Best PSU Bank Stocks – PSU Bank Stocks

The table below shows the best PSU bank stocks based on the highest market capitalization and 1-year return. State Bank of India leads with a market cap of ₹723,831.31 Cr and a 1-year return of 43.26%, followed by Bank of Baroda with a market cap of ₹125,126.28 Cr and an 18.81% return. Other notable performers include Punjab National Bank with a 39.18% return, Canara Bank with 40.74% and Indian Overseas Bank with a 28.84% return.

The table below shows the best PSU bank stocks based on the highest market capitalisation and 1-year return.

Introduction to PSU Bank Stocks List

State Bank of India

The State Bank of India is a banking and financial services provider headquartered in India. The company offers a diverse range of products and services to individuals, commercial enterprises, corporations, public bodies and institutional customers. Its operations are divided into segments such as Treasury, Retail Banking and Insurance Business.

The Treasury segment focuses on investment and trading in foreign exchange and derivative contracts. The Corporate/Wholesale Banking segment includes lending activities for corporate accounts, commercial clients and stressed assets resolution.  

• Stock Name: State Bank of India
• Market Cap: Rs 723,831.31 crore 
• Close Price: Rs 820.40 
• 6-Month Return: 10.15% 
• 1-Month Return: 3.53% 
• 1-Year Return: 43.26% 
• Percentage Away from 52-Week High: 11.17% 
• 5-Year Average Net Profit Margin: 8.58% 
• 5-Year CAGR: 24.92%

Bank of Baroda Ltd

The Bank of Baroda Limited operates within the banking and financial services sector in India. Its business is divided into segments including Treasury, Corporate / Wholesale Banking, Retail Banking and Other Banking Operations. 

The company’s operations are further categorized into Domestic Operations and Foreign Operations. The bank offers various personal banking services like savings accounts, current accounts and term deposits.

• Stock Name: Bank of Baroda Ltd 
• Market Cap: Rs 125126.28 crore 
• Close Price: Rs 247.97 
• 6 Month Return: -4.26% 
• 1 Month Return: 1.26% 
• 1 Year Return: 18.81% 
• Distance from 52 Week High: 20.86% 
• 5 Year Average Net Profit Margin: 7.68% 
• 5 Year CAGR: 22.52%

Punjab National Bank

Punjab National Bank (PNB) is a bank headquartered in India. It operates through various segments including Treasury Operations, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. The bank offers a range of products including personal, corporate, international and capital services. 

Personal products encompass deposits, loans, housing projects, NPA settlement options, accounts, insurance, government services, financial inclusion and priority sector services. Corporate offerings include loans, forex services for exporters/importers, cash management and a gold card scheme for exporters. 

• Stock Name: Punjab National Bank 
• Market Cap: Rs 117756.70 crore 
• Close Price: Rs 103.27   
• 6-Month Return: -20.29% 
• 1-Month Return: -5.38% 
• 1-Year Return: 39.18% 
• Percentage away from 52-week high: 38.38% 
• 5-Year Average Net Profit Margin: 3.70% 
• 5-Year Compound Annual Growth Rate (CAGR): 11.38%

Indian Overseas Bank

The Indian Overseas Bank, also known as the Bank, operates in the banking sector with various segments such as Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. 

The Bank’s activities consist of domestic deposits, domestic advances, foreign exchange operations, investments, services related to micro, small and medium enterprises, including the MUDRA Loan Scheme, retail banking services like Arogya Mahila Savings Bank Accounts, Mid Corporate department, agricultural credit portfolio, loans to small and marginal farmers, loans to non-corporate farmers and microfinance.  

• Stock Name: Indian Overseas Bank   
• Market Cap: Rs. 105796.80 crore   
• Close Price: Rs. 55.53   
• 6-Month Return: -9.71%   
• 1-Month Return: -3.95%   
• 1-Year Return: 28.84%   
• Distance from 52-Week High: 50.82%   
• 5-Year CAGR: 41.76%  

Canara Bank Ltd

Canara Bank Limited (the Bank) is a bank based in India that operates in various segments, including Treasury Operations, Retail Banking Operations, Wholesale Banking Operations, Life Insurance Operations and Other Banking Operations. 

The Bank offers a wide range of products and services, such as personal banking and corporate banking. Personal banking services include depository services, mutual funds, ancillary services, technology products, retail loan products, micro, small and medium enterprise loan products and card services, among others.  

• Stock Name: Canara Bank Ltd   
• Market Cap: Rs 92,974.18 crore   
• Close Price: Rs 104.67   
• 6-Month Return: -10.30%   
• 1-Month Return: -2.71%   
• 1-Year Return: 40.74%   
• Distance from 52-Week High: 23.15%   
• 5-Year Average Net Profit Margin: 5.49%   
• 5-Year CAGR: 22.61%  

Union Bank of India Ltd

Union Bank of India Ltd. is a banking company based in India, offering various services through different segments. These segments include Treasury Operations, Corporate and Wholesale Banking, Retail Banking Operations and Other Banking Operations.   

The Treasury Operations segment provides a variety of account options, such as savings and current accounts, term and recurring deposits and demat and online trading accounts.   The Corporate and Wholesale Banking segment offers services like trade finance, working capital facilities, lines of credit, project financing and channel finance.  

• Stock Name: Union Bank of India Ltd   
• Market Capitalization: Rs 85,137.60 crore   
• Closing Price: Rs 112.22   
• 6-Month Return: -21.28%   
• 1-Month Return: -9.98%   
• 1-Year Return: 9.86%   
• Distance from 52-Week High: 53.72%   
• 5-Year Average Net Profit Margin: 4.62%   
• 5-Year Compound Annual Growth Rate (CAGR): 16.59% 

Indian Bank

Indian Bank is involved in the provision of banking and financial services, with operations divided into different segments. These segments consist of Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Business. 

The Treasury Segment oversees the investment portfolio, foreign exchange and derivative trading. The Corporate/Wholesale Banking segment manages lending activities for corporate accounts, commercial clients and distressed assets. 

• Stock Name: Indian Bank   
• Market Cap: Rs 69,072.31 crore   
• Close Price: Rs 518.65   
• 6-Month Return: 1.45%   
• 1-Month Return: -1.19%   
• 1-Year Return: 24.56%   
• Distance from 52-Week High: 21.99%   
• 5-Year Average Net Profit Margin: 8.61%   
• 5-Year CAGR: 33.39%  

UCO Bank

UCO Bank is an India-based commercial bank that operates through four key segments: Treasury Operations, Corporate Banking Operations, Retail Banking Operations and Other Banking Operations. 

The bank provides a range of services, including corporate banking, international banking, government business and rural banking. Corporate banking services encompass debt/foremost, credit growth, deposits and value-added services. 

• Stock Name: UCO Bank   
• Market Cap: Rs 53,933.33 crore   
• Close Price: Rs 45.68   
• 6-Month Return: -14.70%   
• 1-Month Return: -7.56%   
• 1-Year Return: 14.63%   
• Distance from 52-Week High: 54.66%    
• 5-Year CAGR: 31.09%  

Central Bank of India Ltd

Central Bank of India Limited, an Indian commercial bank, provides a range of banking services such as digital banking, deposits, retail and corporate loans, agricultural services, support for micro, small and medium enterprises, offerings for non-resident Indians and services catering to pensioners. 

Its digital banking options encompass Internet and mobile banking, Cent M-Passbook, debit and credit cards, missed call feature, railways ticket booking, as well as ATM and POS services. Deposit offerings consist of savings and current accounts, time deposits, recurring deposit schemes, small saving schemes and competitive interest rates.  

• Stock Name: Central Bank of India Ltd   
• Market Cap: Rs 51191.50 crore   
• Close Price: Rs 59.02   
• 6 Month Return: -4.50%   
• 1 Month Return: -1.67%   
• 1 Year Return: 25.57%   
• Distance from 52 Week High: 30.29%   
• 5 Year Average Net Profit Margin: 1.76%   
• 5 Year CAGR: 27.74%  

Bank of India Ltd

Bank of India Limited (the Bank) is an India-based financial institution. It is divided into distinct segments comprising Treasury Operations, Wholesale Banking Operations and Retail Banking Operations. 

The Treasury Operations segment deals with the bank’s investment portfolio, including government and other securities trading, money market activities and foreign exchange operations. The Wholesale Banking Operations segment encompasses all loans and advances not categorized under retail banking. 

• Stock Name: Bank of India Ltd   
• Market Cap: Rs 47,657.33 crore   
• Closing Price: Rs 104.82   
• 6 Month Return: -23.93%   
• 1 Month Return: -6.71%   
• 1 Year Return: -0.02%   
• Distance from 52 Week High: 50.69%   
• 5 Year Average Net Profit Margin: 4.48%   
• 5 Year CAGR: 10.30%  

What Are PSU Bank Stocks?

Public Sector Undertaking (PSU) bank stocks are shares of banks that are government-owned and operate under the control of public sector entities. These banks play a significant role in the Indian financial system, providing essential banking services and promoting economic growth.  

Investing in PSU bank stocks typically reflects investor trust in the government’s financial policies and stability. These banks often benefit from government support, making their stocks relatively attractive, especially during economic downturns. Investors see them as essential contributors to national development and financial inclusion initiatives.

Features Of PSU Bank Share List

The key features of PSU bank shares highlight their importance in India’s banking and financial system. These shares represent government ownership, providing stability and trust, making them attractive to conservative investors due to their relatively lower risk.

1. Government Ownership: PSU bank shares are majorly owned by the government, which ensures operational stability and governance. This makes them appealing to risk-averse investors seeking steady returns backed by government support.
2. Dividend Yield: PSU banks generally offer attractive dividend yields, providing regular income for shareholders. This is especially beneficial for long-term investors looking for steady payouts in addition to capital appreciation.
3. Lower Volatility: PSU bank stocks tend to exhibit lower volatility compared to private bank stocks. Their government backing often shields them from extreme market fluctuations, offering a sense of security for conservative investors.
4. Long-term Growth Potential: With increasing government initiatives to boost financial inclusion and banking infrastructure, PSU banks have considerable growth potential over the long term. This makes them a strong investment for patient investors.
5. Valuation Discount: PSU bank shares often trade at a discount compared to private sector banks, offering value investors the opportunity to acquire quality stocks at relatively lower prices while still enjoying potential long-term growth.

PSU Bank Stocks to Buy Based on 6-Month Return

The table below shows the PSU bank stocks to buy based on a 6-month return.

Best PSU Bank Stocks to Buy​ Based on 5-Year Net Profit Margin

The table below shows the best PSU bank stocks to buy​ based on 5-year net profit margin.

Top PSU Bank Stocks Based on 1M Return

The table below shows the top PSU bank stocks based on a 1-month return.

High Dividend Best PSU Bank Stock

The table below shows the high dividend best PSU bank stock.

Historical Performance of Best PSU Bank Stocks

The table below shows the historical performance of the best PSU bank stocks based on 5-year CAGR.

Factors To Consider When Investing In Best PSU Bank Stocks

The factor to consider when investing in the best PSU bank stocks is government policy. Government decisions significantly impact PSU banks, from capital infusion to interest rate adjustments, influencing their profitability and overall stock performance.

1. Financial Performance: Investors should assess the financial health of PSU banks, including their earnings, return on assets and net interest margin. Strong financials indicate stability and growth potential, crucial for evaluating long-term investment prospects.
2. Asset Quality: Monitoring the asset quality of a PSU bank is essential. A high percentage of non-performing assets (NPAs) can negatively impact profitability and growth, making it a critical factor in investment decisions.
3. Dividend History: Reviewing a bank’s dividend payout history can help investors gauge income potential. Consistent dividends reflect a bank’s strong financial standing and provide an additional incentive for long-term investors.
4. Market Valuation: Comparing a PSU bank’s market valuation to its peers is crucial. A lower price-to-earnings ratio (P/E) or price-to-book value (P/B) can signal undervaluation, offering a potential buying opportunity for value investors.
5. Regulatory Environment: The regulatory framework governing PSU banks can impact their operations and profitability. Changes in banking regulations or government policies, such as reforms or capital support, should be closely monitored before investing.

How To Invest In Best PSU Bank Stocks?

Investing in the best PSU bank stocks can be a smart move for long-term wealth creation. Using a reliable broker like Alice Blue makes the process simple and efficient for both new and experienced investors.

• Open a demat and trading account with Alice Blue to start investing.
• Log in to the Alice Blue trading platform to research and track PSU bank stocks.
• Use the stock search feature to find the desired PSU bank shares.
• Place a buy order based on your investment goals and market analysis.
• Monitor your investments and use Alice Blue’s tools for portfolio management.

Impact of Government Policies on Best PSU Bank Stocks

Government policies play a crucial role in shaping the performance of PSU bank stocks. Measures like capital infusion, interest rate adjustments and regulatory reforms directly impact their financial health and lending capacity. These policies can drive growth or impose challenges, depending on the government’s priorities and fiscal stance.

Additionally, government-led initiatives such as financial inclusion and infrastructure development programs benefit PSU banks by increasing their customer base and loan disbursement opportunities. However, policy changes can also introduce risks, such as tighter regulations or economic slowdowns, affecting their profitability and stock performance.

How PSU Bank Stocks Perform in Economic Downturns?

The performance of Public Sector Undertaking (PSU) bank stocks during economic downturns often reflects broader market trends. Typically, these banks face increased pressure from rising non-performing assets (NPAs) as borrowers struggle to meet their obligations amidst economic challenges. 

Investors generally react cautiously, leading to a decline in stock prices and heightened volatility.   However, PSU banks may benefit from government support and strategic interventions aimed at stabilizing the financial system. Additionally, their role in implementing public welfare programs can provide a degree of resilience, attracting some investors looking for long-term value amidst the turbulence.

Advantages Of Investing In Best PSU Bank Stocks

The primary advantage of investing in the best PSU bank stocks is government backing, which provides stability. Government ownership ensures steady capital support, reducing risk and making these stocks attractive to conservative investors.

1. Stable Dividends: PSU banks often provide regular and consistent dividends. These dividends offer a steady income stream, making them appealing to long-term investors looking for predictable returns alongside capital appreciation.
2. Lower Volatility: Due to government ownership, PSU bank stocks tend to be less volatile than private sector banks. This lower risk makes them suitable for investors seeking more stable investment options with reduced market fluctuations.
3. Attractive Valuations: PSU bank stocks are often priced at lower valuations compared to private banks. Value investors can benefit from buying these stocks at a discount, with the potential for significant long-term growth.
4. Government Support: The government’s continuous support through policy initiatives, such as capital infusion and reforms, enhances the financial stability of PSU banks. This backing ensures resilience even in challenging economic conditions.
5. Growth Opportunities: With the government’s focus on financial inclusion and expanding banking services, PSU banks are well-positioned for growth. These initiatives increase lending opportunities and customer bases, improving long-term growth prospects.

Risks Of Investing In Best PSU Bank Stocks

The main risk of investing in the best PSU bank stocks is their exposure to government policies. Changes in regulations, interest rates, or political shifts can directly impact their profitability and operational efficiency, introducing uncertainty for investors.

1. High Non-Performing Assets (NPAs): PSU banks often struggle with a higher percentage of NPAs, which can severely affect their profitability. Poor loan recovery and default rates increase the risk of financial instability, reducing shareholder returns.
2. Limited Autonomy: Due to government ownership, PSU banks may face bureaucratic delays and lack operational flexibility. This can hinder quick decision-making, affecting their ability to compete effectively with private banks in a dynamic market.
3. Lower Profit Margins: PSU banks generally have lower profit margins compared to their private counterparts. Higher operational costs and inefficiencies in processes can restrict their earnings potential, making them less attractive to growth-focused investors.
4. Market Volatility: While PSU banks are considered less volatile, they can still be affected by broader market trends and economic downturns. During financial crises, their stock prices may drop sharply, leading to potential capital losses for investors.
5. Dependence on Government Funding: PSU banks often rely heavily on government capital infusion for growth and stability. If the government reduces its financial support or delays funding, it could strain the bank’s operations and affect stock performance.

PSU Bank Stocks GDP Contribution

PSU bank stocks play a significant role in contributing to India’s GDP by supporting key sectors such as infrastructure, agriculture and manufacturing. Their large lending capacities help fund various government initiatives and development projects, driving economic growth and financial inclusion across the country.

Additionally, PSU banks provide critical financial services in rural areas, enhancing access to credit and banking facilities for underserved populations. This increased financial participation boosts consumption and investment, further contributing to the country’s overall GDP growth and ensuring a more inclusive economic development process.

Who Should Invest in the Best PSU Bank Stocks?

Investors seeking stability with government-backed institutions should consider investing in the best PSU bank stocks. These stocks provide consistent returns, making them ideal for conservative investors looking for lower-risk investments with long-term growth potential.

1. Risk-Averse Investors: PSU bank stocks are well-suited for investors who prefer lower risk. With government backing, these stocks offer more stability compared to private sector banks, making them ideal for cautious investors.
2. Long-Term Investors: Investors with a long-term horizon can benefit from PSU banks’ growth potential. As these banks expand their lending and services, patient investors can expect steady returns over extended periods.
3. Dividend Seekers: Those looking for regular income from dividends will find PSU bank stocks attractive. These banks are known for their consistent dividend payouts, offering a reliable source of income alongside capital appreciation.
4. Value Investors: PSU bank stocks often trade at lower valuations compared to private banks, offering value investors the chance to acquire quality stocks at discounted prices, with the possibility of strong future growth.
5. Income-Oriented Investors: Investors who prioritize income over aggressive growth may benefit from PSU bank stocks. These banks provide a combination of stable dividend income and moderate growth, making them a suitable choice for income-focused portfolios..

Best PSU Bank Stocks In India​ – FAQs

We hope you’re clear on the topic, but there’s more to explore in stocks, commodities, mutual funds, and related areas. Here are important topics to learn about.

Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.