Rs 30,263 Cr.

• Return on Capital Employed (ROCE): 32.70%

• Stock Price: Rs 168

• P/E Ratio: 72.74

• Average ROI in 5 Years: 13.29%

• Debt-to-Equity Ratio: 0.02

• Average Net Profit Margin in 5 Years: 2.74%

• Dividend Yield: 0.32%

5. Engineers India Ltd

Engineers India Ltd, or EIL, is a Navratna public sector enterprise that was established in 1965. It is a premier technology, engineering consultancy, and licensing company. The company’s headquarters is in New Delhi, and it provides solutions across hydrocarbon, infrastructure, and synergic sectors. EIL has a global presence and diverse workforce, and it has continued to drive innovation in industrial engineering and technology.

The company is valued at Rs. 13,383 cr. on the market. They’re well positioned, with a PE ratio of 32.54, and have handed their investors an average ROI of 14.75% in the last five years. They have a very balanced debt to equity at 0.96, meaning they know how to handle finances without having to borrow. Lastly, their profit margin averages 9.36%, and they have a dividend yield of 1.26%.

Here is an overview of the company's fundamentals:

• Market Cap: Rs 13,383 Cr.

• Return on Capital Employed (ROCE): 22.60%

• Stock Price: Rs 238

• P/E Ratio: 32.54

• Average ROI in 5 Years: 14.75%

• Debt-to-Equity Ratio: 0.96

• Average Net Profit Margin in 5 Years: 9.36%

• Dividend Yield: 1.26%

Factors to Consider Before Investing in PSU Stocks in India

Now that we have explored the list of PSU stocks and overview, let’s check out the things to consider before investing in the best PSU stocks in India.

Government Policies and Reforms

Get updates on government policies and reforms regarding the sectors in which the PSU is operational. Any changes in privatization plans, government initiatives, and regulations are known to impact the performance of PSU stocks.

Sector Outlook

Judge the prospects of the sector in which the PSU is operating. Analyze demand-supply dynamics, technological advancement, regulatory changes, and industry trends to capture the growth potential of the sector.

Financial Performance

One can evaluate the financial soundness and performance of the PSU by looking at the revenue growth, debt levels, profitability, and historical financial statements. It helps in identifying any stability in the company and the prospects of growth.

Risks and Challenges

It is essential to analyze risks and challenges directly related to the PSU and the respective industry. These could be technology, disruptions because of regulatory changes, operational problems, and competition from private enterprise companies.

Dividend Yield

PSU stocks mostly yield good dividends. Analyze the dividend yield and payout ratio to find out whether PSU can generate adequate money to provide consistent dividends and fulfill its commitments made to shareholders.

Competitive Scenario

The position of the company in the market, the competitors, and competitive advantages in its sector would provide an idea about the long-term prospects of the company.

How to Invest in the Best PSU Stocks in India

Now that you know the things to consider before investing, let’s check out the steps for investing in the best PSU stocks:

• Understand PSU Sectors: PSU stocks are available in various sectors like Banking, Infrastructure, and Energy. Research them for better investment choices

• Company Performance: Analyze the financial health of the company and sector growth potential

• Choose a Platform: Open Demat account and trading account through a trusted stockbroker

• Investment Duration: Choose between short-term or long-term based on your goals

• Place Your Order: Log in to Rupeezy, search, and purchase the stock

• Monitor Investments: Track stock performance and stay updated with the trends

Conclusion

Before you invest in PSU stocks, examine the financial health and sector performance of each company. In this article, we have looked at specific PSUs like Engineers India Ltd, NBCC, IRCTC, and NMDC, highlighting their main metrics, pros, and cons, such as market cap and profit margins. With this information, you gain insight into potential returns and stability.

There are more PSU stocks to invest in India. Simply download the Rupeezy trading app to explore the best PSU stocks. Remember, making informed choices is the key to successful investing. So, dive in, research thoroughly, and invest wisely.