Best PSU Stocks in India in September 2024 – Based on 5Y CAGR

Public Sector Undertakings (PSUs) have long been a cornerstone of many economies, playing a crucial role in sectors like energy, transportation, and utilities. For investors, PSU stocks offer a blend of stability, dividends, and potential for growth. In this article, we will explore the best PSU stocks in India in September 2024.

Best PSU Stocks in India in September 2024 – Based on 5Y CAGR

Note: The best PSU stocks list given here have been sorted on the basis of 5Y CAGR as of September 12, 2024.

Overview of the Best PSU Stocks in September 2024

• Rail Vikas Nigam Ltd

Incorporated in 2003, Rail Vikas Nigam Ltd is engaged in the business of implementing various types of Rail infrastructure projects assigned by MoR, including doubling, gauge conversion, new lines, railway electrification, major bridges, workshops, Production Units and sharing of freight revenue. In FY 2024, the company’s total income reached ₹23,074.80 crore, up from ₹21,278.01 crore in FY 2023. The profit for FY 2024 was ₹1,574.47 crore, an increase from ₹1,341.75 crore in FY 2023. During Q1 FY25, the company had an order book of ₹83,221 crore, out of which the company has executed the top line of ₹22,000 crore.

Key metrics:

• Return on Equity (ROE): 20.4%
• Return on Capital Employed (ROCE): 18.7%

• Hindustan Aeronautics Ltd

Hindustan Aeronautics Ltd (HAL) manufactures aircraft and helicopters, repairs them, and maintains them. The company is a Navaratna Status Public Sector Undertaking (PSU) under the Ministry of Defence. As of May 2024, HAL’s order book stood at ₹94,000 crores, almost ₹12,000 crores more than the order book from last year. 

Key metrics:

• ROE: 28.9%
• ROCE: 38.9%

• Bharat Dynamics Ltd

Bharat Dynamics Ltd (BDL) was incorporated as a PSU under the Ministry of Defence. The company is the manufacturing base for guided missile systems and allied equipment for the Indian Armed Forces. During FY24, BDL executed and completed numerous orders, such as the Heavy Weight Torpedo order, the Export contract of Light Weight Torpedo, the Akash (Indian Air Force) order, etc. As of March 31, 2024, the total order book stood at ₹19,434 Crore.

Key metrics:

• ROCE: 17.9%
• ROE: 24.2%

• Bharat Electronics Ltd

Bharat Electronics Ltd (BEL) is a Navratna PSU under the Ministry of Defence, Government of India. The company produces advanced electronic products for the Indian Army. During Q1 FY25l, BEL achieved a turnover of ₹4,400.27 crores, reflecting a YoY increase of 19.1%. As of July 31, 2024, the company’s order book stood at ₹76,705 crore.

Key metrics:

• ROCE: 26.3%
• ROE: 34.6%

• REC Ltd

REC is a Central Public Sector Undertaking under the Ministry of Power involved in financing projects in the complete power sector value chain from generation to distribution. The company’s total portfolio of infrastructure logistics is about 12% of its total assets under management. Going forward, the company believes that it may go up to 20% by the end of 2030.

Key metrics:

• ROE: 22.2 %
• ROCE: 10%

Benefits of Investing in PSU Stocks

• Stable Dividends: Thanks to their government backing and stable revenue streams, PSUs often provide regular and stable dividend payments, which can be attractive for income-focused investors.
• Government Support: PSUs benefit from government support, which can provide stability in times of economic uncertainty. This support might include financial aid, policy backing, and protection from extreme market fluctuations.
• Established Market Position: Many PSUs have established and dominant positions in their respective sectors (like energy, transportation, and utilities), which can provide some business stability and growth potential.

Conclusion 

Investing in PSU stocks possesses the potential to provide income in the form of dividends and capital appreciation. However, there are PSU stocks apart from the list mentioned above. It is necessary to do research before investing in PSU stocks.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.