Best Government Stocks in December 2024 Based on 5-Yr CAGR: RVNL, HAL, BEL, BDL

Government stocks in India refer to shares of publicly listed companies that are owned or controlled by the government. In this article, find the best government stocks list in December 2024, based on the 5-yr CAGR. Also, learn the pros and cons of investing in government stocks.

Best Government Stocks in India December 2024 – Based on 5yr CAGR

Note: The best government stocks list provided here is as of December 3, 2024. The stocks are sorted based on their 5-yr CAGR.

Overview of the Best Government Stocks in December 2024

1. Rail Vikas Nigam Ltd

Rail Vikas Nigam Ltd (RVNL) takes up different types of rail infrastructure projects assigned by the Ministry of Railways (MoR), including doubling, gauge conversion, new lines, railway electrification, major bridges, etc. In FY 2024, the company’s total income reached ₹22,915.13 crore, up from ₹21,285.51 crore in FY 2023, an increase of 7.66% YoY. The profit for FY 2024 was ₹1,462.95 crore, an increase from ₹1,267.97 crore in FY 2023, showcasing a growth of 15.38% YoY.

Key metrics:

• Return on Equity (ROE): 19.69%
• Return on Capital Employed (ROCE): 17.44%

2. Hindustan Aeronautics Ltd

Hindustan Aeronautics Ltd (HAL) is engaged in the manufacturing of aircraft and helicopters and repairs and maintains them. The company is a Navaratna Status Public Sector Undertaking (PSU) under the Ministry of Defence. In FY 2024, the company’s total income was ₹32,27,768 lakh, up from ₹28,59,758 lakh in FY 2023. The profit for FY 2024 was ₹7,62,095 lakh, an increase from ₹5,82,773 lakh in FY 2023.

Key metrics:

• ROE: 28.91%
• ROCE: 24.58%

3. Bharat Electronics Ltd

Bharat Electronics Ltd (BEL) is a Navratna PSU under the Ministry of Defence, Government of India. BEL provides advanced electronic products for the Indian Army. In FY 2024, the company’s total income was ₹20,93,838 lakh, up from ₹18,01,524 lakh in FY 2023. The profit for FY 2024 was ₹3,98,524 lakh, an increase from ₹2,98,624 lakh in FY 2023.

Key metrics:

• ROCE: 30.17%
• ROE: 26.37%

4. Bharat Dynamics Ltd

Bharat Dynamics Ltd (BDL) was incorporated as a PSU under the Ministry of Defence. The company is engaged in the manufacturing base for guided missile systems and allied equipment for the Indian Armed Forces. In FY 2024, the company’s total income was ₹2,73,110.44 lakh, up from ₹2,64,479.47 lakh in FY 2023. The profit for FY 2024 was ₹61,272.06 lakh, an increase from ₹35,217.49 lakh in FY 2023.

Key metrics:

• ROCE: 11.34%
• ROE: 17.89%

5. REC Limited

REC is a Central Public Sector Undertaking which comes under the Ministry of Power. The company is engaged in financing projects in the complete power sector value chain from generation to distribution. In FY 2024, the company’s total income was ₹47,214.15 crore, up from ₹39,252.73 crore in FY 2023. The profit for FY 2024 was ₹14,019.21 crore, an increase from ₹11,054.64 crore in FY 2023.

Key metrics:

• ROCE: 3.57%
• ROE: 22.19%

What are Government Stocks?

Government stocks refer to shares of companies that are majority-owned or fully controlled by the government. These companies can either be operated by the central government (Central Public Sector Enterprises or CPSEs) or by state governments (State Public Sector Enterprises or SPSEs). In India, government stocks are primarily issued by public sector enterprises (PSEs) in sectors such as energy, infrastructure, banking, defence, and telecommunications.

CPSEs like Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), and Life Insurance Corporation of India (LIC) are listed on major stock exchanges such as the NSE and BSE. Tamil Nadu Newsprint and Papers Limited (TNPL) is an example of state-owned stock.

Benefits of Investing in Government Stocks

• Stability: Government-backed companies are less likely to experience significant financial instability, offering a safer investment option compared to private sector stocks.
• Long-Term Growth Potential: Government stocks, especially in critical sectors like infrastructure and energy, often have strong growth potential over the long term.
• Lower Volatility: Due to government support, these stocks tend to be less volatile than stocks of private companies.
• Economic Growth: Investing in government stocks allows investors to support businesses that play a role in national development and economic growth.

Disadvantages of Investing in Government Stocks

• Slower Growth: Government stocks can sometimes experience slower growth compared to high-growth private sector companies, limiting the potential for capital appreciation.
• Political Influence: As these companies are government-controlled, they may be influenced by political decisions, which can lead to inefficiency or delays in decision-making.
• Limited Innovation: Public sector companies may not be as innovative or adaptable to changing market conditions, which could limit their growth potential.
• Risk of Privatisation: In some cases, government stocks could face the risk of privatisation, which may alter the dynamics of ownership and impact stock values.

Conclusion

Apart from the government stocks list provided above, there are several other stocks from the state and central government of the country. Before investing in any stock it is necessary to check the business of the company, their financials and future prospects. Understand your investment objective and risk appetite before investing.

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.