Indian PSUs surge for the third consecutive year; REC, PFC, RVNL see upto 250% gain in 2023

Stocks of India’s state-owned companies continue their upward trajectory in 2023, marking the third consecutive year of gains. The BSE PSU index, reflecting the performance of public sector enterprises, has surged by an impressive 46.43% so far this year, surpassing the benchmark BSE Sensex index, which recorded a 14.93% return.

Among the 55 constituents of the BSE PSU index, an overwhelming 53 have achieved double-digit returns in the current year, with power-related companies leading the pack.

July led the monthly gains with a remarkable rally of 23.26%, closely followed by September with a gain of 20.43%. The surge in power stocks is attributed to a robust increase in power demand amid heightened economic activities, benefiting power sector financing companies and supply chain entities.

In September, power demand reached a new record high of 243.27 GW, fueled by industrial activities related to the festive rush. Power Finance Corporation shares soared by 245%, starting the year at ₹113.95 and reaching the current level of Rs 389.55 per share.

Railway PSUs also experienced substantial returns, propelled by significant order wins following the government’s announcement of a record capital outlay of ₹2.40 lakh crore for the Indian Railways in the Union Budget 2023-2024.

Shares of Ircon International jumped 173%, reaching Rs 163.35 apiece, while Rail Vikas Nigam shares grew by 161.17%, recording a new all-time high of Rs 199.25 apiece. Indian Railway Finance Corporation (IRFC) emerged as another top performer in the BSE PSU index, boasting a remarkable return of 153%.

The defence sector witnessed substantial gains, driven by increased budget allocations, strong order wins, and the government’s emphasis on boosting domestic procurement while reducing dependence on defense imports.

Mazagon Dock Shipbuilders saw its shares deliver a return of 165.28% in CY23, spiking from Rs 798 per share to Rs 2,117. Cochin Shipyard recorded a robust 140% rally this year, maintaining its upward trajectory.

In the renewable energy sector, SJVN experienced an impressive 162% rally in CY23, primarily attributed to robust order wins. Several other stocks in the BSE PSU index, including ITI, BHEL, MRPL, NLC India, NBCC (India), and Engineers India, have also delivered noteworthy returns ranging between 103% and 127% during the current year.