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Top 10 Fundamentally Strong Government Penny Stocks Under ₹10 in India – 2025 Guide

In the world of investing, penny stocks—those priced under ₹10—often carry a reputation for being highly risky. Many investors either avoid them entirely or jump in hoping for overnight riches. But there’s another side to penny stocks, especially when we talk about those backed by the Government of India, also known as PSUs (Public Sector Undertakings).


These government-owned companies are typically involved in key sectors like banking, energy, mining, telecom, infrastructure, and manufacturing. While their stock prices may be low today - sometimes due to past financial struggles or market neglect - their fundamental strength, long-term growth potential, and policy support from the government make them worth a closer look.


If you’re a retail investor looking for low-cost, high-potential opportunities backed by government stability, this list might help you build a strong foundation for future gains—without burning a hole in your pocket.


Why Focus on Government Penny Stocks?


1. Government Backing & Stability

Public Sector Undertakings (PSUs) are companies in which the Government of India holds a majority stake, often more than 51%. This government ownership provides a layer of financial security and long-term stability not always seen in private-sector penny stocks.


Because of the government’s involvement, these companies are less likely to go bankrupt or shut down, and they often receive policy-level support, bailouts during tough times, or benefits from favorable reforms. This backing can reduce investor risk, especially during volatile market periods.


2. Low Price, High Accessibility

Many PSU penny stocks trade at low share prices (often under ₹10), making them affordable to small retail investors. This means even investors with limited capital can buy significant quantities of shares and diversify their portfolios without much upfront investment.


Despite their low prices, some of these stocks are fundamentally undervalued, meaning their market price doesn’t reflect the actual strength or potential of the company—creating hidden opportunities for savvy investors.


3. Dividend Income Potential

Unlike most penny stocks, many PSU companies consistently pay dividends. That means you don’t just wait for the share price to rise—you can earn passive income through regular dividend payouts.


This is particularly appealing for long-term investors. For example, some government-backed penny stocks offer dividend yields of 4–6% or more, making them valuable even during stagnant price phases.


4. Untapped Upside

Because these stocks are often overlooked by large institutional investors, they remain off-the-radar—but that’s where the opportunity lies.


Once performance improves—due to restructuring, rising demand in the sector, or government initiatives—the stock price can surge quickly, rewarding early investors. This low institutional ownership means the stock can move sharply with increased interest or positive news.How We Picked These Stocks


We evaluated stocks based on:

  • CMP < ₹10
  • Market cap > ₹200 cr
  • Moderate debt
  • Healthy revenue growth
  • Promoter/government stake > 51%


Top 10 Government Penny Stocks Under ₹10 (2025)

S.No

Company

Sector

Key Strength

Market Cap

1

Mahanagar Telephone Nigam Ltd. (MTNL)

Telecom

Govt-owned, expanding FTTH services, under BharatNet project

₹2,000+ Cr

2

Andrew Yule & Co.

Engineering/Electrical

Over 150-year-old PSU, diversified segments, strong govt backing

₹1,300+ Cr

3

Punjab National Bank (PNB)

Banking

One of India’s largest PSU banks, strong rural & semi-urban presence

₹99,000+ Cr

4

Indian Overseas Bank (IOB)

Banking

High global presence, improved asset quality & profitability

₹79,000+ Cr

5

NHPC Ltd.

Hydro Power

Govt-owned hydroelectric PSU, expanding capacity, regular dividends (2.48% yield)

₹70,000+ Cr

6

Canara Bank

Banking

Strong loan book, 9,700+ branches across India, consistent performance

₹75,000+ Cr

7

Central Bank of India

Banking

Turnaround PSU bank with 219% return in last 5 years

₹36,000+ Cr

8

Bank of Maharashtra

Banking

Fast-growing PSU bank with a wide reach in Maharashtra

₹35,000+ Cr

9

NBCC (India) Ltd.

Construction/Infra

Govt infrastructure arm, executes high-value projects across India and abroad

₹21,000+ Cr

10

NMDC Ltd.

Mining

India’s largest iron ore producer, strong export and profit profile

₹56,000+ Cr

 

Stock-by-Stock Highlights


1. MTNL (Mahanagar Telephone Nigam Ltd) – ₹2 to ₹10

  • MTNL is a government-owned telecom company operating mainly in Delhi and Mumbai.
  • It’s investing in Fiber-to-the-Home (FTTH) and broadband services to stay relevant in the digital age.
  • Despite financial challenges, the low share price reflects deep undervaluation. If revival efforts succeed, even minor positive developments could trigger a strong price surge.

  • Attractive for long-term risk-tolerant investors banking on government revival packages or telecom mergers.

2. Andrew Yule & Co.

  • A diversified PSU involved in engineering, tea plantations, and industrial components.
  • With over a century-old legacy, it has consistent support from the government for operations and expansion.
  • The stock price is low, and recent modernization steps may improve profitability, especially with India’s tea exports and manufacturing sector growth.


3. PNB – Punjab National Bank

  • One of India’s largest and oldest public sector banks.
  • After absorbing other banks like Oriental Bank of Commerce and United Bank of India, PNB has expanded its network and customer base.
  • It has undergone NPA clean-up, digitization, and capital infusion from the government post-COVID.
  • Current share price is relatively low, offering entry at value levels for long-term investors.
  • Backed by strong fundamentals and a wide rural–urban reach, PNB is positioned to benefit from India’s rising credit demand.

4. IOB – Indian Overseas Bank

  • A Chennai-based public sector bank with strong exposure in the South Indian region and international banking
  • IOB was once under PCA (Prompt Corrective Action) by RBI but has now exited it, showing signs of financial improvement and regulatory compliance.
  • Its NPAs have been substantially reduced, and digital banking initiatives are gaining traction.
  • IOB remains one of the lowest-priced PSU bank stocks, creating potential for high returns if profitability sustains.

5. Canara Bank

  • A major government-owned bank that merged with Syndicate Bank, strengthening its capital base and scale of operations.
  • Post-merger, Canara Bank has focused on credit growth, improving CASA ratio, and expanding its digital banking footprint.
  • Its balance sheet has improved steadily, with falling NPAs and higher operational efficiency.
  • Often seen as a mid-range PSU stock, but still trades at attractive valuation multiples, offering upside.

6. Central Bank of India

  • A turnaround story in the PSU banking space.
  • It has shown massive improvement in asset quality and profitability in recent years.
  • As of now, it has delivered over 219% returns in the last 5 years, thanks to effective restructuring, government recapitalization, and increasing digital adoption.
  • Its large branch network and low share price still offer growth potential, especially with improving credit demand.

7. Bank of Maharashtra (BOM)

  • One of the best-performing PSU banks in recent years in terms of loan book quality and growth rate.
  • Despite its regional nature (stronghold in Maharashtra), BOM has consistently reported better asset quality than larger PSU peers.
  • Strong backing from the government and minimal exposure to large corporate NPAs make it a hidden gem among PSU banks.
  • It’s still trading below its intrinsic value, giving investors room for capital appreciation.

8. UCO Bank

  • Headquartered in Kolkata, UCO Bank has improved its financials post-pandemic and has exited PCA norms.
  • The bank has shown strong operating profit growth and aims to scale retail and MSME lending in Tier-2 and Tier-3 cities.
  • UCO Bank’s focus on technology, combined with government support, makes it an attractive long-term turnaround candidate.
  • The stock remains affordable for small investors with multibagger potential if growth sustains.

9. NBCC Ltd. (National Buildings Construction Corporation)

  • A key government player in construction and infrastructure, NBCC handles prestigious redevelopment projects like government quarters, Smart Cities, etc.
  • It also operates overseas in countries like Mauritius, Maldives, and Africa.
  • NBCC benefits directly from government infrastructure investment plans, which means revenue visibility is strong for the coming years.
  • Trading at relatively low price-to-earnings levels—solid long-term potential.

10. NMDC Ltd. (National Mineral Development Corporation)

  • A major PSU in iron ore mining, NMDC plays a crucial role in India’s raw material supply for steel and manufacturing.
  • It’s aligned with India’s “Make in India” and mining policy reforms, which aim to reduce imports and boost domestic output.
  • High production capacity, government contracts, and strong cash flows make NMDC a stable long-term investment, despite being priced modestly.

Why Invest NOW?


  • Government boost: Highest focus on infra, power, telecom in 2025 budget
  • Super-valuable entry: Under ₹10 means minimal entry cost for max upside
  • Dividend plus growth: Earn while you wait—grow as the economy recovers
  • Institutional neglect: Be among the first; big investors are yet to notice

Investment Risks


  1. Volatility & Liquidity: Thin trading could create sharp swings
  2. Policy dependency: Regulatory changes or govt reform delays
  3. Balance sheet issues: Some still under restructuring—research thoroughly
  4. Macro sensitivity: PSU banks react to economic cycles & interest rates

Strategy to Capitalize


  1. Spread the investment across 5–7 of these picks.
  2. Track key triggers: Budget announcements, license wins, policy speeches
  3. Reinvest dividends for compounding.
  4. Exit gradually as price heads toward ₹15–₹20—lock in gains.
  5. Stay updated with quarterly results & news alerts.


Conclusion


The Top 10 Government Penny Stocks Under ₹10 offer a rare blend of affordability, fundamental strength, and government-backed stability. With the right mix of patience and discipline, these picks could deliver multi-fold returns and steady income through dividends. But it's essential to invest smartly—diversify, set triggers, and monitor closely.

Act fast before prices rise—get this opportunity on your radar now and take advantage before bigger investors catch on!


FAQs


Q1. Are government penny stocks safer than regular penny stocks?

Yes - to some extent. PSU backing lends stability and dividend benefits. But volatility and low liquidity still persist.


Q2. Why invest under ₹10?

Because it allows minimal capital investment with high return potential, especially if a turnaround begins.


Q3. How soon can I expect returns?

Typically 1–3 years. These are long-term plays, not quick-flip stocks.


Q4. Should beginners invest here?

With caution. Ideal for those with moderate risk appetite and time to monitor quarterly performance.


Q5. Can I get dividends?

Yes. PSUs like NHPC, NDMC, and banks regularly pay dividends—building passive income.


Last Update : Aug 6, 2025
Published : Aug 6, 2025
Auther : Saurabh Kumar Srivastava
Publisher : Lucknow Lions
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