Three PSU (Public Sector Undertaking) stocks are in focus after securing Navaratna status from the Ministry of Finance, Government of India. This prestigious upgrade enhances their operational flexibility and investment capabilities.
What happened
The Ministry of Finance upgraded four public-sector enterprises, SJVN, Solar Energy Corporation, NHPC, and RailTel Corporation of India, to the ‘Navratna’ status on August 30. Three of the four new Navratna companies in India are publicly traded: Railtel, SJVN, and NHPC.
PSUs can receive various statuses, progressing from Maharatna to Navratna to Miniratna. Navratna status is granted to government-owned companies that were previously classified as ‘Miniratna’ Category I, acknowledging their outstanding financial and market performance.
As Navratna companies, they can now invest up to Rs.1,000 crore without prior government approval. They may also allocate up to 15 percent of their net worth to a specific project or up to 30 percent of their annual net worth, as long as it stays within the Rs.1,000 crore limit.
Additionally, they can establish overseas subsidiaries, form joint ventures, and undertake organizational restructuring to improve their operations.
Stock Price Movement
On Monday, SJVN Ltd’s share price surged 5 percent to an intra-day high of Rs.140 per share. NHPC Ltd’s shares climbed 4.4 percent, reaching Rs.100.5 per share, while RailTel Corporation of India Ltd saw a 5.05 percent rise, hitting Rs.515.6 apiece.
Over the past year, these stocks have delivered impressive multi-bagger returns: SJVN with 105 percent, NHPC with 122 percent, and RailTel with 115 percent.
Financial Performance
Turning towards the financials of these companies, SJVN Ltd reported a revenue of Rs.870 crore for Q1 FY25, up 29 percent from the same quarter last year. Their Profit After Tax (PAT) increased by 31.25 percent to Rs.357 crore during the same period.
NHPC, for the quarter ended Q1 FY25, reported revenue of Rs.2,694 crore, which is a decline of 2.3 percent year-over-year. Despite this, their net profit rose by 1.2 percent to Rs.1,108 crore.
RailTel Corporation achieved a revenue of Rs.558 crore for Q1 FY25, reflecting a 19.3 percent increase from the previous year. Their PAT also saw a significant rise of 29 percent, reaching Rs.49 crore.
Written by – Siddesh S Raskar
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