The Indian Public Sector Undertaking (PSU) stocks have been experiencing a significant surge in FY24 and attracting investor attention due to various factors driving their performance.
The PSU space in India is witnessing impressive returns across diverse sectors like energy, defence, and infrastructure, with some stocks delivering multibagger returns.
In recent periods, the PSU stocks have fallen due to various reasons, one significant factor contributing to the decline is the new RBI guidelines proposing stricter project financing regulations.
The RBI has issued draft guidelines that require a 5 percent general provision on all existing and fresh project loans that are in the construction phase. This is significantly higher than the current standard provision requirement of 0.4 percent.
For non-bank lenders, the impact is expected to be on their capital adequacy ratios, not their profitability or return on equity (RoE). CLSA estimates that their Tier-1 capital ratios could decline by 200-300 basis points.
Moreover, the new RBI guidelines, which also require lenders to maintain a minimum exposure in a project consortium, are seen as a deterrent for private banks to participate in thermal, hydro, and even renewable energy projects.
Listed below are such PSU stocks that are trading at a discount of upto 30 percent from their 52-week high:
REC Ltd
With a market capitalization of Rs. 1,35,808 crores, the shares of the power project financing company started Monday’s trading session on a lower note at Rs. 531 compared to its previous close of Rs. 557.80. During the trading session, the shares hit a low of rs. 481.80, losing around 8 percent and are currently trading at Rs. 518 apiece.
The company hit its 52-week or all-time high in May 2024 at Rs. 567.05 and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 9 percent.
Looking at the company’s financial statements, the revenue increased by 5 percent from Rs. 12,052 crores during the December quarter to Rs. 12,677 crores in the March quarter. In addition, the net profits zoomed by 23 percent from the previous Rs. 3,308 crores to Rs. 4,079 crores during the same period.
Indian Renewable Energy Development Agency Ltd (IREDA)
With a market capitalization of Rs. 46,498 crores, the shares of Mini Ratna company started Monday’s trading session on a flatter note at Rs. 178.80 compared to its previous close of Rs.179.65. During the trading session, the shares hit a low of Rs. 167.55, losing around 5 percent and are currently trading at Rs. 172 apiece.
The company hit its 52-week or all-time high in February 2024 at Rs. 215 and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 20 percent.
Looking at the company’s financial statements, the revenue increased by 11 percent from Rs. 1,253 crores during the December quarter to Rs. 1,391 crores in the March quarter. In addition, the net profits surged by 24 percent from Rs. 386 crores to Rs. 480 crores during the same period.
NBCC (India) Ltd
With a market capitalization of Rs. 24,111 crores, the shares of the infrastructure company started Monday’s trading session on a flatter note at Rs. 139.70 compared to its previous close of Rs. 138.70. During the trading session, the shares hit a low of Rs. 132.55, losing around 4 percent and are currently trading at Rs. 133 apiece.
The company hit its 52-week or all-time high in February 2024 at Rs. 176.50 and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 25 percent.
Looking at the latest financial statement, the revenue zoomed by 11 percent from Rs. 2,053 crores during the September quarter to Rs. 2,413 crores during the December quarter. On the other hand, the net profits magnified by 39 percent from Rs. 82 crores to Rs. 114 crores during the same timeframe.
New India Assurance Company Ltd
With a market capitalization of Rs. 37,278 crores, the shares of India’s largest non-life insurance company started Monday’s trading session on a higher note at Rs. 234.75 compared to its previous close of Rs. 232. During the trading session, the shares hit a low of Rs. 223.30, losing 2 percent and are currently trading at Rs. 227 apiece.
The company hit its 52-week or all-time high in February 2024 at Rs. 324 and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 30 percent.
Coming onto the company’s financial statements, the revenue increased by around 8 percent from Rs. 10,567 crores during the September quarter to Rs. 11,366 crores in the December quarter. Further, the net profits showcased a transition from a net loss of Rs. 175 crores to a net profit of Rs. 722 crores during the same time period.
Written By Vaibhav Patil
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