Public sector undertaking (PSU) stocks of the BSE PSU index posted a record combined profit of over five lakh crore rupees during the financial year 2023-24, according to ACE Equity data, as reported by Business Today.
The profit after tax (PAT) of the 56 PSUs of the index surged 48% to ₹5.07 lakh crore from ₹3.43 lakh crore in FY23. As many as 14 PSUs posted profits of over ten thousand crore.
The share of public sector companies in India’s total stock market capitalization has soared to a seven-year high of over 16 percent in May, driven by a strong rally in state-owned companies. This surge is a significant rise from the low of 7.8 percent in October 2020, doubling since then, according to a Moneycontrol article.
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“It’s crucial to have assurance in execution efficiencies, particularly in defense orders, which span multiple years,” Neeraj Chadawar, Head of Fundamental and Quantitative Research at Axis Securities told Moneycontrol. “While there are substantial orders in the defense sector, uncertainties about execution efficiencies remain for the next three to four years.”
Besides reduced government interference, analysts attribute the rally in PSU stocks to burgeoning order books for these companies over the past four to five years as most belong to the core sector, which is seeing a turn in the cycle, the Moneycontrol article read.
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India’s top 5 performing PSUs, as reported by Business Today, include:
- State Bank of India (SBI), India’s largest PSU lender is also India’s most profitable PSU. Its PAT surged 20% to Rs.68,138 crore during the financial year 2023-24 from Rs.56,558 crore in the previous year. Banks, which constitute a bulk of the PSU pack, have cleared their books after a prolonged period of bad loans.
- Oil & Natural Gas Corporation (ONGC): It had the second highest PAT at Rs.54,705 crore in the financial year 2023-24, registering an annual profit growth of 61% against Rs.34,012 crore profit in 2022-23.
- Indian Oil Corporation (IOC): IOC, with a profit of Rs.41,615 crore came third. Its PAT jumped 284% in a year from Rs.10,842 crore in the previous year.
- Coal India: Its profit rose 16% to Rs.36,942 crore in FY24 from Rs.31,731 crore in the previous year.
- Life Insurance Corporation of India (LIC): At number five is LIC, with a PAT of Rs.36,844 crore during 2023-24. It registered profit growth of 16% against Rs.31,812 crore in 2022-23.
This year, listed PSU firms collectively added almost Rs.18 lakh crore, reaching a total market capitalization of Rs.67.4 lakh crore. In contrast, the BSE PSU Index has seen a significant gain of 35 percent, while the benchmark Sensex and Nifty have only risen by 3 percent, Moneycontrol reported.
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