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PSU Stocks in India

Public sector undertakings (PSU) are enterprises in which a majority stake is held by central or state government either jointly or individually.

PSUs are known for lagging in operational and financial performance because of bureaucracy and corruption.

Hence, PSUs were not expected to perform well. Resultantly, most PSU stocks did not make it to investors’ baskets.

However, some PSU stocks have sound financials and operations too like Indian Oil Corporation (IOCL), Oil and Natural Gas Corporation (ONGC) etc.

While PSU stocks are known to lag, there are some attractive features. PSU stocks are compulsorily

PSUs are owned by the government hence there is a negligible chance that the company will never go bankrupt. Even if these companies would be privatised in the future this would mean better management of the company, which again would benefit the investors.

Also, some PSUs provide important indispensable services. Hence, these companies will always stay afloat in the market. Some PSUs like IRCTC have no competitors which is added advantage for long-term investors.

The government is taking steps to turn around the loss-making PSU stocks or divesting from them. Hence, the steps of the government may change the way people look at PSUs.

In India, there is a long list of PSUs whose shares are traded on stock markets.

Hence, one must not completely ignore PSU stocks.

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