RailTel, SJVN, NHPC shares surge 5% after Navratna upgrade

Shares of RailTel, SJVN, and NHPC, three of the four recently upgraded Navratna PSUs, rallied up to 5% on the NSE today, following the Finance Ministry's decision to elevate their status. The market surge reflects renewed investor interest after these state-owned enterprises received the Navratna classification.

Railtel shares are currently trading at ₹497.15 on the NSE, after reaching an intraday high of ₹516, which was 5.13% higher than the previous close of ₹490.80. Similarly, NHPC shares surged 4.5% from the previous close of ₹96.12 to climb an intraday high of ₹100.50, which is 15% lower than its yearly peak. Besides, SJVN opened strong at ₹140, up 4.98%, but is trading at ₹135.95, still 17.88% below its 52-week high.

What are Navratna PSUs?

Public Sector Undertakings (PSUs) in India are classified into Maharatna, Navratna, and Miniratna categories based on financial performance and market standing. Navratna status, introduced by the government in 1997, is awarded to Miniratna Category I companies in recognition of their strong financial and market performance. This status grants these companies greater autonomy, allowing them to invest up to ₹1,000 crore or 15% of their net worth in a single project without government approval, and up to 30% of their net worth annually, provided it does not exceed ₹1,000 crore. They can also establish overseas subsidiaries, form joint ventures, and engage in mergers and acquisitions to enhance their market position and operational efficiency.

As of now, there are 25 Navratna companies in India, including recent upgrades like SECI, NHPC, SJVN, and RailTel. To be eligible for Navratna status, a Miniratna-I company must have an "Excellent" or "Very Good" MoU rating in three out of the last five years and achieve a composite score of 60 or more across various performance indicators such as Net Profit, Net Worth, and Earnings Per Share. The last PSU that was upgraded to Navratna status was Mazagon Dock. As of August 5, there were 13 Maharatnas, 21 Navratnas (excluding the recent additions), 55 Miniratnas-I, 11 Miniratna-II central public sector enterprises.

While Solar Energy Corporation is not listed on any of the public exchanges, the Finance Ministry also upgraded the solar energy firm to Navratna status. “Classification as a Navratna CPSE enables SECI towards enhanced autonomy in financial and operational matters and will accelerate the company’s growth path through better agility, improved geographical presence and technology focus,” the New and Renewable Energy Ministry said in a press statement.

Established in September 2000, RailTel Corporation provides nationwide broadband, telecom, and VPN services, aside from modernising Indian Railways' control and safety systems. SJVN (Satluj Jal Vidyut Nigam) specialises in hydroelectric power generation and transmission. NHPC on the other hand, founded in 1975, is a hydropower CPSE, which is now diversifying into renewable energy sources like solar, geothermal, tidal, and wind power.

RailTel reported a 25.2% year-on-year increase in net profit, reaching ₹48.7 crore in the first quarter of this fiscal. The consolidated net earnings of SJVN surged 31% to ₹357.09 crore in the June quarter. Meanwhile, NHPC's net profit saw a modest 1.2% year-on-year rise to ₹1,108.5 crore during the same quarter.