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Key Points

Indian PSUs have transformed into wealth creators, adding Rs 57 lakh crore in market cap since 2020. Their profits jumped fivefold while losses reduced dramatically, led by banking and capital goods sectors. Defence and infra-focused PSUs like HAL and BEL became market favourites with consistent execution. The sector's revival is backed by policy reforms, cleaner balance sheets, and improved capital efficiency.

Key Points: Indian PSUs Add Rs 57 Lakh Crore Market Cap in 5 Years

  • PSU profits surged 5X to Rs 5.3L cr in FY25
  • BFSI now drives 38% of PSU profits
  • Defence & infra PSUs grew at 28% CAGR
  • Loss-making PSUs down to 1% from 45% in FY18
2 min read

Indian PSUs turn wealth creators, add Rs 57 lakh crore in market cap in just 5 years

PSUs surge from Rs 12L cr to Rs 69L cr market cap in 5 years, outpacing private peers with 36% earnings CAGR.

"PSUs have clawed back space in the overall market cap pool – Motilal Oswal Report"

New Delhi, June 26

The market capitalisation of the Indian public sector units (PSUs) surged from Rs 12 lakh crore in March 2020 to Rs 69 lakh crore in June 2025 — adding Rs 57 lakh crore in just five financial years, a report revealed on Thursday.

Over FY20–FY25, PSUs clocked a stellar 36 per cent earnings CAGR —outpacing private peers — and powered a 32 per cent surge in the BSE PSU Index, according to the report by Motilal Oswal Financial Services Ltd.

Despite a cooling-off in FY25, the core profit engine remains intact. The decade-long recovery story is anchored in balance sheet clean-ups, policy tailwinds, and sector-specific structural shifts, the findings showed.

"PSUs have clawed back space in the overall market cap pool. Their share, which had slipped to 10.1 per cent in FY22, now stands at 15.3 per cent, thanks to a strong rally and profit growth," the report mentioned.

PSU profits jumped from Rs 1.2 lakh crore in FY20 to Rs 5.3 lakh crore in FY25, far outpacing private sector growth and reversing their earlier underperformance from FY15–20.

"Profitability metrics have improved materially. Better capital efficiency, operating discipline, and lower losses have lifted RoEs across the PSU board," said the report.

FY25 marks the fifth consecutive year of declining losses among PSUs.

BFSI contribution rose to 38 per cent of PSU profits in FY25—from just 7 per cent in FY20. PSU banks, once weighed down by bad loans, are now leading the charge — with clean balance sheets, improving NIMs, and strong earnings visibility.

Capital goods PSUs clocked a 28 per cent CAGR in profits over FY20–25. Defence and infra-led order flows have fuelled this growth. Names like HAL and BEL have emerged as institutional favourites, backed by execution and earnings consistency.

With fundamentals intact and macro tailwinds building, the next phase of re-rating is already underway.

BFSI is expected to drive 53 per cent of incremental PSU profits over the next two years. Loss-making PSUs now account for just 1 per cent of the total profit pool, down from 45 per cent in FY18.

According to the report, structural clean-ups have reshaped the PSU universe, and the earnings base is now broad, resilient, and quality-led.

- IANS

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Reader Comments

R
Rahul K.
This is fantastic news! PSUs were always seen as inefficient, but this turnaround shows what good governance and policy reforms can achieve. HAL and BEL making us proud in defense sector 🇮🇳 Hope this momentum continues!
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Priya M.
As someone who invested in PSU stocks 3 years ago, I'm seeing 4x returns! But government must ensure this isn't just temporary. Need more transparency in operations and less political interference in appointments.
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Amit S.
PSU banks' recovery is the real game changer here. From being NPA nightmares to profit engines - what a transformation! But let's not forget these are public assets. Some profits should be reinvested in social infrastructure too.
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Sunita R.
Great numbers, but how much of this wealth is reaching common people? My father retired from a PSU after 30 years - his pension hasn't increased proportionately. Profit is good, but employee welfare matters too.
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Vikram J.
Defense PSUs performing well is crucial for our Atmanirbhar Bharat vision! 🚀 But we must ensure this growth isn't just on paper. Quality control and timely delivery in defense manufacturing should be the real metrics.
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Neha P.
While the numbers look impressive, I hope this doesn't lead to premature privatization. Strategic PSUs must remain under government control. Their social objectives are as important as profits.
K
Karan D.
The BFSI sector leading PSU profits shows how crucial banking reforms were. But caution - we shouldn't repeat

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