4 PSU Stocks corrected to record high, shows strong potential

PSU stocks are rebounding after having corrected between 25% to even 50% from their record high levels that they had hit in July and August this year. The Nifty PSE Index has gained in three out of the last four trading sessions, during which it has surged over 5%.

Four of the listed stocks in the PSU index are currently presenting healthy potential upsides from current levels. These stocks are taken into consideration for this piece with coverage of at least 10 analysts currently.

The state-run power financier REC Ltd has the highest upside potential currently within stocks on the Nifty PSE index. Consensus projects a potential upside of 30% from current levels for REC. All 10 analysts who have coverage on the stock have a "buy" recommendation.

Last week, Bernstein wrote in a note that the correction seen in shares of both REC and PFC provides an enhanced buying opportunity. DAM Capital has the highest target on REC at Rs 755.

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Coal India Ltd provides an upside potential of 29%, according to consensus estimates. Morgan Stanley initiated coverage on the stock on Wednesday, with a price target of Rs 525, saying that a high power demand outlook will support Coal India's volumes and earnings going forward.

The brokerage also said that the recent correction in the stock price is an attractive buying opportunity as valuations are reasonable. Coal India shares had corrected nearly 25% from their peak.

Oil India has corrected 35% from its recent highs of Rs 767 and currently offers an upside potential of 27% from Tuesday's closing levels. Out of the 20 analysts that have coverage on the stock, 16 of them have a "buy" rating, one says "hold", and the other three have a "sell" rating.

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 Based on consensus estimates, ONGC shares currently offer a potential upside of 26% from current levels. Nomura wrote in its note earlier this month that it anticipates net crude oil realizations to remain range-bound at $75 per barrel and gas realizations to increase, benefitting from a rising share of gas volumes. Out of the 29 analysts that cover ONGC, 19 of them have a "buy" rating, four say "hold", and six of them have a "sell" recommendation. The stock has corrected 27% from its recent peak.

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