Top 5 Government Stocks that Shattered Records in FY24 Sales and Net Profit

Public sector undertakings (PSUs) have been in the news since the election results.

While most of the PSUs tanked on election day following BJP's setback, they have managed to regain strength.

The optimism is so strong in these government owned companies as if PM Modi actually managed to achieve the ambitious target of '400 paar'.

PSU banks, defence, railways, and energy are some of the major sectors in focus before the upcoming Union budget 2024.

With all eyes on the Union Budget, let's look at some of the PSU stocks that had a record-breaking year in terms of profit and sales.

#1 ONGC

First on the list is Oil and Natural Gas Corporation (ONGC).

ONGC, incorporated in 1956, is an Indian central public sector company which operates under the Ministry of Petroleum and Natural Gas.

Over more than 60 years of its operation, the company has discovered 8 out of 9 basins including Assam, Gujarat, Mumbai Offshore, Cauvery, Krishna Godavari, Bengal, and Vindhyan.

The journey of ONGC from incurring a loss of Rs 40 billion (bn) in FY18 to achieving its record-breaking net profit of Rs 405.2 bn this year (standalone basis) highlights its exceptional strategic vision.

ONGC began its strategic development by acquiring a 51.1% stake in Hindustan Petroleum Corporation Limited in 2018.

In 2019, ONGC invested Rs 830 bn in 25 projects and discovered the Bengal basin, opening new doors for the company. In 2022, it discovered the Vindhyan basin.

Coming to this year's performance, on a consolidated basis after taking into account the earnings of subsidiaries, including listed companies HPCL and MRPL, ONGC had a record consolidated net profit of Rs 571 bn for FY24.

In the past 1 year, the stock price has moved up by 70%.

For getting future ready, ONGC is set to invest around Rs 1 trillion by 2030 in a range of initiatives aimed at expanding its renewable energy portfolio to 10 gigawatts (GW).

The company has also developed an energy strategy to double its oil and gas production and increase its capacity three-fold in both domestic and overseas fields by 2040.

This is how ONGC's vision ensures that it will be a formidable force in the energy sector for decades to come.

#2 SBI

Second on the list is State Bank of India (SBI).

SBI, founded in 1955 is an Indian multinational public sector bank fostering adequate capitalisation, healthy coverage ratios, and improvement in asset quality outlook.

The bank's market capitalisation crossed Rs 8 trillion in June 2024 boosting investor confidence and the public's trust in the banking sector.

The milestone in the banking sector highlights the government's commitment to strengthen the sector which can result in more supportive policies.

In the fourth quarter of FY24, SBI reported a 23.9% jump in its net profit.

For full fiscal, SBI's profit came in at Rs 695.4 bn.

The record profit is supported by strong credit growth of 15.2%, foreign office advances growth by 9.4%, retail personal advances of 14.6%, and SME advances of 20.5%.

SBI shows a positive momentum in India's banking sector, observed from its record profits and improved asset quality.

In the past 1 year, the stock price has moved up by 47%.

#3 NTPC

The third company on this list is National Thermal Power Corporation (NTPC).

NTPC is a PSU based in New Delhi, founded in 1975 to accelerate power development in India.

The company's main activities include setting up power plants and power generation through its coal-based and gas-based power plants.

NTPC's present installed capacity stands at 76,048 megawatt (MW). It contributes to 25% of the total power generation in India.

In FY24, NTPC registered its highest ever profit of Rs 213.3 bn, driven by record sales due to increasing power demand.

The record profit is also due to its annual record of electricity generation of 422 bn units in FY24 itself compared to 399 units in FY23.

In the past 1 year, the stock price has moved up by more than 90%.

It is important to note that NTPC's sustainable practices are integral to the profit growth and for its increasing market share in energy production.

NTPC plans to add 10 GW of conventional power in the next 3 years. NTPC will also add 16 GW of renewable energy in the same period.

The company expects that it will reach over 130 GW total capacity by 2032 with 15 GW of renewable energy by FY26.

The plans and record-breaking profits show its position as a key player in India's resilient future.

#4 Coal India

Fourth on the list is Coal India.

Coal India is a PSU which is under the ownership of Ministry of Coal, Government of India.

It was founded in 1975 as a holding company with five subsidiaries including Eastern Coalfields Limited, Bharat Coking Coal Limited, Central Coalfields Limited, Western Coalfields Limited, and Central Mine Planning and Design Institute.

India's Coal PSUs have exceeded their targets in FY21-22 by achieving a whopping 104.8% and replicated this success in FY22-23 with an impressive 109.2% achievement. As per the Ministry of Coal, the procurement for FY23-24 were achieved with 107%.

Amid the sectoral growth, Coal India has achieved a record production amounting to 703.9 million tonnes of coal by March 2024.

Coal India achieved a record-breaking net profit of Rs 373.7 bn in FY24 compared to Rs 281.3 bn in FY23.

The PSU's stock price shows an upward trend and has surged 112% over just one year.

The company's chairman and managing director PM Prasad mentioned that Coal India is targeting to produce 838 million tonnes of coal in FY24-25.

Coal India is ambitious in its production targets which highlights the company's financial strength and aims to create value for its shareholders.

#5 LIC

Last on the list is Life Insurance Corporation of India (LIC).

LIC was established in 1956 when the parliament of India passed the Life Insurance of India Act, nationalising the insurance industry in India.

The company's main activity is selling life insurance policies. Further, it invests the premiums in the financial markets and in government securities.

As per LIC's rules that around 75% of the gathered funds by LIC should be invested in central and state government securities.

For financial year 2024, LIC posted a record profit of Rs 408.8 bn compared to Rs 360 bn in FY24.

Over the past year, LIC's stock price has surged by an impressive 64%.

LIC is looking at acquiring private health insurance firms to enter into the health insurance segment. This inorganic option will be the company's initiative towards expansion.

The question now is whether LIC will pursue the acquisitions effectively and successfully establish its presence in the health insurance segment to keep up with the record profits.

In Conclusion

The record-breaking performance of PSUs in India shows the vision of the companies and the expectations laid out by the shareholders.

As the budget approaches, the attention will be directed towards PSUs once again.

The five stocks explored in this article show promising growth prospects.

There is anticipation among investors regarding potential announcements by the finance minister that may impact various PSUs.

Nevertheless, sustained research must not be compromised against all odds.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...