Top PSU Shares to Invest in India 2024: Best Public Sector Companies for Your Portfolio

Public Sector Undertakings (PSUs) in India have shown remarkable performance and growth in recent years. Here is a detailed analysis of some of the top PSU shares to watch in 2024, backed by financial snapshots and growth trajectories.

1. ONGC

Oil and Natural Gas Corporation (ONGC) is India’s largest producer of crude oil and natural gas, responsible for around 70% of the country’s production. ONGC Videsh, its wholly-owned subsidiary, is a key player in the international energy market.

Financial Highlights (2019-2023):

• Revenue Growth: 13.6% CAGR

• Net Profit Growth: 4.7% CAGR

• Return on Capital Employed (RoCE): 13.9%

• Return on Equity (RoE): 12.8%

ONGC has maintained a healthy balance between mature and new oil fields, with significant investments planned for the Krishna-Godavari basin to boost production by 2027.

2. Mazagon Dock Shipbuilders Limited (MDL)

Mazagon Dock Shipbuilders is a pivotal player in India’s defense sector, specializing in building and repairing warships, submarines, and other naval vessels.

Financial Highlights (2019-2023):

• Revenue Growth: 11.2% CAGR

• Net Profit Growth: 21.6% CAGR

• RoCE: 24.4%

• RoE:16.3%

MDL has consistently reported high profits and is expanding into underwater heavy engineering and offshore platforms, with plans to increase capital expenditure for its dry dock operations.

3. Engineers India

Engineers India provides comprehensive project management, consultancy, and engineering services, particularly in the hydrocarbon, petrochemical, and infrastructure sectors.

Financial Highlights (2019-2023):

• Revenue Growth:11.9% CAGR

• RoCE:16.9%

• RoE: 24.1%

With a robust domestic and international presence, Engineers India is capitalizing on the green energy wave, actively engaging in solar, wind, and hydrogen projects.

4. State Bank of India (SBI)

State Bank of India is a banking giant with a strong retail franchise and significant market share in competitive segments.

Financial Highlights (2018-2022):

• Net Profit Growth:18x increase

• Advances Growth: 10.8% CAGR

• RoE:18.4%

SBI has improved its asset quality significantly, reducing its NPA ratio to 0.4% and positioning itself well for future growth, driven by government capital outlay plans and rising credit demand.

5. Bharat Electronics

Bharat Electronics supplies radar, communication, and electronic warfare equipment to the Indian armed forces and has a diverse product portfolio.

Financial Highlights (2019-2023):

• Revenue Growth:10.7% CAGR

• Net Profit Growth: 15.8% CAGR

• RoCE:28.7%

• RoE:20%

The company’s growth is supported by increased indigenization and a strong local supply chain network, with substantial order book growth reported in December 2023.

6. Coal India

Coal India is the world’s largest coal producer, accounting for 80% of India’s total coal production.

Financial Highlights (2019-2023):

• Revenue Growth: 9.8% CAGR

• Net Profit Growth: 31.9% CAGR

• RoCE: 70.8%

• RoE: 53.7%

Coal India has shown robust performance driven by strong demand from the power and steel sectors, along with successful substitution of imported coal.

7. IREDA

Indian Renewable Energy Development Agency (IREDA) is a government-owned entity focusing on financing renewable energy projects.

Financial Highlights (2019-2023):

• Revenue Growth: 13.6% CAGR

• Net Profit: Rs 8.6 bn in March 2023

• RoCE: 8%

• RoE: 12.4%

IREDA has significantly improved its asset quality, with net NPAs falling to 1.5% by December 2023, and is set for growth with fresh fundraising plans.

8. RITES

RITES Ltd, under the Ministry of Railways, offers comprehensive services across the transportation infrastructure lifecycle.

Financial Highlights (2019-2023):

• Revenue Growth: 10.6% CAGR

• Net Profit Growth: 9.9% CAGR

• RoCE: 29.9%

• RoE: 21.7%

RITES boasts a strong order book and is expanding internationally, particularly targeting markets with different railway gauges.

9. Rail Vikas Nigam Limited (RVNL)

RVNL is a key player in Indian rail infrastructure, handling diverse projects including line doubling, gauge conversion, and electrification.

Financial Highlights (2019-2023):

• Revenue Growth: 21.8% CAGR

• Net Profit Growth: 20.1% CAGR

• RoCE: 15.2%

• RoE: 18.1%

Recently recognized as a Navratna company, RVNL has a strong order book and is expanding into metro line development and international markets.

10. Power Finance Corporation (PFC)

PFC provides financing across the power sector and has diversified into infrastructure and renewable energy projects.

Financial Highlights (2019-2023):

• Net Interest Income Growth: 10% CAGR

• RoA: 2.5%

• RoE: 20%

PFC is strategically placed to benefit from India’s infrastructure push and has significantly reduced its net NPAs to 0.86% by December 2023.

Additional PSU Stocks to Watch

Bank of Maharashtra

With a diverse clientele, this public sector bank is poised to facilitate growth across various sectors in India.

Bharat Heavy Electricals Limited (BHEL)

A key player in the power generation sector, BHEL is actively exploring renewable energy solutions.

Dredging Corporation of India (DCI)

DCI’s expertise in dredging and maritime infrastructure is crucial as India focuses on developing its coastal regions and waterways.

Housing and Urban Development Corporation (HUDCO)

HUDCO plays a vital role in financing affordable housing and urban development initiatives.

Conclusion

The pro-business stance of the Indian government and PSU-favorable policies have driven significant gains in PSU stocks in FY24. With the Indian economy projected to be the world’s fastest-growing, these PSUs are well-positioned for sustained growth and should be on every investor’s watchlist.