PSU stocks that can rally in 2025 to keep on your radar

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PSU stocks that can rally in 2025 to keep on your radar

In the evolving landscape of public sector undertakings, strategic investors are eyeing transformative opportunities. The 2025 PSU market promises potential rebounds driven by government reforms, infrastructure investments, and sectoral restructuring, signalling a critical moment for portfolio diversification and strategic positioning.

PSUs Revival from 2022 Market Lows

After experiencing significant market corrections in 2022, Public Sector Undertakings (PSUs) in India staged a remarkable recovery driven by strategic government interventions. The “Make in India” initiative, infrastructure investments, and revised dividend guidelines reinvigorated investor confidence.

Companies like Bharat Electronics, Hindustan Aeronautics Limited, and SJVN witnessed substantial stock price rallies, with some experiencing gains up to 359%. Improved operational efficiency, expanded project pipelines, and focused sector investments in renewable energy and defence catalysed this transformation, positioning PSUs for sustained growth and attracting renewed market interest.

Correction of 2024 on PSUs

The 2024 market correction for public sector undertakings (PSUs) in India has been marked by a sharp decline in their valuations. By November 2024, 38 PSU stocks had fallen more than 20% from 52-week highs. Factors include disappointing Q2 earnings, with nearly half the firms missing expectations, and broader economic pressures like slowing GDP growth and reduced government spending. Despite challenges, selective recovery opportunities in the oil and power sectors remain.

Following is a list of PSUs with future growth potential:

1. Bharat Electronics Ltd

Bharat Electronics Limited (BEL), established in 1954, is a leading public sector enterprise under the Ministry of Defence, headquartered in Bangalore, Karnataka. Recognised with Navratna status, BEL underscores India’s defence prowess by delivering cutting-edge electronic systems and solutions.

BEL focuses on designing, developing, and manufacturing advanced electronic systems for defence and civilian applications. Its diverse portfolio includes radar systems, avionics, communication products, and weapon systems.With multiple manufacturing units across India, including Ghaziabad and Hyderabad, BEL strengthens its domestic presence while expanding internationally to markets in Europe, Africa, and the Middle East.

Bharat Electronics (BEL) is a leading aerospace and defence electronics company with a diverse product range. ICICI Direct maintains a “BUY” rating on BEL with a target price of ₹345 per share with an upside of 22% from the time of recording, based on the company’s healthy order backlog, improving execution, and robust pipeline, which are expected to drive strong revenue and PAT growth over the next few years.

Bharat Electronics Limited’s revenue from operations has increased by 14.28 percent from Rs. 17,734 crore in FY23 to Rs. 20,268 crore in FY24. The company’s net profit has increased from Rs. 2,986 crore in FY23 to Rs. 3,985 crore in FY24, which has grown by 33.45 percent.

With a market capitalisation of Rs. 2,24,885 crores, Bharat Electronics Limited’s share price closed at Rs. 307.65 per equity share.

2. NTPC Ltd

NTPC Limited, established in 1975, is India’s largest power generation company. Headquartered in New Delhi, it is a Public Sector Undertaking (PSU) under the Ministry of Power. NTPC has an installed capacity of around 76,442 MW and plays a critical role in India’s power sector, contributing to more than 25% of the country’s total power generation.

The company generates electricity from a diverse range of sources, including coal, gas, hydro, and renewable energy. NTPC also engages in power project consultancy, coal mining, and energy trading. Recognised with ‘Maharatna’ status in 2010, NTPC continues to focus on operational efficiency, renewable energy, and sustainability, helping to meet India’s growing energy demands.

Sharekhan has given a “BUY” rating on NTPC Ltd. with a target price of Rs. 460 and an upside of 13% from the date of recording. The rationale for this rating is that the company’s thermal/RE capacity addition provides a good outlook, and the stock offers a decent valuation given its strong long-term growth prospects.

NTPC Limited’s revenue from operations has increased by 1.3 percent from Rs. 1,76,207 crore in FY23 to Rs. 1,78,501 crore in FY24. The company’s net profit has increased from Rs. 17,121 crore in FY23 to Rs. 21,332 crore in FY24, which has grown by 24.59 percent.

With a market capitalisation of Rs. 3,51,988 crores, NTPC Limited’s share price closed at Rs. 363 per equity share.