Best Government Stocks in January 2025 Based on 5-Yr CAGR: RVNL, BHEL, HAL, BEL, BDL

Government stocks in India refer to shares of publicly traded companies that are either owned or significantly controlled by the government. These stocks often represent industries crucial to the nation’s infrastructure, economy, and development, such as energy, transportation, and finance. In this article, check the best government stocks list in January 2025, based on the 5-yr CAGR. Also, learn the pros and cons of investing in government stocks.

Best Government Stocks in India January 2025 – Based on 5yr CAGR

Note: The best government stocks list provided here is as of December 24, 2024. The stocks are sorted based on their 5-yr CAGR.

Overview of the Best Government Stocks in January 2025

1. Rail Vikas Nigam Ltd

Rail Vikas Nigam Ltd (RVNL) takes up different kinds of rail infrastructure projects assigned by the Ministry of Railways (MoR), including doubling, gauge conversion, new lines, railway electrification, major bridges, etc. In FY 2024, the company’s total income reached ₹22,915.13 crore, up from ₹21,285.51 crore in FY 2023, an increase of 7.66% YoY. The profit for FY 2024 was ₹1,462.95 crore, an increase from ₹1,267.97 crore in FY 2023, showcasing a growth of 15.38% YoY.

In H1 FY 2025, the company’s net profit was ₹510.82 crore, a drop from ₹737.51 crore during the same period in FY 2024.

Key metrics:

• Return on Equity (ROE): 19.69%
• Return on Capital Employed (ROCE): 17.44%

2. Hindustan Aeronautics Ltd

Hindustan Aeronautics Ltd (HAL) is involved in the manufacturing of aircraft and helicopters and repairs and maintains them. The company is a Navaratna Status Public Sector Undertaking (PSU) under the Ministry of Defence. In FY 2024, the company’s total income was ₹32,27,768 lakh, up from ₹28,59,758 lakh in FY 2023. The profit for FY 2024 was ₹7,62,095 lakh, an increase from ₹5,82,773 lakh in FY 2023. In H1 FY 2025, the company’s net profit was ₹2,94,763 lakh, an increase from ₹2,05,076 lakh during the same period in FY 2024.

Key metrics:

• ROE: 28.91%
• ROCE: 24.58%

3. Bharat Electronics Ltd

Bharat Electronics Ltd (BEL) is a Navratna PSU under the Ministry of Defence, Government of India. BEL provides advanced electronic products for the Indian Army. In FY 2024, the company’s total income was ₹20,93,838 lakh, up from ₹18,01,524 lakh in FY 2023. The profit for FY 2024 was ₹3,98,524 lakh, an increase from ₹2,98,624 lakh in FY 2023. In H1 FY 2025, the company’s net profit was ₹1,88,406 lakh, an increase from ₹1,32,831 lakh during the same period in FY 2024.

Key metrics:

• ROCE: 30.17%
• ROE: 26.37%

4. Bharat Dynamics Ltd

Bharat Dynamics Ltd (BDL) was established as a PSU under the Ministry of Defence. The company is involved in the manufacturing base for guided missile systems and allied equipment for the Indian Armed Forces. In FY 2024, the company’s total income was ₹2,73,110.44 lakh, up from ₹2,64,479.47 lakh in FY 2023. The profit for FY 2024 was ₹61,272.06 lakh, an increase from ₹35,217.49 lakh in FY 2023. In H1 FY 2025, the company’s net profit was ₹129.75 crore, a drop from ₹188.91 crore during the same period in FY 2024.

Key metrics:

• ROCE: 11.34%
• ROE: 17.89%

5. Bharat Heavy Electricals Ltd

Bharat Heavy Electricals Ltd (BHEL) is a leading integrated manufacturer of power plant equipment, specialising in the design, engineering, production, installation, testing, commissioning, and servicing of a wide array of products and services. As India’s flagship engineering and manufacturing company, BHEL is owned and controlled by the Government of India. In FY 2024, the company’s revenue from operations was ₹23,893 crore, slightly up from ₹23,365 crore in FY 2023. The profit for FY 2024 was ₹282 crore, a drop from ₹654 crore in FY 2023.

The PAT for the period H1 FY25 stood at -₹116 crore, compared to a loss of -₹271 crore in H1 FY24.

Key metrics:

• ROCE: 3.18%
• ROE: 1.16%

Pros of Investing in Government Stocks

• Stability and Safety: Government stocks are generally considered safe, as they are backed by the government’s financial strength. They tend to be less volatile compared to private-sector stocks.
• Strong Financial Backing: Government entities often have access to significant financial resources, which can support their growth and long-term stability.
• Public Sector Advantage: Government companies can benefit from government policies, contracts, and tenders, especially in the infrastructure, defence, and energy sectors.
• Long-Term Growth: Many government stocks, especially those in key industries like energy, infrastructure, and utilities, have a strong potential for long-term growth.

Cons of Investing in Government Stocks

• Political Influence: Government stocks can be affected by political decisions, changes in leadership, or shifting government priorities, leading to uncertainty.
• Limited Market Flexibility: Public sector companies might have less flexibility in adapting to market conditions due to government regulations and controls.

Conclusion

Apart from the government stocks list provided above, there are several other companies from the state and central government of the country. Before investing in any stock it is important to understand the business of the company, their financials and future prospects. Understand your investment objective and risk appetite before investing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.