Discover the Best PSU Penny Stocks in India: Top Picks Under Rs 100

Investors often find penny stocks attractive due to their potential for high returns despite their low trading prices. In India, stocks trading below Rs 100 are generally considered penny stocks. To navigate this landscape effectively, it’s crucial to focus on companies with strong fundamentals that can withstand market fluctuations over time.

Currently, the Public Sector Undertaking (PSU) sector is showing promising growth, bolstered by a stable government and positive economic outlook. Anticipation is high that the Union Budget 2024 will bring significant announcements for railways, infrastructure, and renewable energy, potentially boosting PSU stocks further.

Here, we present a selection of PSU stocks trading below Rs 100, chosen based on rigorous fundamental criteria including Return on Equity (ROE), Return on Capital Employed (ROCE), and debt-to-equity ratio.

1 MMTC (Metals and Minerals Trading Corporation of India)

Stock Price: Rs 84

Market Cap: Rs 126 billion

MMTC is a leading public sector trading company in India, majorly involved in trading minerals, precious metals, metals, agro-products, coal & hydrocarbons, and fertilizers. The stock has surged 40% in 2024, driven by the government’s plan to divest a 15% stake from its current 89.9% holding.

2 Bank of Maharashtra

Stock Price: Rs 64

Market Cap: Rs 449 billion

Bank of Maharashtra, a public sector bank with over 2,341 branches, has seen its stock rise by 39% in 2024. The bank boasts the lowest net NPAs among PSU banks at 0.2% of total advances. Its net profit has grown at a CAGR of 23% over the past five years, leading to an ROE of 22.8% as of March 2024.

3 Indian Overseas Bank (IOB)

Stock Price: Rs 62

Market Cap: Rs 1,173 billion

Indian Overseas Bank, one of the oldest PSU banks, has seen a 43% increase in its stock price in 2024. The government currently holds a 96.4% stake in IOB, which it plans to reduce to below 75% in compliance with market regulations. The bank’s net profit reached Rs 26.6 billion in FY24, with expectations of further growth driven by a focus on housing and jewel loan segments.

4 Central Bank of India

Stock Price: Rs 62

Market Cap: Rs 537.5 billion

Central Bank of India has improved its net NPA from 1.77% to 1.23% and is focusing on digital banking and other segments. The stock has gained 22% in 2024, and the government plans to reduce its 93.1% stake by about 18% by August 2024.

5 PTC India Financial Services

Stock Price: Rs 51

Market Cap: Rs 32.4 billion

As an infrastructure finance company, PTC India Financial Services provides financing solutions across the energy value chain. The stock has increased by 15% in 2024, despite past challenges. The company’s revenue for FY24 was Rs 7.8 billion, with a profit of Rs 1.6 billion.

6 UCO Bank

Stock Price: Rs 54

Market Cap: Rs 648 billion

UCO Bank offers various banking services, including international banking and e-banking solutions. The bank’s net NPAs are among the lowest at 0.89% of total advances, and its stock has risen by 35% in 2024. The bank’s net profit has grown at a CAGR of 190% over the last three years, with an ROE of 13.1%.

7 Andrew Yule

Stock Price: Rs 44

Market Cap: Rs 22 billion

Andrew Yule, involved in the manufacturing of tea, transformers, and other engineering products, has underperformed in 2024. The company’s fortunes could improve with better tea production and management of its debt metrics. The government currently holds over 89% stake in the company.

Other Noteworthy PSU Penny Stocks

Apart from the highlighted seven, several other PSU stocks trade below Rs 100. Here are a few:

• Indbank Merchant Banking Services Ltd. - Rs 49.9

• Punjab & Sind Bank - Rs 59.1

• HMT Ltd. - Rs 68.2

• Bharat Immunologicals & Biologicals Corporation Ltd. - Rs 29.7

• Gujarat State Financial Corporation Ltd. - Rs 24.3

• Hindustan Fluorocarbons Ltd. - Rs 18.8

• Hindustan Organic Chemicals Ltd. - Rs 45.1

• Ind Bank Housing Ltd. - Rs 63.0

• Mahanagar Telephone Nigam Ltd. - Rs 40.6

• Mysore Paper Mills Ltd. - Rs 7.4

• Tamilnadu Telecommunications Ltd. - Rs 10.1

• Punjab Communications Ltd. - Rs 68.1

• IFCI Ltd. - Rs 60.9

In Conclusion, Investing in PSU penny stocks can be rewarding but comes with risks, especially as the government may reduce its holdings in these companies to raise funds. Staying informed about market trends, government policies, and the financial health of these companies is essential for making smart investment decisions in this segment.