The aggregate market capitalisation of India’s public sector undertakings (PSUs) has surpassed ₹50 lakh crore, marking an unprecedented milestone driven by the robust performance of state-owned firms across various sectors. The PSUs’ exceptional performance is reflected in the stock prices of 23 companies, with their values soaring over two-fold in the year 2023.
Leading the pack are REC, Power Finance Corp, Mazagon Dock Shipbuilders, Rail Vikas Nigam , IRFC, BHEL, Hindustan Aeronautics, and others. Particularly noteworthy is the three-fold surge in the stock prices of REC and Power Finance Corp in 2023, while companies like Engineers India, Hindustan Aeronautics, BHEL, IRFC, Cochin Shipyard, Rail Vikas Nigam, and IRCON International have witnessed gains ranging from 100% to 190% between January and the present.
State Bank of India, holding the position of the largest lender, maintains the highest market valuation among PSUs, closely followed by the insurance giant LIC with ₹4.7 lakh crore. Alongside NTPC and ONGC, these four entities collectively contribute to approximately one-third of the total market capitalization of PSUs.
Over the past 18 months, the combined market valuation of public sector companies has witnessed a substantial surge of ₹23.2 lakh crore, reaching the monumental ₹50 lakh crore mark. Key contributors to this surge include SBI, NTPC, Hindustan Aeronautics, Coal India, Power Finance Corporation, ONGC, and REC, accounting for over a third of the absolute gains.
“Looking at sectors like Indian oil marketing companies, which are currently trading at a Price to Earnings ratio of about 3, we assess them as undervalued. As the Indian government advances towards green energy, these companies present significant growth potential,” said Anirudh Garg, Head of Research at Invasset
Simultaneously, the overall market capitalization of all listed firms on the BSE has experienced a notable 48.5% increase, reaching ₹349 lakh crore during the same period. This surge is attributed not only to the rise in stock prices but also to the influx of new companies entering the market.
The debut of companies like Indian Renewable Energy Development Agency (IREDA), Life Insurance Corporation, SBI Cards, IRFC, Mazagon Dock Shipbuilders, and Railtel Corporation of India in the PSU space over the last four years has contributed to the overall market expansion.
“Public sector enterprises, especially those concentrating on Capex themes like railways and defense, are poised for substantial growth. This is bolstered by the government’s revised approach towards these companies and their respective sectors,” said Anirudh Garg, Head of Research at Invasset
Garg also said that public sector banks have effectively navigated past their NPA concerns. The implementation of new legislations such as NCLT laws and the Insolvency and Bankruptcy Code has further strengthened their position.
While the Nifty PSE Index has witnessed an impressive 67% rally in 2023, the broader Nifty50 has recorded a 16% increase during the same period.
