Navratna Companies in India: Eligibility Criteria and Stock Performance

Navratna Companies are a group of companies in the Central Public Sector Enterprises (CPSEs) that have enhanced financial autonomy. The Government of India initially awarded the Navratna status to nine public sector undertakings (PSUs) in 1997. Over the years, the list of Navratna Companies has expanded to 13 (listed companies only), including some top PSUs such as BHEL, and Hindustan Aeronautics Limited.

CPSEs are divided into several categories, including Maharatna companies, Navratna companies, and Miniratna companies. In this article, we will explore only the Navratna companies listed in the Indian market and their historical stock performance.

Among these, Navratna Companies are given certain privileges, allowing them to invest up to Rs 1,000 crore without necessitating explicit government approval. Additionally, they have the flexibility to allocate 15% of their net worth for a specific project or up to 30% of their net worth over the entire year, all while adhering to the Rs 1,000 crore limit. This enhanced autonomy provides Navratna companies with a competitive edge when participating in the global market.

Criteria:

To attain Navratna status, specific criteria must be met. Firstly, CPSEs should be categorized as Miniratna I and included in Schedule ‘A.’ Furthermore, they must have achieved either an ‘excellent’ or ‘very good’ MOU rating in at least three of the previous five years. Additionally, they should maintain a composite score of 60 or higher across six critical performance indicators. Some of the indicators and their respective weights include Net Profit to Net Worth, Manpower Cost to Total Cost of Production or Cost of Services, Earnings Per Share, and Inter-Sectoral Performance. Meeting these criteria is essential for CPSEs to become eligible for Navratna status.

Navratna Companies in India:

According to the data, RVNL, engaged in railway construction and a prominent player in the same field, emerged as the top performer by generating an impressive multibagger return of 353% for its investors in the last year. Engineering India secured the second position in the list, generating a return of 128% during the same period.

On the other hand, Container Corporation disappointed its investors during the same period, as the stock generated a mere 2% return in the last year.

If we compare the sizes of these companies, three companies, namely ONGC, Hindustan Aeronautics, and BEL Limited, have a market capitalization of over Rs 1 lakh crore.

Investors should keep an eye on the stocks of these Navratna companies.

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.