Table of Contents

Table of Contents

Best PSU Stocks for Long Term Investing: A Comprehensive Guide

Investing in Public Sector Units (PSUs) has always sparked debate among investors. While PSUs were often criticized in the past, recent government initiatives have transformed their performance, making them promising investment opportunities. This blog will explore the best PSU stocks for long-term investing and highlight why they are worth considering.

What are PSUs?

Public Sector Units (PSUs) are companies where the government holds a majority stake, typically over 51%. These companies operate in key industries such as banking, defense, and infrastructure, contributing significantly to the country’s economic growth.

Why Should We Invest in PSUs Now?

In the past, PSUs were criticized for inefficiency and underperformance. However, things have changed since the government began focusing on:

  • Recapitalization of PSU Banks
  • Disinvestment from underperforming companies
  • Strategic reforms aimed at improving governance and profitability

With these initiatives, PSUs are now better positioned for sustainable growth, making them viable options for long-term investment. Let’s dive into three best PSU stocks for long-term investing.

1. Bank of Baroda – The Banking Powerhouse

Bank of Baroda (BOB) is a well-known PSU in the banking sector, offering services across corporate, retail, and international banking. Let’s explore why it stands out:

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Performance Highlights:

  • Third-largest public sector bank in terms of deposit market share.
  • Second-largest bank by net advances, showing its strength in lending.

Key Financial Indicators:

  • In 2022, deposit growth was 6.5%, and advances growth was 6.7%.
  • For FY23, the growth figures improved to 6.7% and 6.9%, respectively.

Why Bank of Baroda is One of the Best PSU Stocks for Long Term Investing:

  • Ambitious Growth Targets: Management expects a 13-14% growth in FY24.
  • Promising Returns: Aiming for a 16-18% Return on Equity (ROE) and 1% Return on Assets (ROA).
  • Digital Expansion: 94% of transactions are digital, reflecting operational efficiency.

Despite challenges like NPA from GoAir’s loan, BOB has maintained strong buffers, demonstrating resilience. With 63.97% government ownership, Bank of Baroda will likely remain a priority for future recapitalization efforts.

2. Hindustan Aeronautics Limited (HAL) – The Defense Sector Giant

Hindustan Aeronautics Limited (HAL) is a Navratna PSU leading India’s defense manufacturing. Founded in 1964, HAL is known for building aircraft, helicopters, and engines.

Why HAL is One of the Best PSU Stocks for Long Term Investing:

  • Strategic Role in Defense: Supplies critical components to India’s defense services and ISRO.
  • 90% of Revenue: Comes from the defense sector, ensuring stable demand.
  • Navratna Status: Signifies its elite standing among government companies.

Growth Prospects:

  • Order book valued at ₹82,000 crores, with new orders expected for helicopters and fighter jets.
  • Management projects a 10% revenue growth in FY24-25.
  • Zero Debt: HAL’s clean balance sheet ensures financial stability.

The government’s focus on self-reliance in defense further strengthens HAL’s position. This company is well on its way to becoming a global defense technology exporter.

3. State Bank of India (SBI) – The Nation’s Banker

SBI, India’s largest bank, has been a key player in the country’s economic growth. With over 200 years of legacy, SBI is considered the father of all banks in India.

Financial Strengths:

  • ROE and ROA are consistently rising, indicating profitability.
  • Lowest cost-to-asset ratio among Indian banks, reflecting operational efficiency.
  • Retail personal loans grew by 15.28%, SME loans by 19%, and agriculture loans by 18% in the past year.

Why SBI is One of the Best PSU Stocks for Long Term Investing:

  • Fortune 500 Company: SBI’s global presence and reputation add to its credibility.
  • 0.32% Net NPA: This low level of non-performing assets puts it on par with private banks like HDFC and ICICI.
  • Reduced Credit Costs: Improving profit margins and operational performance.

With strong government backing, SBI is poised to remain a key player in India’s financial ecosystem, making it an excellent choice for long-term investors.

Conclusion

Investing in PSUs like Bank of Baroda, Hindustan Aeronautics Limited, and State Bank of India offers a unique opportunity to benefit from government-backed reforms and growth initiatives. These companies, with their strong financials and ambitious targets, are among the best PSU stocks for long-term investing.

While investing, it is essential to track their performance regularly and stay updated with sectoral developments to make informed decisions.

If you want to further enhance your knowledge, check out the best stock market courses in Delhi or explore the Top 5 Online Stock Market Courses in India to deepen your understanding and make smarter investment choices.

This blog ensures a smooth reading experience while covering essential information, making it accessible for all age groups. With a strategic focus on PSU stocks for long-term investing, readers will gain valuable insights into profitable investment opportunities.

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Our blogs are made for educational purposes only, and we do not provide investment recommendations. We are not SEBI-registered advisors and do not accept cryptocurrency payments. We present publicly available facts and data, not favoring any company.

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