Top 5 Performing PSEs of FY24: Powering Returns and Progress!

Public Sector Enterprises (PSEs) have seen significant growth driven by substantial order inflows, highlighting the government’s commitment to initiatives like Atmanirbhar Bharat and Make in India. This upward trajectory has also benefited other PSEs, resulting in noteworthy gains for them too. In this blog, we delve into the top 5 PSE stocks that stood out in FY24, providing substantial returns to investors.

Following are the top 5 performing PSE stocks of FY24:

REC Ltd: REC is a Central Public Sector Enterprise operating under the Ministry of Power, specializing in financing projects across the entire power sector value chain, encompassing generation, transmission, and distribution. With a staggering 299.91% one-year return and a decent Return on Capital Employed (ROCE) of 9.14%, REC capitalized on the growing demand for power infrastructure financing.

Bharat Heavy Electricals Ltd: Bharat Heavy Electricals Ltd (BHEL) is a comprehensive power plant equipment manufacturer involved in the design, engineering, manufacturing, erection, testing, commissioning, and servicing of a diverse array of products and services. Its offerings cater to various core sectors of the economy, including power, transmission, industry, transportation, renewable energy, oil & gas, and defence. BHEL stands as the premier engineering and manufacturing company in India, owned and governed by the Government of India. With a remarkable 236.52% return. Though lacking a P/E ratio due to negative earnings, BHEL’s strong presence in core sectors like power and defence positions it for future growth. Its low debt and diverse product portfolio are some of the positive indicators.

Power Finance Corporation Ltd: Power Finance Corporation Limited (PFC) is recognized as a Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI) as an Infrastructure Finance Company. PFC’s primary focus is on providing financial support to the Indian power sector. PFC’s impressive 228.79% return and decent ROCE of 9.08% reflects its role in fuelling India’s power sector ambitions.

Hindustan Aeronautics Ltd: Hindustan Aeronautics specializes in aircraft and helicopter manufacturing, as well as the repair and maintenance of aircraft and helicopters. HAL’s 141.21% return signifies investor confidence in the growing Indian aerospace sector. With a robust ROCE of 30.58% and zero debt, HAL stands out for its financial strength and strategic importance.

Oil India: Oil India Ltd is involved in the exploration, development, and production of crude oil and natural gas, as well as the transportation of crude oil and the production of LPG. Additionally, it offers various exploration and production-related services for oil blocks. Oil India’s 132.79% return reflects the global surge in energy prices. Its high ROE of 25.23% and low Debt/Equity ratio of 0.56 solidify its financial standing.

The success of these PSEs can be attributed to several factors:

Government Focus on Infrastructure: The Indian government’s continued emphasis on infrastructure development, particularly in the power and energy sectors, fuelled demand for the services offered by these PSEs.

Economic Rebound: India’s economic recovery post-pandemic led to increased demand for electricity, oil, and gas, benefitting the core businesses of these PSEs.

Strategic Importance: These PSEs play a crucial role in India’s self-reliance initiatives in strategic sectors like defence and energy.

Conclusion

The top 5 performing PSEs in FY24 exemplify the potential of India’s public sector enterprises, and while FY24 witnessed exceptional performance, investors should maintain a cautious optimism for the future. Factors like global economic conditions, energy prices, and government policies will influence the trajectory of these PSEs.

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.