Indian state-owned companies have emerged as the champions of the market in FY24, outperforming mid-and small-cap stocks with a stellar surge in their stock prices. The BSE PSU index, which measures the performance of public sector enterprises, witnessed a remarkable gain of 92.4% from 9,497 points to 18,274 points.
This exceptional performance can be attributed to the government’s increased capital expenditure (capex) spending and sector-specific factors. The government raised the capital outlay by 11.1% in the recent interim budget, boosting investor confidence in the PSU stocks. Additionally, the anticipation of political stability post the Lok Sabha elections has further fueled bullish sentiment among investors.
The limited liquidity in PSU stocks, combined with strong order acquisitions from the private sector, has created a supply-demand gap, driving stock prices higher. Furthermore, the government’s efforts to limit the fiscal deficit to 5.1% for FY25 have provided additional support to PSU bank shares, leading to improved profitability and potential dividend payouts.
Various sectors such as railways, power, defence, and oil PSUs have also witnessed significant gains in FY24, with companies in these sectors touching record highs. Out of the 56 stocks listed in the BSE PSU index, 37 stocks have delivered multibagger returns ranging between 100% and 460%, with IRFC leading the pack with a stellar return of 458%.
Overall, the phenomenal performance of Indian state-owned companies in FY24 highlights their resilience and potential for growth, making them an attractive investment option for investors. However, it is advisable for investors to consult with certified experts before making any investment decisions.
