4 PSU Stocks with Strong Growth Plans for the Next 3 Years

Public Sector Undertakings (PSUs) are in the spotlight as India's growth story strengthens, reflecting renewed investor confidence in state-owned enterprises.

With sectors such as defence, energy, and infrastructure driving the momentum, select PSUs are emerging as strong PSU stocks in India for long-term investors.

In this editorial, we cover four top PSU stocks - their financial highlights, growth plans for the next three years, and key insights to know.

#1 Bharat Electronics

Bharat Electronics Ltd (BEL) is established as India's foremost defence electronics company. The company possesses multi-product, multi-technology, and multi-unit capabilities.

Its core focus is the design, development, manufacturing, and supply of a wide range of strategic electronic products and systems for the Indian defence sector.

In FY25, the defence segment contributed 94% of the total turnover. BEL also diversifies into professional electronics for non-defence areas, including Homeland Security, Smart City Solutions, Cyber Security, Software Solutions, and Medical Electronics.

Growth Plans

The company is highly optimistic about its future growth, expecting consistent profit growth of over 20% to remain strong.

It's aiming for an order inflow of more than Rs 270 billion (bn). In addition, if the QRSAM deal is signed, valued at over Rs 300 bn, the total order inflow could rise sharply. Overall, the company expects its FY26 order inflow to fall between Rs 250 bn and Rs 500 bn.

It also plans to invest more than Rs 10 bn in capex and around Rs 16 bn in R&D.

Financial Highlights

Financial Snapshot (FY22 - Q1 FY26)

Source: Quarterly & Yearly Financial Report

Over the past few years, the company has shown consistent financial growth. In FY23, PAT rose 28% and turnover grew 15%, because of R&D and modernisation despite global headwinds.

In FY25, turnover increased 16.2% and PAT surged 31.5%, with EBITDA margins strengthening due to indigenisation and cost control.

Looking ahead, management expects revenue growth above 15% and margins above 27% in FY26.

#2 Coal India

Coal India (CIL) is officially classified as a 'Maharatna' enterprise and holds the title of the single largest coal producer globally.

The company is crucial for India's energy security, as coal remains the most dominant and affordable source for power generation in the country.

CIL is primarily involved in mining and the production of coal, operating across eight Indian states.

It meets about 40% of the nation's primary commercial energy requirement, contributing roughly 74% to 79% of India's total coal output.

CIL supplies essential fuel to major sectors like power, steel, cement, and fertiliser, along with supporting activities such as coal washing and mine planning services.

Growth Plans

CIL is charting an ambitious path forward, planning to achieve a massive production goal of 1 billion tonnes (BT) of coal by FY29.

To meet this volume target, the company has lined up a significant capital expenditure plan, proposing Rs 160 bn for FY26, with a large chunk allocated to enhancing rail lines and coal handling infrastructure for smoother delivery.

Beyond its core mining business, CIL is making big moves into diversification to ensure long-term sustainability.

The company aims to become a net-zero energy company, committing to set up 3 GW of solar power capacity by FY28.

Furthermore, CIL is venturing into high-growth areas like coal-to-chemical projects (coal gasification) by forming new joint ventures and actively acquiring assets for critical minerals such as lithium, cobalt, and graphite, aiming to reduce India's import dependence on these vital materials.

Financial Highlights

Financial Snapshot (FY22 - Q1 FY26)

Source: Quarterly & Yearly Financial Report

The company gave a strong performance in FY24. However, FY25 saw net profit decline 6%, because the sales rate decreased and contractual expenses related to mining increased. Despite this, EBITDA remained stable, signalling ongoing operational efficiency.

In Q1 FY26, profitability dropped further, mainly due to lower volumes sold under Fuel Supply Agreements and reduced realisation in e-auction prices.

#3 GAIL

GAIL (India) ltd is known as India's leading natural gas company, handling crucial roles across the entire value chain.

Its core business revolves around operating massive infrastructure for transporting natural gas and Liquefied Petroleum Gas (LPG), including around 65% of the total Natural Gas transmission pipelines in the country.

Beyond managing this extensive pipeline network, the company is a major player in natural gas marketing, often through importing and distributing LNG across India.

Additionally, the company has significant business verticals covering petrochemicals, producing LPG and other Liquid Hydrocarbons (LHC), and developing the City Gas Distribution (CGD) sector through subsidiaries and joint ventures.

Growth Plans

The company is focused on strong future expansion anchored in its ambitious Strategy 2030. A key goal is expanding its pipeline network and strengthening its gas sourcing portfolio.

To meet growing domestic demand, the company intends to secure another 5 to 6 MMTPA of LNG supplies from different global locations by 2030.

Major projects are underway to boost the high-value petrochemical segment, notably including the establishment of a 500 KTA PDHPP plant at Usar and a 60 KTA Polypropylene (PP) unit at Pata.

Financial Highlights

Financial Snapshot (FY22 - Q1 FY26)

Source: Quarterly & Yearly Financial Report

FY23 saw profitability cut nearly in half due to the geopolitical crisis, leading to skyrocketing spot gas prices and resulting supply disruption.

However, FY24 brought a sharp recovery, largely driven by better gas trading margins and an upward revision of the transmission tariff.

FY25 achieved a record high profit primarily due to enhanced operational efficiency and was boosted significantly by a massive Rs 24,400 million exceptional income received from an arbitration settlement with M/s SMTS.

Q1 FY26 results showed a decline compared to the previous quarter, mainly because dividend income was not received in Q1.

Management has maintained its guidance of Rs 40 bn to Rs 45 bn for marketing margins for FY26.

#4 Garden Reach Shipbuilders & Engineers

Garden Reach Shipbuilders & Engineers Ltd (GRSE) is engaged in the construction of warships and is a specialist in surface shipbuilding.

While serving the Indian defence sector, GRSE also operates divisions for Ship Repair and Engineering Products. The engineering segment includes the production of portable steel bridges supplied to the Indian Army, Border Roads Organisation (BRO), and NHIDCL.

Growth Plans

GRSE is pursuing future growth and diversification. A major goal is to become a Navratna Company by 2030 and achieve global recognition as a leading Indian shipyard.

To support this, its planning to expand capacity for larger platforms through a collaboration agreement (MOU) with Pipavav, as current facilities have limitations in that size range. The company is targeting the construction of around 40 ships in the next five years.

Its focusing heavily on new product development, particularly autonomous vessels, and green energy platforms like hybrid ferries.

GRSE is also enhancing its export footprint for both defence and commercial vessels and expanding its ship repair and refit verticals.

The management expects to conclude the contract for the high-value Next-Generation Corvette project during the current financial year.

Financial Highlights

Financial Snapshot (FY22 - Q1 FY26)

Source: Quarterly & Yearly Financial Report

The company's revenue from operations and net profit showed improvement from FY22 to FY25. This was attributed to meticulous planning, efficient procurement strategies, and increased operational efficiency across critical projects.

Management expects to maintain similar growth in FY26 and FY27 in both top line and bottom line, aiming for a net profit margin consistently above 8%.

Should You Invest in PSU Stocks in 2025?

PSU stocks offer a unique blend of stability, dividend income, and long-term growth potential, especially in sectors like defence, energy, and infrastructure.

These companies demonstrate strong financial performance, clear growth plans, and strategic initiatives to enhance operational efficiency.

However, investors should carefully consider the risks before investing. PSU stocks are influenced heavily by government policies, geopolitical developments, commodity price volatility, and global economic conditions.

So, profitability may fluctuate due to regulatory changes, project delays, or macroeconomic headwinds.

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...