Best PSU Stocks to Buy in 2024

Best PSU Stocks to Buy in 2024 : SMC Global Securities

If you’re looking for the best PSU stocks to buy, then it’s important for you to know that as of 2024, the PSU industry is regaining 17.3% of India’s market dominance and is on an incredible upward trajectory. PSUs are the engine of India’s economy, powering vital sectors, including mining, banking, energy, and infrastructure.

What are PSU Stocks?

Public Sector Undertaking, or PSU, stocks are ownership shares in companies held by the Indian government. These companies are involved in significant banking, infrastructure, and energy sectors. State Bank of India, Coal India, and NTPC are examples. PSU equities are renowned for their consistency, frequent dividend payments, and strategic significance to the nation’s economy.

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Top 10 PSU Stocks to Invest in 2024

  1. Coal India
  2. SBI
  3. ONGC
  4. GAIL
  5. NTPC
  6. IOCL
  7. Power Grid Corp
  8. Hindustan Aeronautics Ltd
  9. Bharat Electronics Ltd
  10. Indian Railway Finance Corp Ltd

Overview of Best PSU Stocks to Invest in India

1. Coal India

The Ministry of Coal Government of India (CGI), owns Coal India Limited (CIL), a significant public sector organisation in India. With more than 300 mines, the company operates mixed, opencast, and underground mines. A solid dividend yield of 4.95% is offered by CIL company stock.

2. SBI

Serving over 48 crore clients through its extensive network of over 22,405 branches, 65,627 ATMs/ADWMs, and 76,089 BC shops, SBI is the largest bank in India, holding 1/4th of the market. SBI’s share price is rising primarily, so investors’ interest in SBI’s shares is also on the rise.

3. ONGC

About two-thirds of the nation’s domestic production is produced by ONGC. This crude oil is refined into essential petroleum products like petrol, diesel and LPG by downstream companies like BPCL, IOC, and ONGC’s subsidiaries, HPCL and MRPL.

4. GAIL

GAIL India Limited is a vertically integrated gas corporation. It processes, transports, markets and transmits liquefied petroleum gas (LPG). It also regasifies liquefied natural gas (LNG); and produces and markets petrochemicals. GAIL is now trading above its 20-day, 50-day, and 200-day EMAs, indicating a strong bullish trend.

5. NTPC

NTPC, India’s largest power utility, has a total installed capacity of 76,015 MW (including joint ventures). NTPC’s TTM P/E ratio is 15.64, compared to the sector’s P/E of 18.63. The corporation is on track to become India’s largest integrated power provider, with a goal capacity of 130 GW by 2032.

6. IOCL

IOCL is a public sector organisation based in New Delhi but registered in Mumbai. The Ministry of Petroleum and Natural Gas oversees its operations. Indian Oil controls over half of India’s petroleum product market, 35% of national refining capacity (via its subsidiary Chennai Petroleum Corporation Ltd. (CPCL), and 71% of downstream sector pipeline through capacity.

7. Power Grid Corp

More than half of the electricity produced in India is transmitted over Power grid’s network. The company’s operations include power transmission, distribution, and energy trading. The stock is now in a solid bullish trend, and investors have advised it to continue to hold it.

8. Hindustan Aeronautics Ltd

Hindustan Aeronautics Limited (HAL) is an Indian public sector defence and aerospace company located in Bangalore. The company has extensive expertise in designing and manufacturing various aircraft and equipment.

9. Bharat Electronics Ltd

Bharat Electronics (BEL), a significant Navratna stock in the defence PSU group, has pulled back somewhat from Rs 300 levels, making it an excellent investment for future good returns. BEL’s growth prediction remains solid, making it a popular choice among investors.

10. Indian Railway Finance Corp Ltd

IRFC is a Schedule ‘A’ Public Sector Enterprise administered by the Ministry of Railways, Government of India. It is also registered with the Reserve Bank of India as a Systemically Important Non-Deposit Taking Non-Banking Financial Company (NBFC – ND-SI) and an Infrastructure Finance Company (NBFC-IFC).

Latest Performance of Top 10 PSU Stocks

Company Name Mar Cap.

(Cr).

ROCE % CMP  Debt / Eq

%

ROE % P/E Div Yld %
Coal India Ltd. ₹ 2,97,380 65.1 ₹ 482 0.08 53.4 7.96 5.03 
SBI ₹ 7,39,270 6.68  ₹ 828 1.54 20.1 10.2 1.64
ONGC ₹ 3,36,082 18.4 ₹ 267 0.45 16.3 6.69 4.24
GAIL ₹ 1,33,705 14.6  ₹ 203 0.28 14.0 13.4 2.70
NTPC Ltd. ₹ 3,48,789 10.4 ₹ 360 1.48 13.5 16.8 2.02
IOCL ₹ 2,28,976  20.6 ₹ 162 0.72 25.4 5.78 3.07
Power Grid Corp ₹ 2,86,691  13.0 ₹ 308 1.42 18.3  18.4 3.63
Hindustan Aeronautics Ltd ₹ 3,30,977 38.9 ₹ 4,949 0.00 28.9 43.6 0.55
Bharat Electronics Ltd ₹ 2,14,871 34.8 ₹ 294 0.00 26.4 54.0 0.61
Indian Railway Finance Corp Ltd ₹ 2,31,051 5.73 ₹ 177 8.38 13.6  36.0 0.85

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Overview of the PSU Stocks in Indian Market

PSUs are among the largest employers in India. It has created thousands of jobs in cities across India. Besides this, PSUs are essential in establishing government policies and programme. They are involved in implementing government programme for rural development, poverty reduction, socioeconomic welfare, etc.

Advantages and Risks Associated with Investing in PSU Stocks

PSU stock investments include many benefits, including stability, dividend income, and potential for long-term development. These stocks have a more cautious character and a sense of security because the government supports them.

However, certain risks are to be considered, including bureaucracy, earnings volatility, and political interference. Furthermore, PSU stocks might underperform privately owned companies because they place less emphasis on shareholder value.

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Why Should You Invest in PSU Stocks in India?

PSU stocks have soared, outperforming the Nifty. They are seeing phenomenal development, with some exceeding 100% in a year and others rising by 300-400%. In May 2024, the percentage of public sector companies in India’s overall stock market valuation reached a seven-year high of more than 16 per cent, boosted by a robust increase in state-owned companies. This spike is a massive increase from the low of 7.8 per cent in October 2020, which has doubled since then and contrasts with the peak of 29 per cent in February 2009.

How to Start Investing in PSU Stocks?

SMC streamlines your trading experience, allowing you to manage your investments confidently and successfully without any hassle. Invest in PSU stocks with our professional guide.

Here are three easy steps to start investing in PSU stocks :

  1. Go to the official website of SMCtradeonline or simply download the app
  2. Open a free demat account
  3. Start investing

WHY SMC

  • 20 Lac+ unique clients
  • 33+ Years of Serving
  • Advance Technical Analysis
  • Free Demat Account



Conclusion

While many PSUs have been continually successful throughout the years, others have suffered setbacks owing to market competitors, inefficiency, and more. As a result, before investing in PSU stocks, you should conduct thorough research and consider numerous elements that influence investment decisions.

Author: All Content is verified by SMC Global Securities.

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