Public sector undertakings (PSUs) are important drivers of India’s growth. They help create jobs and boost the economy. The main goal of the PSU business is to help and meet people’s needs. Indian public sector undertakings (PSUs) operate in segments such as banks, manufacturing, mining, telecommunications, steel, and energy.
There are also several best PSU stocks to buy for investors. The steady dividend yields on these stocks are a big reason investors are interested in them. These yields are especially attractive when the market is volatile. Also, because they follow long-term economic trends, cautious investors who want security and a steady income stream are interested in these stocks.
Top PSU stocks to invest in 2025 based on market cap
In November 2024, the market value of all 103 PSU companies stood at Rs 66.06 lakh crore. Based on the market value and expert scores, here is a list of the best PSU stocks to buy for your reference:
1. Oil & Natural Gas Corporation
As of May 2025, ONGC has a market cap of ₹3,13,941 crore. As one of India’s leading PSUs, its main business is oil discovery and production. The company works on exploring, growing, and producing crude oil, natural gas, and other energy goods.
2. NTPC
The National Thermal Power Corporation (NTPC) is India’s largest power company. It was started in 1975 and has been making and selling electricity to State Power Utilities ever since. As of May, 2025, NTPC Limited’s market cap is ₹3,36,038 cr. It has many power plants spread out across the country. The PSU has been essential in the energy field for a long time, from making electricity to managing projects.
3. Coal India Ltd
As of May 2025, Coal India’s market cap is ₹2,51,439 crore, which points to the stock’s immense potential. Established in 1975, Coal India Ltd’s main business is coal mining. The company owns more than 300 mines, both deep and open pit, operating in 8 Indian states. It is arguably one of the best PSU stocks to buy.
4. Power Grid Corp Ltd
The Power Grid Corporation of India Limited, or POWERGRID, is a PSU. It has a market cap of ₹2,80,878 crore as of May 2025. The firm was established on October 23, 1989, and is a publicly traded company. The Indian government owns 51.34% of the company, while public and private investors own the rest. Besides, it is a power transmission business that plans, builds, runs, and maintains interstate transmission Systems.
5. Indian Railway Finance Corp
The Indian Railway Finance Corp. (IRFC) was set up in 1986. This PSU is in charge of the Indian Railways’ finances. The market capitalization of IRFC is ₹1,80,411 crore, as of May 2025.
Essential insights on public sector undertakings (PSUs)
If the government owns at least 51% of a business or firm, it is called a public sector undertaking. The Central or state governments can own them, or both can own them together. Besides, governments make big decisions about PSUs, like investing and growth.
• Understanding the role of PSUs in India’s economy
PSUs play a central role in maintaining and driving India’s economy. PSUs operate in the energy, mining, banking, and manufacturing sectors.
An advantage for PSUs is that the government supports them in putting the nation’s interests ahead of quick profits. There are many best PSU stocks to buy for investors.
• How PSUs contribute to national development
PSUs help develop various parts of the economy. They undertake important projects such as roads, railways, and power plants. Various organizations help provide and coordinate education, health, and skill-building opportunities in rural places. PSUs aid the development of industry and assist small businesses.
They help develop rural areas by reducing the development gap between different regions. Governments use the earnings from public enterprises to pay for welfare programs. Because of their social responsibility efforts, these companies are essential in bringing about improvements in India.
Why should you invest in PSU stocks?
Dividends on PSU shares are usually steady. Besides, the government tries to get these companies to pay dividends as it helps shareholders earn a steady income. PSU stocks are stable and hence suitable for long-term investments.
• Stability and Government Backing
One of the best things about PSU firms is that the government backs them, and there are many of the best PSU stocks to buy. These funds are put into companies in which the government owns a large stake. This acts as an invisible safety net. It usually means more stable operations and lower default risks, especially when the economy isn’t doing well.
• Dividend Yields and Financial Health
Investors who want to make money can get regular cash from PSU stock funds. Besides, companies in the public sector usually stick to the same payout policies, which can help owners better plan their cash flows. This steady income stream and the chance that the value will rise make for a fair way to build wealth.
Navigating the investment process in PSU stocks
Investing involves thinking carefully about many different things. But these steps are essential when you think of the best PSU stocks to buy to make sure that the most critical parts in a business plan are taken care of:
• Key Factors to Consider Before Investing
PSU stocks are a great way to spend your money. However, you should consider the impact of various factors on these stocks before investing.
• Plans and Changes Made By the Government
You should monitor government policies in the sector where the PSU operates. Many factors, such as reform plans, government programs, and regulatory changes, can impact PSU stocks’ performance.
• Financial Performance
You should look at how well the PSU is doing financially and how well it is running. Study its past financial records and see how its income has grown, how much debt it has, how profitable it is, and so on.
• Steps to Purchase PSU Stocks Effectively
You can buy shares in these government-owned companies. Besides, here’s the process of the best PSU stocks to buy:
• Open an Account:
Download Lemonn and create an account to access a complete tool for trading and tracking PSU stocks.
• Look into PSU companies:
Look at metrics like dividend yield, which shows how much money the stock makes each year in payouts. Return on equity (ROE) shows the ratio of a company’s profits to its shareholders’ money.
• Diversify in Different Areas:
Putting money into public sector companies that operate in banking, energy, and defense sectors.
You should follow policies and trends in your industry. Staying up to date with changes in government policies and the field will help you make wise business choices.
Conclusion
When it comes to PSU stocks, they’re neither a sure thing nor a wasted effort. The best PSU stocks to buy offer safety, value, and possible growth. They are good value for buyers who plan to invest for the long term.
Of course, much of a PSU’s performance depends on how well it is run and global industry trends. India’s capital markets offer several good PSU stocks, and they are known for the promise that the past and the future hold for investors who do things the right way.
FAQs
Q. Why are PSU stocks considered a safe investment?
Public sector companies (PSUs) mostly operate in critical segments like banking, defense, mining, and energy. These investments come with risks like government meddling, slow decision-making, and policy instability, but they also offer stable returns and stock prices below their actual value.
Q. What are the top-performing PSU stocks in recent years?
PSUs work in diverse areas like banking, energy, and infrastructure. They allow investors to earn from their steady performance and good dividends. Some of the best PSU stocks for investment are Oil & Natural Gas Corporation, NTPC, Coal India Ltd, Power Grid Corp Ltd, and Indian Railway Finance Corp.
Q. How does government policy impact PSU stocks?
Government policy greatly impacts the performance of PSU stocks in India. When the government sells its shares, changes rules, infuses money into companies, or instructs them how to share profits, these choices affect the value of stocks and investor sentiments.
