Investing in government-owned companies, often referred to as public sector companies, is a popular choice for investors seeking stability and low-risk, long-term returns. India’s companies are particularly attractive to investors because of the explosive growth of the economy in recent years and projected economic growth in the future.
In this article, we will highlight six prominent companies that are, in large part, owned by the government. Each of them is an industry leader and plays a pivotal role in the Indian economy. Let’s explore what these companies do and their significance in their respective sectors.
List of the best government stocks to buy in India:
State Bank of India – The largest bank in India
Oil & Natural Gas Corporation – The leading oil and gas company
NTPC – The largest power utility in India
Power Grid Corporation of India – The backbone of India’s energy infrastructure
Coal India Limited – The biggest government-owned coal producer in the world
Indian Oil Corporation – India’s largest oil company
These are the government stocks to buy in India in 2024
In the following sections, we will provide you with key information on India’s top government companies and their stocks. Before we get started, it’s worth noting that these companies are ranked by their respective market capitalization.
1. State Bank of India – The largest bank in India
The State Bank of India (SBI) is the largest public sector bank in India, holding a dominant position in the country's banking sector. With a vast network of branches and ATMs spread across urban and rural areas, SBI provides a comprehensive range of banking services, including private banking, corporate banking, and international banking.
SBI's aggressive push towards digital banking has enhanced operational efficiency and customer experience. Initiatives like YONO (You Only Need One) have positioned SBI as a leader in digital banking services. The bank’s strategic initiatives to reduce non-performing assets (NPAs) have further strengthened its financial position. With a market cap of 7.3 trillion INR ($87.6 billion USD), SBI is one of the largest banks in the world.
Sector Finance Market Cap 7.3 trillion INR ($87.6 billion USD) 5-Year Performance +137%
2. Oil & Natural Gas Corporation – The leading oil and gas company
Oil & Natural Gas Corporation (ONGC) is India’s leading oil and gas exploration and production company. It operates under the Ministry of Petroleum and Natural Gas and plays a crucial role in meeting the country’s energy needs. ONGC’s operations include exploring, drilling, and refining fossil fuel products. The company has a significant presence both domestically and internationally, contributing substantially to India’s energy security.
ONGC is known for its attractive dividend yield, which provides a steady income stream for investors. Its consistent dividend payments make it a favored choice among income-focused investors. In addition, its international ventures and partnerships – such as the expedited development of multiple offshore fields in collaboration with global partners over the next three years – further enhance its growth prospects.
Sector Energy Market Cap 3.5 trillion INR ($42 billion USD) 5-Year Performance +56.9%
3. NTPC – The largest power utility in India
NTPC Limited, formerly known as National Thermal Power Corporation, is the largest power utility company in the country and one of India’s best infrastructure stocks. It is primarily involved in the generation and sale of electricity. NTPC operates a diverse portfolio of power generation assets, including coal, gas, hydro, solar, and wind power plants.
NTPC’s significant investments in renewable energy projects align with global sustainability trends and position it well for future growth. Also, as a government-backed entity, NTPC benefits from policy support and favorable regulations, ensuring operational stability and growth opportunities.
Sector Utilities Market Cap 3.5 trillion INR ($42 billion USD) 5-Year Performance +184.8%
4. Power Grid Corporation of India – The backbone of India’s energy infrastructure
Power Grid Corporation of India (PGCIL) is a crucial player in India’s power sector. It is responsible for the transmission of electricity across the country. It owns and operates a vast network of transmission lines and electricity infrastructure, ensuring the reliable and efficient delivery of electricity across the country.
Its extensive and reliable transmission network is critical to the nation’s power infrastructure. The continuous investments in expanding and modernizing its transmission network enhance its operational efficiency and capacity, positioning it for long-term growth.
Sector Utilities Market Cap 2.9 trillion INR ($34.8 billion USD) 5-Year Performance +211.2%
5. Coal India Limited – The biggest government-owned coal producer in the world
Coal India Limited (CIL) is the largest government-owned coal-producing company in the world. Operating under the Ministry of Coal, CIL is responsible for the production and sale of coal and coal-based products. The company’s extensive mining operations cater to the needs of various industries, including power generation, steel, and cement.
With a 46% share, coal remains a critical energy source for India, and CIL’s role in ensuring energy security makes it a strategically important company with government support. In addition, the stock’s strong dividend yield further enhances its appeal as an income-generating investment.
Sector Energy Market Cap 2.9 trillion INR ($34.8 billion USD) 5-Year Performance +101.9%
6. Indian Oil Corporation – India’s largest oil company
Indian Oil Corporation (IOC) is the largest oil company in India and a key player in the fossil fuel sector. IOC's operations encompass the entire petroleum producing and delivery system, including refining, pipeline transportation, and sale of petroleum products. The company also has a significant presence in the petrochemical and natural gas sectors.
IOC’s investments in expanding refining capacity, petrochemical projects, and renewable energy initiatives position it for future growth and diversification. The company’s robust distribution network ensures the widespread availability of its products, while its dominant position in the fuel retail space provides a competitive edge.
Sector Energy Market Cap 2.3 trillion INR ($27.6 billion USD) 5-Year Performance +58.4%
The bottom line
The six government-owned companies featured in this article are not only industry leaders but also one of the pillars of the Indian economy. Their operations span critical sectors such as banking, energy, and infrastructure, highlighting their importance and the pivotal roles they play in the nation’s development. Investing in them can offer exposure to the robust growth potential of India’s economy, which is expected to increase to $6.4 trillion by 2029, more than double of what it was in 2021.
If you want to explore a more general overview of the best stock investments with a focus on Western companies, check out our list of the best stocks to buy right now.