IREDA, IRFC, REC, Garden Reach Shipbuilders, RITES, Dredging Corporation, NHPC and BHEL were among major losers in public sector stocks. IRFC shares declined 2.1 percent in today's session as the stock is currently trading close to its yearly lows. IREDA declined 2.2 percent and the stock could see fresh 52-week lows if selling pressure continues. Among gainers were NTPC Green Energy, Engineers India and Coal India. Overall market sentiment is negative and we could see fresh selling on Friday. However, there is also a possibility of recovery from lower levels. Global markets are looking strong and Nasdaq Composite is currently trading very close to its all-time highs. TopNews Team has reviewed technical levels for public sector stocks for short term investors and traders.

IREDA: Growth Acceleration Meets Margin Scrutiny

The Indian Renewable Energy Development Agency has emerged as a focal point for investors tracking India's clean energy financing ecosystem, though recent quarterly results present a nuanced picture that demands careful analysis. The company's Q1 FY26 performance showcased impressive top-line momentum, with operating profit surging approximately 49% year-over-year while total operating income climbed roughly 30%, reflecting the institution's expanding role in financing India's renewable energy transition.

However, beneath this growth narrative lies a more complex operational reality. Consolidated net profit declined approximately 35-36% year-over-year to roughly Rs 247 crore, primarily due to elevated operational costs that have pressured bottom-line performance. This divergence between revenue growth and profit compression creates an interesting investment dynamic – growth-oriented investors can point to expanding market share and robust loan disbursements, while margin-focused analysts highlight the sustainability concerns around current cost structures.

The strategic positioning received a significant boost when IREDA signed its annual MoU with the Ministry of New & Renewable Energy on August 25, 2025, establishing a revenue target of approximately Rs 8,200 crore for FY26. This represents roughly 22% growth above FY25 levels and provides concrete visibility into the management's growth trajectory. For a lending institution whose stock performance closely correlates with growth visibility, such formalized targets typically serve as sentiment catalysts.

Perhaps more structurally significant is IREDA's inclusion in the Section 54EC capital-gains-exemption bond framework, placing it alongside established names like NHAI and REC. This development, effective from FY26, potentially broadens IREDA's access to retail and wealth management channels while simultaneously lowering funding costs – a dual benefit that should support both spread management and valuation multiples over time.

Current brokerage consensus, compiled across multiple research platforms, suggests average price targets around Rs 225, implying upside from recent trading levels. However, the sustainability of this optimism will likely depend on management's ability to demonstrate improved cost discipline while maintaining the aggressive growth trajectory that has defined the company's recent expansion.

IRFC: Fundamental Stability Meets Technical Resistance

Indian Railway Finance Corporation presents perhaps the most straightforward fundamental story among the PSU financials, yet technical factors have created near-term headwinds that complicate timing decisions for potential investors. The company's Q1 FY26 results demonstrated continued stability with net sales reaching approximately Rs 6,915 crore and net profit of roughly Rs 1,745 crore, both showing year-over-year growth.

This earnings consistency reflects IRFC's advantaged position as the primary financing vehicle for Indian Railways' capital expenditure programs. The company benefits from relatively predictable cash flows tied to government infrastructure spending cycles, while maintaining historically low credit costs due to its quasi-sovereign counterparty profile.

A notable positive development emerged on August 21 when IRFC executed a refinancing exercise designed to lower its cost of funds. While specific details remain confidential, such refinancing activities typically serve to protect net interest margins as large debt maturities roll over in a potentially volatile interest rate environment. For NBFC investors, sustained improvements in funding costs represent a direct pathway to improved return on equity metrics.

The technical picture, however, presents a more challenging narrative. Market analysis indicates the stock has declined approximately 50% from its peak levels and faces resistance near the Rs 130 level, which technical analysts view as a critical barometer for any sustainable recovery momentum. This price action reflects broader PSU sector rotation patterns rather than company-specific fundamental deterioration.

The absence of fresh brokerage initiations or target price revisions in recent weeks suggests the investment community is taking a wait-and-see approach, allowing technical factors and positioning dynamics to drive near-term price action rather than fundamental reassessment.

RITES: Export Momentum Building on Solid Foundation

RITES Limited continues to demonstrate the resilience of its diversified engineering consultancy and project execution model, with recent quarterly results highlighting both operational stability and strategic positioning for accelerated growth. Q1 FY26 revenue remained relatively flat year-over-year at approximately Rs 490 crore, while EBITDA expanded roughly 8% and PAT grew about 1%, reflecting improved operational efficiency despite softer turnkey project revenues.

The company's commitment to shareholder returns remained evident through management's proposal for an interim dividend of 60% (Rs 6 on Rs 10 face value), underscoring robust cash generation capabilities and disciplined capital allocation. This dividend policy reflects confidence in the sustainability of current business momentum while providing income-focused investors with attractive yield characteristics.

More strategically significant is the company's order book composition and trajectory. RITES secured over 150 new orders during Q1 worth approximately Rs 451 crore, bringing total order book to roughly Rs 8,790 crore, with 33% representing high-margin consultancy work. This mix shift toward consultancy services should support margin expansion over time, as these engagements typically carry superior profitability profiles compared to equipment-intensive turnkey projects.

The export opportunity represents a particularly compelling growth catalyst, with export orders valued at approximately Rs 1,388 crore scheduled to ramp up from Q2 onwards. This international revenue stream diversifies the company's geographic exposure while potentially commanding premium pricing due to RITES' established expertise in railway infrastructure development.

Axis Securities recently reiterated its BUY rating with a target price of Rs 280, with analysts Uttam K. Srimal and Shikha Doshi highlighting the robust backlog and export acceleration potential. Their analysis incorporates management's 20% FY26 revenue growth guidance while acknowledging potential margin moderation as higher-margin nomination-based work gradually recedes.

DCI: Operational Turnaround Gains Traction

Dredging Corporation of India's transformation story continues to unfold through a combination of improved operational efficiency and strategic capacity management that positions the company for sustained profitability recovery. Recent developments demonstrate both the depth of the current order pipeline and management's pragmatic approach to execution challenges.

The Syama Prasad Mookerjee Port in Kolkata's decision to structure a major O&M dredging tender with DCI as the implementing agency confirms the company's entrenched position within India's east-coast port infrastructure network. This relationship-driven business model provides sustainable revenue visibility in a capacity-constrained industry where specialized equipment and expertise create meaningful barriers to entry.

Equally significant is DCI's evolving approach to capacity management, demonstrated through its approximately Rs 90 crore subcontracting arrangement with KMEW for modernization-linked dredging and allied works. This strategic outsourcing allows DCI to manage peak workload demands while protecting project deadline commitments – a crucial capability given the liquidated damages clauses typically embedded in port infrastructure contracts.

The fundamental inflection point remains DCI's return to profitability at the FY25 close, marking a critical turnaround after extended losses. For an asset-heavy business model like dredging, earnings leverage accelerates rapidly when equipment utilization improves and fixed mobilization costs get amortized across a stable work calendar.

The August 13 board meeting agenda included results discussion and other strategic business items, though specific outcomes have not been disclosed. For DCI investors, project news flow typically drives price action more directly than traditional Street modeling, making execution updates and government capex announcements from the shipping ministry crucial catalysts to monitor.

NHPC: Steady Performance with Strategic Optimization Ahead

National Hydroelectric Power Corporation delivered another quarter of operational consistency that reinforces its position as a reliable dividend-yielding utility play, while simultaneously advancing strategic initiatives that could unlock significant value for shareholders. Q1 FY26 results showed revenue growth of approximately 19% year-over-year to Rs 3,214 crore, with EBITDA reaching Rs 1,802 crore and PAT growing roughly 4% to Rs 1,065 crore.

This performance profile reflects NHPC's advantages as a hydroelectric generator, including minimal fuel costs, long asset lives, and relatively predictable seasonal generation patterns. The steady EBITDA progression despite hydrology variations demonstrates effective portfolio management across the company's diversified asset base.

Perhaps more intriguing for value-oriented investors are the strategic initiatives under board consideration, particularly the framework to monetize returns on equity and cash flows from existing power stations. Such capital recycling mechanisms, potentially through infrastructure investment trust (InvIT) structures, could simultaneously lower the cost of capital while accelerating growth project funding without significant equity dilution – a value creation pathway that has proven successful across multiple infrastructure sectors.

The revision of FY26 borrowing plans also signals management's focus on optimizing the capital structure as major projects like Subansiri Lower approach commissioning. The successful testing milestone achieved by the first 170-MW unit at Subansiri represents tangible de-risking for what constitutes a flagship project in NHPC's growth narrative.

JM Financial's reiterated BUY rating following the Q1 results reflects Street confidence in both the operational delivery and strategic direction. The constructive fundamental setup, combined with visible project execution progress and potential capital optimization, creates multiple catalysts for sustained outperformance.

BHEL: Execution Challenges Overshadow Order Pipeline

Bharat Heavy Electricals Limited continues to exemplify the classic public sector conundrum – substantial order book potential constrained by execution discipline and margin delivery challenges. The Q1 FY26 results disappointed investors primarily due to weak margin performance and elevated cost pressures, highlighting the persistent gap between order wins and profitable revenue conversion.

The market reaction reflected this fundamental tension, with shares declining despite management's emphasis on the robust order backlog. Street debate has increasingly focused on the timeline for translating large thermal and nuclear EPC packages into sustainable profitability, particularly given supply chain complexities and project execution intensity requirements.

Prabhudas Lilladher analysts Amit Anwani, Prathmesh Salunkhe, and Hitesh Agarwal maintained their HOLD rating with a target price of Rs 237, explicitly noting that while the order book provides medium-term revenue visibility, weak profitability trends and execution slippages cap near-term upside potential. This cautious stance reflects the analytical community's "show-me" attitude toward BHEL's operational improvement claims.

Nuvama's research team maintained a more constructive BUY rating while trimming the target price to approximately Rs 335, acknowledging valuation support from the project pipeline while emphasizing quarterly execution risks. This divergence in Street opinion creates potential for significant price volatility around any major order announcements or visible execution improvements.

For BHEL, the path forward requires demonstrating margin discipline on current projects while maintaining competitive positioning for future thermal and nuclear power infrastructure awards. The stock's historical tendency toward sharp moves on clean project wins or execution updates suggests that patient investors willing to navigate quarterly volatility might find opportunities, though timing remains challenging.

Strategic Investment Implications

The current PSU landscape presents differentiated risk-reward profiles that demand sector-specific analysis rather than broad-based approaches. IREDA and NHPC emerge as the most compelling fundamental stories, combining visible growth catalysts with reasonable execution risk, while RITES offers attractive international diversification through its export order ramp.

IRFC represents a steady, dividend-focused play constrained primarily by technical factors rather than fundamental deterioration, potentially attractive for value investors willing to navigate near-term price consolidation. DCI's turnaround story continues progressing, though the capital-intensive nature of the dredging business requires careful monitoring of utilization trends and contract profitability.