Amid the overall flat performance of the Indian benchmark indices in FY23, public sector undertaking (PSU) stocks have emerged as a bright spot for investors. These stocks have delivered solid gains, outperformed the broader market and rewarded investors with handsome returns.
While several blue-chip companies struggled with a challenging macroeconomic environment, PSU stocks managed to weather the storm.
These companies have benefited from a range of factors, including strong government support, favorable policy changes, and improving fundamentals.
In FY23, the BSE PSU index outperformed the BSE Sensex, rising by 10.28% from 8,554 to 9,434 points. Over the same period, the Sensex rose marginally by 0.70%.
In FY23, 11 BSE PSU stocks produced returns of more than 50%; of those, three stocks managed to deliver multi-bagger returns.
Mazagon Dock Shipbuilders, a defence PSU firm, emerged as the top-performing stock in the BSE PSU index with a staggering 177.40% return in the fiscal year 2022–23. Over this period, the company's shares have increased from ₹239.70 apiece to ₹663 apiece.
The stock witnessed a remarkable surge of 237% between August and November of the previous year, reaching an all-time high of ₹936.70.
The company is one of India's leading defence public-sector undertaking shipyards under the Ministry of Defence (MoD). It is principally engaged in building and repairing ships, submarines, various types of vessels, and related engineering products for its customers.
The very next PSU stock on the list was Rail Vikas Nigam, a railway infrastructure company. The stock finished FY23 strongly, owing to robust financial performance and strong order inflows with ongoing transformation in the railway sector.
The stock began its upward rally on October 20 at around 35.75 apiece, after it bagged an order worth ₹484 crore for the development of Kharicut Canal (between Naroda Smashan Gruh & Vinzol Vehla) in AMC Area Package 2 and 3.
Since then, the stock has witnessed an upward surge and ended FY23 at ₹68.60. Overall, in the last fiscal year, it generated a return of nearly 110%.
With a rally of around 105% in FY23, UCO Bank emerged as the third top gainer in the BSE PSU index, with a significant portion of the gains (58%) being made in December alone.
The unprecedented rise in the stock price occurred after the Reserve Bank of India (RBI) granted permission in November to nine Russian banks to establish special Vostro accounts with UCO Bank and IndusInd Bank to facilitate overseas trade in rupees.
In addition to that, the bank's solid performance in Q2 and Q3 of FY23 made the stock a standout performer in the last fiscal year.
Similarly, another PSU bank, the Indian Bank, also showed impressive performance, growing from ₹152.90 to ₹288.55, yielding a return of 88.71%.
Further, shares of Hindustan Aeronautics (HAL) and Bharat Dynamics, two of India's leading defence public sector undertakings, have also seen a strong performance in FY23.
HAL, an aerospace and defence company, saw its shares rise from ₹1,484.90 apiece to ₹2,731, an 83.91% increase in value, with majority of the gains occurring in the first half of the last fiscal.
Likewise, shares of Bharat Dynamics Limited, a manufacturer of missile systems, increased from ₹549.30 to ₹988.70, giving investors a return of almost 80% in FY23.
Other stocks, such as Punjab & Sind Bank, Union Bank of India, Bank of India, Cochin Shipyard, and Bank of Maharashtra, saw gains between 50% and 65% in FY23.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.