The optimized structure of Pd3M2Se2 (M = Pb and Sn) compounds is used to explore the M‐Site cation variation. Density functional theory (DFT) using generalized gradient approximation (GGA) with Hubbard potential (GGA+U) and Wu and Cohen (GGA+WC) functionals are used to examine the physical characteristics. The chemical stability is indicated by negative values for the formation energy and obtained as −26.75 eV and −28.25 eV for Pd3Pb2Se2 and Pd3Sn2Se2 compounds respectively. The feeble interaction of Se‐4p and Pb‐6p orbital electrons in the conduction band results in a considerable contribution. As a result, the energy bands of the Pd3Pb2Se2 structure are altered in such a way that it has a high electrical conductivity. The Pd3Pb2Se2 and Pd3Sn2Se2 structures are metallic, with both ionic and covalent interactions, according to electronic population studies. While the extinction coefficient for the Pd3Pb2Se2 compound is 4.20 at 0.65 eV, the Pd3Sn2Se2 structure has a highest peak of 7.20 at this energy, indicating their photoelectric applicability. The Pd3Pb2Se2 and Pd3Sn2Se2 structures seemed to be transparent to photons energy at 16.4 eV and 18.20 eV respectively. These shandite compounds showed superior absorption for Ultraviolet (UV) photon energy as well as efficient infrared and visible light absorption with conductivity.