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.
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