Best PSU Penny Stocks in India

While there's no general definition for penny stocks in India, stocks trading below Rs 100 are usually categorized as penny stocks.

These stocks are attractive to investors because of obvious reasons... they come with the potential for high returns.

But to navigate this terrain successfully, it is important to seek out businesses that have strong fundamentals, so they can withstand the test of time.

Right now, the PSU sector is on fire with a stable government in place and strong growth prospects.

The upcoming Union Budget 2024 could ignite further momentum for PSU stocks as there's anticipation of big bang news for railways, infra and renewable energy sectors.

Keeping that in mind, let's look at some PSU stocks that are currently trading below Rs 100.

Please note, we ran a query on a total of 104 PSU stocks out of which we found 20 which were trading below Rs 100, out of which we further added the fundamental filters like ROE, ROCE, debt to equity, etc. to filter the best ones.

Take a look...

#1 MMTC

First on this list is MMTC.

MMTC (known fully as Metals and Minerals Trading Corporation of India) is one of the two highest earners of foreign exchange for India and India's largest public sector trading body.

The company's segments include minerals, precious metals, metals, agro products, coal & hydrocarbon, fertiliser, and others.

The company is engaged in trading agricultural products, such as wheat, rice cleared of the husk, corn, soybean food, edible oil and pulses.

Trading at Rs 84 per share with a marketcap of Rs 126 billion (bn), MMTC shares have rallied 40% in 2024 so far.

MMTC has been in focus recently after it was announced that the government is looking to divest a part stake in the firm.

According to media reports, the government may sell around 15% of its shareholding in the company. It currently owns 89.9% stake.

Last year, there were reports of the company shutting down as the core purpose of the PSU has become obsolete.

While there are no business operations in MMTC currently, the final announcement on its closure is awaited.

To know more about its detailed financials, please click here.

#2 Bank of Maharashtra

Next on this list is Bank of Maharashtra.

The public sector bank is engaged in retail banking, corporate/wholesale banking, priority sector banking, treasury operations and other banking services.

The bank is headquartered in Pune and operates through a network of more than 2,341 branches across India.

Shares of the company currently trade at Rs 64, having surged 39% in 2024 so far. It commands a marketcap of Rs 449 bn.

The bank's net NPAs stand lowest among PSU banks at 0.2% of total advances.

Bank of Maharashtra has improved its asset quality drastically, with the NPAs going from 0.97% in FY22 to 0.2 in FY24 while maintaining a healthy NIM of 3.9%.

The bank's net profit has grown at a CAGR (compounded annual growth rate) of 23% in the last five years. This growth has resulted in a return on equity (RoE) of 22.8% in March 2024.

Going forward, Bank of Maharashtra is looking to grow its business in Gujarat by 25% by the end of the second quarter of the financial year 2024-25.

For the full year, the bank aims for 18-20% growth in advances.

It's also targeting a business of Rs 5 trillion and becoming a fully digitised bank.

As of March 2024, the government holds around 86.5% stake in the bank.

To know more, check out Bank of Maharashtra's latest shareholding pattern.

#3 Indian Overseas Bank

Third on this list is Indian Overseas Bank (IOB).

IOB is one of the oldest and major public sector bank in India.

Presently, the government maintains a majority stake of 96.4% in IOB.

In line with the market regulator regulations requiring the bank to limit government ownership to below 75%, the institution has to reduce the government's stake by around 21.4%.

Shares of the company currently trade at Rs 62, having surged 43% in 2024 so far. It commands a marketcap of Rs 1,173 bn.

In FY24, the company's operating profit improved by 13.8% while net profit grew to the highest in decades to Rs 26.6 bn.

The bank is looking to raise around Rs 50 bn through equity.

IOB recently unveiled a slew of upgradation facilities on savings scheme that offer enhanced features to its customers.

Prospects in the retail sector are promising, with a strategic focus on housing and jewel loan segments. IOB anticipates significant growth in its jewel loan portfolio, which currently stands at Rs 390 bn, having expanded 3.5 times over the past four years.

Looking ahead, IOB envisions a continual reduction in net NPAs, demonstrating a firm commitment to managing slippages and upholding stringent control over asset quality.

The bank is optimistic about the forthcoming financial year, projecting a credit growth of 13-14%.

Additionally, after a break of about eight years, IOB is working to scale up its footprint by adding about 40-50 branches.

To know more about its detailed financials, please click here.

#4 Central Bank of India

Next on this list is Central Bank of India.

The company offers various banking services, including digital banking, deposits, retail loans and agriculture.

As of March 2024, the government holds a majority stake of 93.1% in the bank.

By August 2024, the bank aims to monetise approximately 18% of this government ownership, as per regulatory requirements. For this dilution, it has taken the OFS route.

Shares of the company currently trade at Rs 62, having surged 22% in 2024 so far. It commands a marketcap of Rs 537.5 bn.

Its net NPA reduced from 1.77% to 1.23%.

Retail, agriculture and MSME segments continue to be the bank's major focus areas and form a huge chunk of its advances.

Central Bank of India is taking various initiatives towards its digital segment. Its Cent Neo project aims to improve digital products for retail and wholesale banking.

To know more about its detailed financials, please click here.

#5 PTC India Financial Services

Fifth on this list is PTC India Financial Services.

The company is a registered NBFC with the RBI and it holds the status of infrastructure finance company. It provides equity and debt financing solutions to the energy value chain.

While PFC and IREDA may be getting all the attention these days, owing to lending prospects getting better, PTC India Financial Services may also join the bandwagon given the government's massive thrust.

Shares of the company currently trade at Rs 51, having surged 15% in 2024 so far. It commands a marketcap of Rs 32.4 bn.

In the recent past, the company has been under scrutiny for deviating in loan sanction norms, not reporting its results, among other reasons.

However, things may be turning around for the crisis-ridden subsidiary of India's largest power trading company PTC India.

For the financial year ended March 2024, the company's revenue came in at Rs 7.8 bn while profit came in at Rs 1.6 bn.

The company is expecting good traction from its transmission segment with new projects in the pipeline.

The current focus for PTC India Financial is on increasing fund disbursement and loan book size.

To know more about its detailed financials, please click here.

#6 UCO Bank

Next on this list is UCO Bank.

The lender offers a host of value-added banking solutions to its customers including international banking services, services for NRIs loan schemes, deposit schemes, and value-added e-banking solutions.

Shares of UCO Bank currently trade at Rs 54, having surged 35% in 2024 so far. It commands a marketcap of Rs 648 bn.

UCO Bank is among the top PSU banks with lowest NPAs. The lender's net NPAs stood at 0.89% of total advances in 2024.

While the bank had reported gross NPAs of 7.89% in March 2022, this has now improved.

The improvement in net profits and the margins have helped boost the return ratios. The bank's net profit has grown at a CAGR of 190% in the last three years. The RoE reported by the company stands at 13.1%.

The management of the bank aims to continue working on operational efficiency to improve its return ratios.

It is also focussing on improving CASA for low-cost deposits and monitoring pricing closely to protect net interest margins.

Besides this, it is working towards building a strong loan portfolio and managing credit costs.

To know more about its detailed financials, please click here.

#7 Andrew Yule

Last on this list is Andrew Yule.

The company is a CPSE in the medium and light engineering sector engaged in manufacturing of tea, transformers, regulators, circuit breakers, switches, industrial fans, tea machinery, among other things.

It has four operating units, out of which three are in West Bengal and one in Chennai, Tamil Nadu. It also owns many tea gardens in West Bengal.

Shares of Andrew Yule currently trade at Rs 44, having underperformed in 2024 so far. It commands a marketcap of Rs 22 bn.

The company's FY24 performance was impacted owing to low production of tea and muted export demand along with rising cost of production.

What's more, employee expenses shot up which added to margin pressure.

Going forward, a recovery in tea production could improve the company's fortunes while debt metrics should be closely tracked.

Interestingly, the company holds 26.2% stake in Tide Water Oil, which commands a marketcap of Rs 42 bn.

Currently, the government holds over 89% stake in Andrew Yule.

To know more about its detailed financials, please click here.

Other PSU Penny Stocks in India

So these were the PSU penny stocks that fared well on ROE, ROCE and certain other metrics.

However, if one were to remove those filters and search for PSU stocks in India under Rs 100, these would be the results -

PSU Penny Stocks in India

Company	Current Price (Rs)	Marketcap (Rs m)
Indbank Merchant Banking Services Ltd.	49.9	2,213.1
Punjab & Sind Bank	59.1	400,770.5
HMT Ltd.	68.2	82,095.0
Bharat Immunologicals & Biologicals Corporation Ltd.	29.7	1,282.0
Gujarat State Financial Corporation Ltd.	24.3	2,168.1
Hindustan Fluorocarbons Ltd.	18.8	367.9
Hindustan Organic Chemicals Ltd.	45.1	3,027.5
Ind Bank Housing Ltd.	63.0	630.0
Mahanagar Telephone Nigam Ltd.	40.6	25,546.5
Mysore Paper Mills Ltd.	7.4	882.2
Tamilnadu Telecommunications Ltd.	10.1	461.8
Punjab Communications Ltd.	68.1	818.7
IFCI Ltd.	60.9	159,193.8

Source: Equitymaster

So apart from the 7 stocks mentioned in the writeup above, there are 13 more PSU companies which are currently trading below Rs 100.

In Conclusion

Investors taking on PSU penny stocks should consider the fact that government holding could go down as the government decides to cash in on the current market rally and sell some stake and raise divestment amount.

Finance Minister Nirmala Sitharaman recently said that government is open to the idea of disinvestment of equity stake in PSUs.

Investors must stay up to date with the ever-changing market dynamics, government policies, and financial health companies, to make well-informed investment decisions... especially when penny stocks are involved.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...