Best Blue Chip PSU Stocks To Buy Now

This is a list of the Best Blue Chip PSU Stocks To Buy Now. The stocks have Zero/Minimal Debt, High RoE & RoCE (>15%), High Dividend Yield, Beaten Down Valuations, High Growth Visibility.

Investors with a 12-18 months investment horizon can Accumulate/Buy fundamentally sound companies or companies with a strong visibility of earnings. We have selected five stocks from the PSU segment with 5 key parameters, assuring that at least 3 parameters are met. The selection of stocks are from companies with market cap less than 10000 crores.

The Five key parameters are:

 Beaten down price, growth visibility at reasonable price.
 Minimal to zero Debt companies.
 Higher Dividend Yield and Payout Ratio expected.
 ROE, ROCE above 15%.
 Market Capitalization of below 10,000 crore.

It is common saying that amongst adversity lies opportunity. The recent fall in PSU shares gives an excellent opportunity for long term investors with a 12-18 months investment horizon to accumulate some PSU shares. We have high conviction that these shares are likely to generate an average of ~30% annualized return in the next 18 months. Since the general elections are just seven months from now, sentimentally worst seems to have been factored into these stocks.

The Five broader factors for identifying the companies, besides the other rationales mentioned in the individual reports are as follows:

 Oil price shock is an eye opener to the Government to expedite significant investment in hydrocarbon sector.
 Huge investment plans by Refineries and pipeline companies in oil and gas sector (details in company note).
 Development of major ports.
 The New Mining Policy which is in the offing.
 Monetization of surplus Government land/ Building of smart cities / affordable housing projects.

The detailed rational and update on the companies are given in the ensuing pages.