By Research team
Top PSU Stocks to Watch in 2025 and Why They’re Gaining Interest?
What are PSU Stocks?
Thank you for reading this post, don't forget to subscribe!PSU or Public Sector Undertaking Stocks are stocks in which the Government of India holds more than a 51% share. They are characterized by features such as stability, consistent growth as well as good dividend payout ratios. They are hence a good investment opportunity for investors looking for steady stable growth in their portfolios as they offer a cushion during market volatility to some extent.
PSU stocks may be categorized as follows:
- MAHARATNA Stocks which are Large Scale PSUs that operate on a global scale and have high fiscal autonomy. (Eg.- ONGC, SAIL)
- NAVRATNA Stocks which are Medium Scale PSUs that have strong financial as well as operational stability. (Eg., BEL, HAL)
- MINIRATNA Stocks are smaller scale stocks that have consistent profitability but lag behind in decision making power and market presence. (Eg., MAZDOCK, NHPC)
Why invest in PSU Stocks?
- Stability & Reliability: PSU stocks offer stability due to Government ownership and support in terms of financing as well as a robust order book funded by Government Capex as well as policy reforms.
- Dividend Yield: Most PSU stocks offer consistent dividends which may be reinvested or taken as a source of passive income as per the investor’s wish.
- Valuations: PSU stocks generally trade at very attractive valuations which make it a safer bet for conservative investors due to high profitability as compared to its stock price.
- Portfolio Diversification: PSUs are available in multiple sectors such as Banking (SBI), Energy (ONGC, GAIL), infrastructure (POWERGRID) as well as defense sector (HAL, BEL). This offers diversification for investors which is always a prudent approach to stock investing.
- Strategic Disinvestments: Selling of Government stake of Private investors usually benefit the company in the form of improved efficiency and operational performance which in turn result in higher profitability as well as valuations.
Top 10 PSU Stocks of 2025
- State Bank of India (SBIN): SBI is currently the largest bank in India with 25% share of the total loans as well as deposits and a 23% Market Share by assets. It holds a formidable position in both retail as well as corporate banking with its group companies diversifying further into Wealth and Asset Management, Insurance as well as Payments. Strong Credit growth and ROE coupled with an improving asset quality and digital banking initiatives bodes well for the PSU giant which already has a vast branch banking presence across the nation.
- Market Cap: 47 Lakh Cr.
- P/E Ratio:10
- Yield: 1.96%
- Oil and Natural Gas Corporation (ONGC): ONGC is India’s largest Oil and Gas Company which is also involved in exploration, development and production of oil and gas as well as related services. Itis a significant contributor in India’s energy security and is a conglomerate that is recognized on a global scale. It is also involved in Power Generation and has also recently ventured into Green Energy which offers and insight into the company’s forward thinking approach.
- Market Cap:91 Lakh Cr.
- P/E Ratio:27
- Yield: 5.17%
- NTPC Limited: NTPC is India’s largest player in the power generation segment across hydro, thermal and renewable energy sources. With our countries rising power demands, NTPC is uniquely placed at an advantageous position when considering its future profitability and performance. Investments in renewable sources can also point towards stable and sustainable growth.
- Market Cap:23 Lakh Cr.
- P/E Ratio:51
- Yield: 2.50%
- Coal India: Coal India has a near monopoly in India’s coal production while being the largest producer of coal in the World. The company also has a significant presence in power generation and with its strong dividend yield, it is perfect investment choice for investors looking for good dividend stocks.
- Market Cap:38 Lakh Cr.
- P/E Ratio:28
- Yield: 6.77%
- Power Grid Corporation of India Ltd: Power Grid Corporation of India Ltd is a major player in India’s power transmission sector with an 85% market share in inter-state transmissions. It plays a major role in integrating renewable energy into our country’s national grid and is also uniquely placed to benefit from increased power consumption. With its regulated model, it is easy to predict its cash flow. Its steady dividend payout also makes it a safer bet for investors looking for a stable and conservative portfolio.
- Market Cap:52 Lakh Cr.
- P/E Ratio:04
- Yield: 3.18%
- Indian Railway Finance Corporation: IRFC is a PSU stock involved in raising financial resources from the Capital Markets as well as other sources for the expansion of the Indian Railways network. With the Government’s commitment to improving our Rail infrastructure to expedite movement of goods as well as providing better connectivity for people, IRFC is set for exceptional growth as long as Capex in infrastructure development persists.
- Market Cap:54 Lakh Cr.
- P/E Ratio:02
- Yield: 1.30%
- Rail Vikas Nigam Ltd: RVNL is involved in the construction of infrastructure to expand the railways network of India in conjunction with the demands of the Ministry of Railways. Similar to IRFC, Government Capex in the railways sector where it holds a monopoly is set to affect the stock of RVNL positively which can be observed through its high P/E ratio as investors expect exponential growth for the stock.
- Market Cap: 68 K Cr.
- P/E Ratio:88
- Yield: 0.53%
- Mazagon Dock Shipbuilders Limited: MAZDOCK manufactures warships and submarines for the Indian Navy as well as support vessels and platforms for offshore drilling. With the Government’s push for defense indigenization, this stock has already seen explosive growth over the past few years and is expected to continue its outperformance in line with increased defense spending in these tumultuous times of geopolitical tensions worldwide.
- Market Cap: 03 Lakh Cr.
- P/E Ratio:92
- Yield: 0.64%
- Bharat Electronics Ltd: BEL is a PSU involved in manufacturing Aerospace as well as Defense electronics. In similar vein to MAZDOCK, BEL is also set to see exponential growth thanks to the renewed defense push in India.
- Market Cap: 73 Lakh Cr.
- P/E Ratio:59
- Yield: 0.64%
- Hindustan Aeronautics Ltd: HAL is an aerospace and defense company involved in developing fighter aircrafts, trainer aircrafts, transport aircrafts and helicopters. With an ever expanding order book thanks to consistent purchases from the Indian Defense Forces, it is another defense stock that an investor may look at for exceptional growth potential.
- Market Cap: 90 Lakh Cr.
- P/E Ratio:86
- Yield: 0.90%
Final Thoughts:
PSU stocks may have underperformed in the past but they slowly seem to be making a comeback thanks to a supportive macro environment, generally low valuations and strong fundamentals. There may be some disadvantages such as bureaucratic inefficiencies, volatile dividend payouts and earnings, government interference and market underperformance but investors may weigh the pros and cons and invest in a few of them not just for dividends and stability but also for potential growth stories.