5 PSUs Among the Top 10 Nifty 200 Stocks with the Highest EPS Upgrades After Q1

Despite concerns over PSU valuations as a group, five state-run companies—Oil India Ltd, Coal India Ltd, GAIL (India) Ltd, Canara Bank Ltd, and Power Finance Corporation Ltd (PFC)—ranked among the top 10 Nifty 200 stocks with the highest consensus upgrades in FY25 earnings estimates following the June quarter.

Oil India led the pack with a 17% surge in consensus EPS estimates for FY25, the highest among all Nifty 200 constituents post-Q1. Emkay Global boosted Oil India’s FY25E-26 consolidated EPS estimates by 6-7% each, citing an improved core outlook. The firm also raised its target price by 31% to Rs 700, supported by anticipated gas pricing triggers and a strong core, maintaining a “Buy” rating.

Anand Rathi acknowledged Oil India’s impressive Q1 operational performance, aside from higher other expenses. However, due to the stock’s sharp 250% rise last year, they downgraded the rating to “Hold” while raising the target price to Rs 644 from Rs 531, based on a 7x FY26e EV/EBITDA multiple (up from 5.5x).

Coal India saw a 14% increase in consensus EPS estimates post-June quarter results. PhillipCapital noted that India’s energy demand will continue to heavily rely on fossil fuels, with coal remaining the primary energy source in the medium term. They believe Coal India will play a crucial role in meeting these needs, strengthening its balance sheet through volume growth, and expect dividend yields to stay strong. They set a target price of Rs 621, valuing the stock equally by EV/EBITDA and PE ratio. Axis Securities also valued Coal India at 6x one-year forward EV/EBITDA, arriving at a target price of Rs 575 per share, up from Rs 550 earlier.

Among PSUs, GAIL and Canara Bank each saw a 10% upgrade in FY25 EPS estimates. Canara Bank posted mixed results, with earnings in line due to lower provisions offsetting muted net interest income (NII). While NIM contracted by 17 basis points quarter-on-quarter due to a change in accounting policy, management expects NIM to reach 2.95% by the end of FY25. Loan growth was driven by the retail segment, although deposit growth was modest with a sequential decline in the CASA ratio. MOFSL expects Canara Bank to deliver an FY26E RoA/RoE of 1.1%/19.3%, reiterating a “Buy” rating with a target of Rs 133, based on a 1.1x FY26E ABV multiple.

Nuvama downgraded GAIL due to high valuations, citing concerns over the sustainability of elevated natural gas marketing earnings amid historical volatility. They highlighted narrowing spreads between regional spot LNG and Henry Hub, as well as between Brent-linked and Henry Hub-linked contracted LNG, driven by lower global crude demand growth. Systematix Institutional Equities, however, raised GAIL’s target price to Rs 230 from Rs 202, maintaining a “Hold” rating. ICICI Securities retained a “Buy” rating on GAIL, with a target price of Rs 275.

PFC saw a 9% consensus EPS upgrade post-Q1 results. Elara Securities anticipates a slight near-term decline in PFC’s stock multiple due to concerns over exposure to a controversial developer group and a slowdown in growth momentum to 14%. However, they believe steady NIM and lower credit costs, driven by significant account resolutions and effective funding cost management, could offset these issues. Elara Securities forecasts a healthy 2.8% RoA and 17% RoE for FY24-26E and maintains a “Buy” rating, considering the favorable risk-reward on subsidiary valuation adjusted to 1x PABV.