When people think of PSUs, they believe that these PSU companies lag in quality standards and are inefficient. People fear to invest in PSUs, but there are exceptions! Some PSUs function better than private companies and plan for societal development, making billions of amount every year. This is the reason why investing in PSUs for the long term is a good option that you will never regret.
What are PSUs?
Public sector undertakings are organizations where the government holds the majority of its stake and is aimed at economic growth in core sectors like infrastructure, energy, and finance. They are also classified as CPSUs (Central Public Undertakings, Public Sector banks, and State Public Sector Undertakings with different levels of government control. In this blog, we will discuss the top PSUs that you must invest in 2024 that are:
Oil & Natural Gas Corporation
Oil and Natural Gas Corporation also called ONGC was established in 1993. ONGC is the most popular PSU in India mainly engaged in oil production and exploration. It is among the leading natural gas and crude oil companies engaged in the development, exploration, and production of natural gas, crude oil, and other petroleum products. Key subsidiaries are Mangalore Refinery, ONGC Videsh Limited, HPCL Biofuels Limited, Hindustan Petroleum Corporation, Mangalore Petrochemicals Limited, and Petronet MHB Limited.
Power Grid
The next PSU company that you should invest in 2024 is Power Grid Corporation of India Limited India’s largest electric power transmission and Maharatna Central Public Undertaking company. The government of India has a 51.3 percent stake in the company from 31st March 2021. Power Grid was established in 1989 and was founded to set up high voltage direct current and extra high voltage alternating current. Power Grid moves huge power blocks from central generating agencies that have surplus power to load centers across different regions. It is run by the Ministry of Power, India.
State Bank of India Ltd
State Bank of India is the largest PSU bank in India. It has more than 200 offices in the country and internationally. The State Bank has contributed to the economic development and growth of the country by taking major initiatives for rural India. The State Bank of India holds a strong loan book with asset quality. Also, the State Bank has a smaller number of non-performing assets.
Coal India Ltd
Coal India is no doubt the backbone of the Indian economy. It was established in 1975. It primarily involves coal mining and is spread across 8 different states in India. Coal India has more than 300 mines that include mixed, underground, and opencast. It is governed by the Indian Institute of Coal Management which is a corporate training institute in India. Coal India is a Maharatna company and has different subsidiaries. A few of them are Mahanadi Coalfields Limited, Bharat Coking Coal Limited, and Central Coalfields Limited. You may invest in Coal India if you are considering PSU stock to add to your portfolio in 2024.
NHPC
Another PSU stock that you should consider to invest in 2024 is the National Hydroelectric Power Corporation. It was set up in 1975. This company is involved in the sale of bulk power and generation of power. A few of the main business activities of NHPC are consultancy assignment services, project management, power trading, construction contracts, and much more. A few of the subsidiary companies are Chenab Valley Power Projects, Loktak Downstream Hydroelectric Corporation Limited, and Jalpower Corporation Limited,
Indian Railway Finance Corp
This PSU company was set up in 1986. Indian Railway Finance Corp looks after the finances of Indian Railways. The primary business of the Indian Railway Finance Corp is to borrow money from the financial market to finance the asset creation. They are further leased out to the Indian railway.
GAIL (India) Ltd
Gail is among India’s leading natural gas organizations. It has supremacy in the distribution and transmission of LPG. It functions in the petroleum and gas sector under the Petroleum and Natural Gas Ministry of India. Gail is expanding its operations to mitigate the concentration risk.
Factors You Must Consider Before Investing in PSU Stocks in 2024
When you are considering PSU stocks as an investment, you should check these factors before investing in PSU stocks in 2024 that are:
Sector Outlook
Before you invest in PSU stocks in 2024, it is necessary to know the prospects of the field in which the PSU functions. Know the technological advancements, demand-supply dynamics, market trends, regulatory changes, and other parameters.
Challenges and Risk
You should not forget to know the challenges and risks involved in that specific stock or sector. Risks might arise in the form of regulatory changes, operational challenges along technological disruptions.
Government Reforms and Policies
You must keep an update on the government reforms and policies linked with that particular stock. Several factors such as government initiatives, privatization plans, and regulatory changes may have an impact on the PSU stock performance.
Payout Ratio and Dividend Yield
Public Sector Undertaking stocks are well-known for their dividend payouts. You should assess the payout ratio and dividend yield to consider a PSUs ability to produce continuous dividends and adhere to the shareholder’s commitment.
Conclusion
As PSU stocks provide attractive dividend yields and valuations, traders should conduct a proper study to know the opportunities and evaluate them based on government policies, financial performance, and other factors. There are potential issues such as the ongoing privatization wave, bureaucratic inefficiencies, and reforms that are reshaping Public Sector Undertakings. Thus, it is the best stock to invest for growth in 2024. If you wish to take stock market courses in Gurgaon, Delhi Trading Academy is the perfect solution for you. They ensure to guide you in the right direction and make your stock market journey amazing with the best faculties. Call Delhi Trading Academy right away to get more details on stock market courses in Gurgaon.
FAQ’s
While Public Sector Undertaking stocks provide attractive dividend yields and valuations, traders should conduct proper research and study to know promising opportunities, determining elements such as government policies, financial performance, and industry outlook.
PSU stocks are a good investment choice as there is continuous bottom and top-line growth and they are trading at attractive valuations. You have to follow a well-informed and strategic approach to get a good return on your investment.
The profitable companies are Coal India, NTPC, Power Finance Corporation, IRCTC, Gail India, Oil and Natural Gas Corporation, and Gail India.