From Mazagon Dock Shipbuilders to IRCTC, 7 of 8 PSU stocks listed over last 5 years gave multibagger returns

Over the last five years, eight Public Sector Undertaking (PSU) companies made their debut in the Indian market, spanning various sectors including insurance, defence, railways, and power. Notably, seven of these stocks have delivered multibagger returns.

Mazagon frontrunner

Mazagon Dock Shipbuilders emerged as the frontrunner in this lineup. The stock made its debut on the stock exchanges on October 12, 2020, at ₹173 apiece, 19.3% higher the issue price of ₹145. Since its listing, the stock has consistently delivered impressive returns.

In its first year of listing, the stock gained 24%, followed by a 28% increase in CY21. The subsequent year witnessed an extraordinary multibagger return of 189%. As of the current year, the stock has already surged by an outstanding 170%. At the current level, it is trading at ₹2,139 apiece, 1375% higher than its IPO price.

Also Read: Mazagon Dock shares up 170% in 2023. It’s headed for another massive year

The company is one of India's leading defence public-sector undertaking shipyards under the Ministry of Defence (MoD). It is principally engaged in building and repairing ships, submarines, various types of vessels, and related engineering products for its customers. Since its inception in 1934, the company has delivered 801 vessels and built 27 warships and 7 submarines.

The rally in defence stocks has been remarkable this year, owing to factors such as increased budget allocations, strong order wins, and the government's emphasis on boosting domestic procurement while reducing dependence on defence imports.

Railways PSUs

Rail Vikas Nigam, a railway infrastructure PSU, saw its shares deliver a whopping return of 170% this year so far, registering the best yearly performance since listing. From their September 2022 low of ₹32.85, they have gained nearly 461.49% to date to trade at ₹184.45 apiece.

Incorporated in 2003 by the Ministry of Railways (MoR), the company is a wholly owned government company, a Miniratna (Category 1) Schedule ‘A’ Central Public Sector Enterprise.

The company focuses on executing all types of railway projects, including new lines, doubling, gauge conversion, railway electrification, metro projects, workshops, major bridges, construction of cable-stayed bridges, and institution buildings.

The company's shares made their debut on Indian stock exchanges on April 11, 2019, with a listing price of ₹19.10. Considering the current market price, the shares have seen an impressive growth of 870.78% over the issue price of ₹19.

Indian Railway Finance Corporation (IRFC) has also emerged as a strong performer. After a subdued entry at ₹24.9 apiece on January 29, 2021, compared to the issue price of ₹26, the stock experienced a resurgence in CY22 with a 42.23% return.

This year, it has delivered an impressive multibagger return of 208%, reaching ₹100 apiece. This stellar performance has propelled the company's market capitalisation beyond the ₹1 lakh crore mark. The stock is presently trading 285% higher than its issue price.

Indian Railway Catering & Tourism Corporation (IRCTC) was another railway-related stock that performed well since its listing. The stock made a strong debut on October 14, 2019, as it was listed at a premium of 101% at ₹644 apiece over the IPO price of ₹320. The stock has been trading on an ex-split basis with a 1:5 ratio since October 29, 2021.

At the current market price of ₹888.50, the stock is trading 177.65% higher than its issue price.

Also Read: IRCTC shares rise over 13%, hit 52-week high after record turnover

IRCTC is the only entity authorised by the Indian government to provide online railway tickets, catering services to railways, and packaged drinking water at railway stations and trains in India. The company has expanded its services over the years to include a wide range of tourism and hospitality offerings, such as luxury train tours, hotel bookings, and holiday packages.

Similarly, RailTel Corporation of India shares have surged by 235%, currently trading at ₹314.80 apiece from their issue price of ₹94. These performances underscore the robust strength of railway-related PSUs in the market.

IREDA emerges as a rapid gainer

In a brief span since its listing, IREDA's shares have witnessed a remarkable surge, establishing the company as a recent winner in the market. The stock made its debut on Indian exchanges on November 29, opening at ₹60 apiece, against its issue price of ₹32. Maintaining this upward trajectory, it reached a historic high of ₹123.30 apiece in the subsequent 11 sessions.

The IPO garnered significant demand across investor segments, experiencing an impressive subscription rate of 38.8 times during the three-day bidding window from November 21 to 23.

Insurance PSUs

LIC, the country's largest insurance company, is regaining momentum with a notable uptick in its shares during November and December. After a 15-month hiatus, the stock surpassed the ₹800 mark on December 13, with November witnessing an impressive 12.83% gain—its most significant monthly increase since its debut in May 2022.

Also Read: LIC share price hits 52-week high. Can the stock cross over its issue price

LIC faced a tepid start on May 17, 2022, listing at an 8.62% discount to the issue price of ₹949. On the first day, the stock settled at ₹875.25, marking a 7.75% dip from the IPO price. A month later, it plummeted to ₹654.55 levels.

Since its listing, LIC has not traded above the issue price of ₹949. However, recent performances suggest a potential shift, with analysts anticipating the stock to surpass its IPO price as it currently hovers 16.33% below this milestone.

Further, MSTC, a 'Miniratna' PSU, also gained 300% to trade at ₹512 apiece over its IPO price of ₹128 apiece. The company is engaged in providing e-commerce-related services across diversified industry segments, offering e-auction/e-sale, e-procurement services, and the development of customised software and solutions.

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.