The Nifty PSE (Public Sector Enterprise) Index witnessed a drop of 8.5% over the last 12 months. However, Foreign Institutional Investors (FIIs) didn’t lose hope and held on to PSE stocks. Even during Q4FY25, when FIIs were offloading equities massively. What is more interesting is that the three companies in which FIIs have the highest stake amongst all PSEs (that are included in the NIFTY PSE Index) are from the same theme. And that is Power.
Let’s try to understand why FIIs are holding on to these PSE stocks amidst all the volatility.
#1 Power Grid Corporation of India Limited (POWERGRID)
Power Grid Corporation of India Ltd. (PGCIL) is the largest electric power transmission company in the country with a Maharatna Status. It is a Central Public Sector Undertaking (CPSU), where the Government of India (GOI) holds 51.34% stakes as of 31 March 2025. PGCIL primarily engages in moving large blocks of power from power-generating agencies to load centers. It covers almost 84% of the inter-regional networks of power grids.
FIIs were holding a 26.79% stake in this Power giant at the end of Q4FY25.
Here’s more about PGCIL’s financials.
The sales at PGCIL increased to ₹12,275 crore in Q4FY25 from ₹11,978 crore in Q4FY24, registering a 2.48% year-on-year (YoY) growth. However, the net profit for the same period dropped by 1% from ₹4166 crore in Q4FY24 to ₹4143 crore in Q4FY25.
PGCIL paid ₹10.5 per share as total dividend during FY25. The dividend yield is 3.94%, way lower than the industry median of 13.61%. Even the dividend payout at 53.93% falls short of the industry median of 85.75%.
Coming to the valuation of the company, PGCIL is fairly valued as its current price-earnings (PE) ratio is at par with the industry PE of 17.1x. However, it is trading at a bit pricier compared to its 10-year median PE of 13.8x.
There are several FIIs who hold stakes in PGCIL; however, all below 1% stake, except for the Government of Singapore, which holds a significant stake of 2.57% at the end of Q4FY25.
#2 REC Limited (RECLTD)
Rural Electrification Corporation Limited (REC Ltd.) engages in financing power projects, which span from power generation to distribution. It also has the Maharatna status and comes under the Ministry of Power of the GOI. It is registered as a Non-banking Finance Company (NBFC), Infrastructure Finance Company (IFC), and also as a Public Financial Institution (PFI).
FIIs were holding a 20.48% stake in this power finance company at the end of Q4FY25.
During Q4FY25, revenue of REC increased by 20.95% YoY to Rs 15,334 crores from ₹12,677 crores in Q4FY24. Furthermore, the sales increased for three consecutive quarters in FY25, starting Q2FY25. The net profit grew from ₹4,079 crore in Q4FY24 to ₹4,310 crore in Q4FY25, registering a 6% YoY growth.
During FY25, REC sanctioned over ₹3.37 lakh crore of loans. The disbursement increased by 18% YoY to ₹1.91 lakh crore. One interesting thing to notice here is that loan disbursement for renewable energy projects increased the most by 63% during the year. Also, Net interest income (NII) went up by 27% to ₹20,000 crore.
The company offered ₹18 per share as a dividend during FY25. The REC Ltd.’s dividend yield of 3.89% is 3x of the industry median dividend yield of 1.15%. The dividend payout ratio is almost double at 29.84% as compared to the industry median of 16.08%.
The stock is trading at a PE is 6.68x, making REC Ltd. marginally expensive as compared to its 10-year median PE of 4.47x. However, the stock is trading way cheaper compared to the industry median PE of 19.4x.
There are several FIIs that hold stakes of REC Ltd.; however, all below 1%.
#3 Power Finance Corporation Limited (PFC)
Power Finance Corporation Ltd. (PFC) is an NBFC focused on the power sector. It extends financial assistance for power projects. PFC’s product portfolio includes term loans, lease financing for the purchase of equipment, debt refinancing, deferred payment guarantees, and more.
At the end of Q4FY25, FIIs held an 18.84% stake in this power finance company with an increase of 0.80% points during the fourth quarter.
Here are the financials of Power Finance Corp.
The revenue for Q4FY25 quarter grew by 21.22% YoY from ₹24,141 crore in Q4FY24 to ₹29,265 crore. Out of total revenue, the interest income grew from ₹15,154 crore in Q4FY24 to ₹16,584 crore in Q4FY25. Coming to the net profit, it increased by 12% YoY from ₹7,556 crore in Q4FY24 to ₹8,358 crore in Q4FY25.
PFC successfully reduced both its Gross and Net Non-Performing Assets (NPA) in Q4FY25. Gross NPA reduced to 1.64% in Q4FY25 from 3.02% in Q4FY24, and Net NPA reduced to 0.38% from 0.85% during the same period.
The company paid a total dividend of ₹15.8 per share during FY25 and has a dividend payout ratio of 22.68%, way higher than the industry median of 16.08%. The dividend yield of Power Finance Corp. at 3.89% is also significantly higher than the industry median of 1.15%.
The stock of PFC trades at a PE of 5.83x, which is way lower than the industry median of 19.39x, indicating the NBFC could be trading cheap (basis this parameter alone); however, it is a bit pricier compared to its 10-year median PE of 4.01x.
Several FIIs hold a stake in Power Finance Corp, but all under 1%, except for the Government of Singapore, which holds a 1.23% stake at the end of Q4FY25.
Wrapping up
Even amidst a selling spree during Q4FY25, FIIs held on to these public sector enterprises and even increased their stakes. What’s more interesting is that all three stocks are from the power sector. Now it will be worth watching whether FIIs will increase their stake further in these PSEs in time to come.
Disclaimer
We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Maumita Mitra is a seasoned writer specializing in demystifying the world of investment for a broad audience. She has a keen eye for detail and a knack for explaining complex financial concepts in the simplest manner possible.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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