NALCO, RCF, BHEL, HUDCO and Garden Reach Shipbuilders were among major gainers in the PSU segment. Overall market trend has turned bullish and NSE Nifty closed the session 1.6 percent higher. As Nifty closed comfortably above 25,000 mark, we can expect further momentum in the markets. Some stocks in PSU segment have witnessed strong correction and could be consider as value buys at current levels. However, investors should have long term view on these counters. In a week characterized by sharp movements across India's public sector undertakings (PSUs), a handful of heavyweights delivered strong earnings-driven rallies, while others lagged due to policy overhangs or fundamental concerns. The latest developments—spanning NALCO’s robust earnings and expansion plans, IRFC’s fundraising ambitions, BHEL’s upcoming results, RCF’s technical setup, and Dredging Corporation’s turnaround—have reshaped market sentiment. Analysts remain divided, with views ranging from cautious optimism to bearish retrenchment. Based on reports from ICICI Securities, Religare Broking, Prabhudas Lilladher, and Investec, this comprehensive analysis outlines stock-specific catalysts, risk factors, and actionable strategies for investors in India's PSU space.

1. NALCO: Aluminium Upside Meets Global Surplus Risks

National Aluminium Company (NALCO) continues to attract bullish momentum, driven by surging aluminium prices and exceptional earnings.

Recent Price Action: On May 15, the stock closed at Rs179.10, marking a 3.44% gain. Over the week, it appreciated by 16.14%.

Financial Highlights: In Q3 FY25, net profit tripled year-over-year to Rs1,566 crore, with EBITDA rising by 200%.

Expansion Plans: The company is expected to commission an additional 1 million tonnes of alumina refining capacity by end-2025.

Analyst Sentiment: ICICI Securities recommends a “Buy” with a Rs235 target, citing a low P/E of 7.58. Prabhudas Lilladher sees value in cost efficiency and dividend yield, recommending “Accumulate.”

Market View: Roughly 70% of tracked analysts are bullish, with a consensus median price target of Rs216.6—indicating over 21% potential upside.

Risk Factors: A projected global aluminium surplus could weigh on export margins, even as domestic demand remains resilient.

2. IRFC: Mixed Sentiment Surrounds Q4 Results and Funding Plans

Indian Railway Finance Corporation (IRFC) is walking a fine line between government policy and public markets as it eyes a major capital raise.

Recent Price Action: IRFC traded at Rs130.24 on May 15, gaining 0.22% for the day and 9.5% for the week—still down 18% from its 52-week high.

Earnings Snapshot: Q4 FY25 profit dipped 2.1% YoY to Rs1,682 crore, while revenues rose 3.8% to Rs6,722 crore.

Capital Mobilization: The board has cleared plans to raise Rs60,000 crore in FY26 for railway infra development.

Ownership Overhang: With the government owning 86.36%, market participants are wary of stake dilution to meet minimum public shareholding (MPS) norms.

Analyst Take: Views diverge:

Religare Broking (Ravi Singh): Target Rs135 with stop-loss at Rs110.

Bonanza (Kunal Kamble): Bullish to Rs157 if Rs109 support holds.

Investec: “Sell” call with a target of Rs50, citing overvaluation (P/B of 2.96) and regulatory risks.

Technical Levels: RSI at 46.63 implies neutrality. Support and resistance at Rs118 and Rs126, respectively.

3. Dredging Corporation: A Quiet Revival in the Making

Dredging Corporation of India has staged a modest recovery after quarters of operational distress.

Recent Price Surge: On May 12, the stock jumped 5.41% to Rs594.15.

Quarterly Rebound: Q3 FY25 net profit stood at Rs16.06 crore, reversing losses from the prior three quarters. Revenue grew 66.22% quarter-over-quarter—the best in three years.

Strategic Wins: Fresh contracts from major ports are enhancing visibility.

Technical Setup: Resistance is pegged at Rs603.85, with support near Rs583.20. A breakout above Rs603 could push the stock toward Rs635.

Fundamentals: Lower debt (D/E at 0.63) and a 4.05% ROCE hint at operational discipline.

Investment Outlook: While earnings visibility has improved, dependence on government orders and cyclicality remain concerns.

4. Rashtriya Chemicals & Fertilizers: Awaiting a Technical Breakout

Rashtriya Chemicals & Fertilizers (RCF) is drawing trader attention as a potential breakout candidate.

Stock Performance: Traded at Rs148.63 on May 15, with a weekly gain of 3.12%. However, it underperformed the Nifty Smallcap 100 by 20% over the past year.

Earnings Pulse: Q4 FY25 saw a drop in revenue to Rs324 crore (YoY), but net profit rebounded to Rs35 crore.

Balance Sheet Positive: The company reduced its liabilities by 11% during FY25.

Technical Outlook: Consolidation between Rs130–150 is ongoing. A close above Rs155 may set the stage for a rally toward Rs180–200.

Valuation: Currently trading at a P/E of 30.95, below the sector average of 36.8—suggesting limited immediate upside.

Short-Term Sentiment: Neutral, with modest optimism driven by reduced debt and better margins.

5. BHEL: All Eyes on Q4 Numbers and Dividends

Bharat Heavy Electricals Ltd (BHEL) remains in the spotlight as its Q4 results and dividend declarations loom.

Stock Trajectory: The stock rose 3.07% on May 15 to Rs239.68, extending its 4-session rally to 13.84%. It trades above all key moving averages.

Performance Highlights: FY25 revenues increased 19% YoY to Rs27,350 crore. Order inflows hit Rs92,534 crore, driven primarily by thermal power projects.

Analyst Ratings:

Morgan Stanley: “Overweight” with a Rs352 target, citing a strong pipeline and renewable diversification.

CLSA: “Reduce” to Rs166, flagging pressure from competitors like L&T.

Consensus Stance: Mixed. 41% recommend “Buy” while 47% suggest “Sell.” The average target stands at Rs213.

Technical Setup: RSI at 62 implies slight overbought conditions. Immediate resistance lies at Rs247.4; support is near Rs230.

Macro Trend Summary: PSU Stocks Reflect Sector-Specific Forces

Here’s a quick comparative snapshot for investor reference:

Conclusion: Diversified Opportunities, Focused Strategy

Public sector stocks remain a barometer for India's infrastructure and policy momentum. NALCO and BHEL showcase structural strength, while IRFC and RCF face governance and valuation headwinds. Dredging Corp is in the midst of a recovery story worth monitoring. For portfolio managers and retail investors alike, navigating this landscape will require balancing macro signals with stock-specific triggers. As always, updated data and disciplined risk management remain paramount.