Top government stocks in India you should know about
Editorial Team: One Touch Finance
Based on 5-year growth performance
If you’re thinking about investing in the Indian stock market, you’ve probably heard about government-owned companies. These are businesses where the government holds a major stake. The good news? They often come with more stability than private companies because the government backs them. Plus, they operate in important sectors like defense, railways, and energy.
I’ve put together this guide to help you understand which government stocks have been performing well over the past five years. Think of this as your starting point for learning about these investment options. The information here is based on data from September 2024.
How these government stocks compare
Company Name | Market Cap (₹ Cr) | P/E Ratio | 5-Yr CAGR (%) | 1-Yr Return (%) | Sector |
Rail Vikas Nigam Ltd | 1,08,806 | 69.11 | 83.92 | 213.05 | Railways |
Hindustan Aeronautics Ltd | 2,92,207 | 38.34 | 63.58 | 125.74 | Defense |
Bharat Electronics Ltd | 2,12,349 | 53.29 | 51.00 | 111.04 | Defense |
Bharat Dynamics Ltd | 41,188 | 67.22 | 48.24 | 117.24 | Defense |
Oil India Ltd | 91,773 | 14.49 | 41.63 | 206.46 | Energy |
REC Limited | 1,43,273 | 10.13 | 41.34 | 103.55 | Finance |
Bharat Heavy Electricals | 97,724 | 346.27 | 40.26 | 125.69 | Power |
NHPC Ltd | 93,850 | 25.89 | 32.42 | 81.07 | Power |
Power Grid Corporation | 3,39,890 | 21.83 | 26.66 | 84.25 | Power |
State Bank of India | 7,15,620 | 10.67 | 23.26 | 34.90 | Banking |
Note: This data is from September 27, 2024. I ranked these companies by how much they grew over five years.
What you need to know about each company
Rail Vikas Nigam Limited
This company builds railway projects across India. They handle everything from adding new train tracks to converting old railway lines and building big bridges. In 2024, they made ₹22,915 crore in total money and kept ₹1,463 crore as profit. Their return on equity is 19.69%, which means they use investor money pretty well.
Hindustan Aeronautics Limited
HAL makes airplanes and helicopters for India’s military. They also fix and maintain these aircraft. This is one of the government’s most important defense companies. In 2024, they earned ₹32,277 crore and made a profit of ₹7,621 crore. Their return on equity is an impressive 28.91%.
Bharat Electronics Limited
BEL creates high-tech electronic equipment for the Indian Army. This includes things like radar systems and communication devices. They made ₹20,938 crore in 2024 with a profit of ₹3,985 crore. What’s really good is their return on capital employed at 30.17%, showing they’re efficient with their resources.
Bharat Dynamics Limited
BDL is all about missiles. They make guided missile systems for India’s Armed Forces. While their revenue in 2024 was ₹2,731 crore, their profit jumped big time to ₹613 crore. That’s almost double from the year before, which shows they’re growing fast.
Oil India Limited
This is India’s second-biggest government oil company. They explore for oil and gas and produce it. Their 2024 numbers show ₹37,646 crore in revenue and ₹6,980 crore in profit. These numbers went down from 2023, probably because oil prices changed.
Why you might want to invest in these stocks
They’re more stable: When you invest in government companies, you get the safety of government backing. This means there’s less chance the company will suddenly fail compared to a regular private business.
You get regular money: Many of these companies pay you dividends regularly. That means you get cash payments just for owning their shares, on top of any profit you make when the stock price goes up.
Easy to buy and sell: These stocks are traded a lot in the market. So if you want to sell your shares, you can usually find a buyer pretty quickly.
What you should watch out for
Government decisions matter a lot: Since the government owns these companies, any new rules or policy changes can affect how they do business. Political situations can also impact their performance.
They depend on government finances: How well these companies do often connects to how the government is managing the economy overall. If the government is facing money problems, it can hurt these companies too.
My final thoughts
Before you invest in any of these companies, I recommend doing your homework. Look at how each one operates, check their financial reports, and think about where they might be heading in the future. Make sure what you’re investing in matches your own money goals.
These government stocks can be a solid part of your investment mix, especially if you want something steady and aren’t looking to take huge risks. They’re good if you’re thinking long-term and want to protect your money while it grows.
Just remember that past performance doesn’t promise future success. What worked in the last five years might not work the same way going forward. If you’re not sure about something, talk to a financial advisor who can give you advice based on your specific situation.
Important stuff you should know
The information comes from various sources I found as of September 2024. Do your own research and talk to a qualified financial expert before you invest your money. Remember, investing in stocks always has risks, and you could lose money.