Public sector undertaking (PSU) stocks of the BSE PSU index achieved a record-breaking combined profit of over five lakh crore rupees during the financial year 2023-24, according to ACE Equity data reported by Business Today. The profit after tax (PAT) for the 56 PSUs in the index increased by 48%, reaching ₹5.07 lakh crore from ₹3.43 lakh crore in FY23. Notably, 14 PSUs reported profits exceeding ten thousand crore rupees each.

The share of public sector companies in India's total stock market capitalization has surged to a seven-year high of over 16% in May, driven by a robust rally in state-owned enterprises. This marks a significant rise from a low of 7.8% in October 2020, effectively doubling since then, as highlighted in a Moneycontrol article.

"It's essential to have confidence in execution efficiencies, especially in defense orders, which span multiple years," said Neeraj Chadawar, Head of Fundamental and Quantitative Research at Axis Securities, in an interview with Moneycontrol. "While there are substantial orders in the defense sector, uncertainties about execution efficiencies remain for the next three to four years."

Analysts also attribute the rally in PSU stocks to the expanding order books of these companies over the past four to five years. Most of these companies belong to the core sector, which is experiencing a cyclical upswing. Additionally, reduced government interference has played a role in this rally, according to the Moneycontrol article.

Top Performing PSUs in FY 2023-24

India's top five performing PSUs, as reported by Business Today, include:

1. State Bank of India (SBI): As India's largest PSU lender, SBI is also the most profitable PSU. Its PAT surged 20% to ₹68,138 crore during FY 2023-24 from ₹56,558 crore in the previous year. Banks, which make up a significant portion of the PSU pack, have cleared their books after a prolonged period of bad loans.

2. Oil & Natural Gas Corporation (ONGC): ONGC reported the second highest PAT at ₹54,705 crore for FY 2023-24, marking an annual profit growth of 61% from ₹34,012 crore in 2022-23.

3. Indian Oil Corporation (IOC): IOC came in third with a profit of ₹41,615 crore. Its PAT jumped 284% from ₹10,842 crore in the previous year.

4. Coal India: The company’s profit rose 16% to ₹36,942 crore in FY 2023-24 from ₹31,731 crore in the previous year.

5. Life Insurance Corporation of India (LIC): LIC, with a PAT of ₹36,844 crore in FY 2023-24, reported a profit growth of 16% from ₹31,812 crore in 2022-23.

In the current financial year, listed PSU firms collectively added almost ₹18 lakh crore, reaching a total market capitalization of ₹67.4 lakh crore. The BSE PSU Index has seen a significant gain of 35%, compared to the benchmark Sensex.