return to news
  1. REC to BHEL: Top PSU stocks in focus amid strong rally in last one year

REC to BHEL: Top PSU stocks in focus amid strong rally in last one year

blog author image


blog verification badge

3 min read • Updated: February 21, 2024, 12:50 AM

Facebook PageTwitter PageLinkedin Page


The PSU stocks across sectors have rallied more than 250% last year. Experts believe that the rally in PSU stocks is likely to continue further. Let’s take a look at top PSU stocks to watch out for in 2024.

REC to BHEL: Top PSU stocks in focus amid strong rally in last one year

It would not be an overstatement to say that the year 2023 belonged to the stocks of public sector undertakings (PSUs).

The BSE PSU index, which consists of all major state-owned companies listed on BSE, jumped by a massive 55% in 2023. In comparison, equity benchmark BSE Sensex rose 18.7% during the same period.

In fact, one of every three stocks on the BSE PSU index doubled in calendar year 2023.

This unprecedented rally in PSU stocks was mainly driven by the government’s focus on capital expenditure, infrastructure spending and the push for the ‘Make in India’ initiative. Consistent order inflows along with administrative reforms turned these PSUs into wealth-generating entities for stock market investors.

Experts believe that the dream run of PSUs is far from over. If the present government gets a third term in office, the economy may receive another capex shot, fuelling the next leg of rally in PSU stocks in 2024.

Here is a list of top public sector companies, which could continue their stellar run in 2024.


Shares of state-owned power sector financing companies Rural Electrification Corp. (REC) and Power Finance Corp. (PFC) rallied 254% and 238%, respectively, in calendar year 2023. The surge in stock prices of these companies came amid a thriving power sector in a country that is seeing huge demand for electricity.


Another power sector stock, Bharat Heavy Electricals Ltd (BHEL), which is a leading power generation equipment manufacturer, soared 144% in 2023.


Shares of thermal power-generating company NTPC Ltd also gained 87% during the year. Experts believe that a pick-up in power orders, driven by expansion in core sectors of the economy, should augur well for these companies going ahead.

IRFC, Ircon and RVNL

Railway-related stocks surpassed expectations in 2023 and may continue to do so in 2024 due to increased capital outlays for the railway sector. Shares of Indian Railway Finance Corp. Ltd (IRFC), a state-owned financier for railway companies, climbed 197% during the year, while Ircon International Ltd climbed almost 200%. Rail Vikas Nigam Ltd stocks also gained 166% in the year 2023.

HAL and Mazagon Dock Shipbuilders

Defence stocks were on fire in 2023, with Mazagon Dock Shipbuilders rallying 188% and Hindustan Aeronautics Ltd (HAL) rising 130%. Renewed focus on modernisation of defence forces, along with strong push for becoming self-reliant, or ‘Atmanirbhar’, in defence manufacturing has driven huge capex in the sector. Higher order inflows provide long-term revenue visibility for these firms, creating scope for further rally in share prices.

Punjab National Bank and other PSU banks

Shares of Punjab National Bank (PNB) jumped almost 60% in 2023 and emerged as one of the top-performing PSU banking stocks on improved financial performance and asset quality. Shares of Indian Bank, Central Bank of India, Bank of Maharashtra and Union Bank of India also surged in the range of 40-60% on the back of healthy growth in advances. Lower slippages and healthy recoveries can keep the rally going in PSU stocks in the coming months.

To sum up

Having seen the past performance of these PSU stocks, one can easily conclude that state-owned companies are going through their best phase. However, it would be advisable for investors to keep a few factors in mind before making any fresh investment in these shares.

First, considering the recent rally, make sure you are comfortable with the valuations before you shortlist any PSU stock for investment. And, prepare yourself for a volatile ride as these companies are comparatively more vulnerable to government policies and macroeconomic conditions.