New Delhi— Indian public sector undertakings (PSUs) have transformed into significant wealth creators, adding ₹57 lakh crore in market capitalization between March 2020 and June 2025, according to a report released Thursday by Motilal Oswal Financial Services Ltd.
The combined market cap of PSUs soared from ₹12 lakh crore in FY20 to ₹69 lakh crore in FY25, underscoring a powerful turnaround driven by structural reforms, balance sheet clean-ups, and policy momentum.
During this five-year period, PSUs recorded a compound annual growth rate (CAGR) of 36 percent in earnings, outpacing their private sector peers and driving a 32 percent surge in the BSE PSU Index.
“PSUs have reclaimed their place in the market cap landscape. Their share, which had dropped to 10.1 percent in FY22, has rebounded to 15.3 percent, thanks to strong earnings growth and sustained market performance,” the report stated.
Profits for PSUs jumped from ₹1.2 lakh crore in FY20 to ₹5.3 lakh crore in FY25 — a nearly 4.5x increase — reversing the underperformance seen during FY15–FY20. Improved capital efficiency, stronger operating discipline, and declining losses have bolstered return on equity (RoE) across the board.
FY25 also marked the fifth straight year of reduced losses for PSUs. Notably, the banking, financial services, and insurance (BFSI) sector contributed 38 percent of total PSU profits in FY25 — a significant rise from just 7 percent in FY20. State-run banks, once burdened by non-performing assets, are now leading the resurgence with cleaned-up balance sheets, rising net interest margins (NIMs), and stable earnings.
Capital goods PSUs have also shown robust growth, registering a 28 percent profit CAGR from FY20 to FY25. This momentum has been fueled by increased defense and infrastructure spending, propelling companies like Hindustan Aeronautics Ltd. (HAL) and Bharat Electronics Ltd. (BEL) to become institutional favorites.
Looking ahead, BFSI is expected to drive 53 percent of the incremental PSU profit growth over the next two years. The share of loss-making PSUs has plummeted to just 1 percent of the overall profit pool — a dramatic improvement from 45 percent in FY18.
Motilal Oswal’s report concludes that the PSU landscape has undergone a structural transformation, resulting in a broader, more resilient, and quality-led earnings base. With fundamentals remaining strong and macroeconomic tailwinds building, the stage is set for a continued re-rating of the PSU space. (Source: IANS)
