PSU Stocks: The shares of government companies listed in the Indian stock market have given strong returns to their shareholders after the Covid period. Be it defense stocks or railway stocks or shares of bank or power sector companies. In recent times and especially since the last week of September, these shares have also been beaten due to the selling by foreign investors in the market. But brokerage house Elara Capital has released a report in which the brokerage house said that it is overweight on SBI, NTPC, Bharat Electronics, Coal India, GAIL, BPCL and HPCL and investors have been advised to invest in the stocks of these government companies. 

Elara Capital's Model Portfolio 

Elara Capital has included the shares of 18 government companies in its model portfolio. It includes SBI (State Bank of India), Power Finance Corporation, REC and HUDCO from the financial sector. NTPC, Coal India, NHPC and NLC India from the utility sector, Bharat Electronics (BEL), Hindustan Aeronautics and RITES from the industrial sector. Indian Oil (IOCL), GAIL, BPCL, HPCL and Oil India from the energy sector. NMDC stock from the metals sector is included in the model portfolio of Elara Capital Research. 

Elara Capital has said in its report that out of 59 stocks listed on the stock exchange, 18 stocks fit our investment criteria due to policy support, funding, visibility, execution capability and operational efficiency. The brokerage house said that among PSU banks, it is overweight on SBI as it is at par with large private banks on excellent savings deposit metrics. 

In the energy sector, Elara Capital is overweight on GAIL and government oil marketing companies HPCL and BPCL. But due to its higher share in petrol and diesel sales, the brokerage house likes HPCL's stock more. Also, NTPC and Coal India's stock are included in the top picks of the brokerage house. According to the brokerage house, NTPC and Coal India's stock are ready to capitalize on the expansion of the thermal asset cycle. Among oil and gas PSU stocks, Elara Capital is also overweight on GAIL's stock.       

Strong jump expected in the income of PSU companies 

Garima Kapoor, economist at Elara Capital, has prepared a report on public sector companies titled India PSU Cycle: Resurgent & Secular. In this report, she said, we remain structurally and cyclically positive on the PSU sector as we expect a strong improvement in the asset cycle, which is expected to increase the income of these companies for the next three years. According to the report, PSU asset creation has still not reached its peak and the talk of slowdown in the government's capital expenditure is baseless. According to the note, the capital expenditure pipeline remains strong in strategic sectors like defense, railways, electricity.