Top Debt Free Companies in India and Debt Free Stocks in India 2022

A company that will thrive beyond the scope of short-term activities in business and exists for the long term will have to put in place good capital for its daily activities.

Moreover, capital is needed for daily activities, unforeseen circumstances, and operational costs, which can be sourced from either the company's purse or financial institutions.

Companies have two options to raise capital, either through Equity or Debt.

●      Equity

Mutual fund aims to derive dividend income by investing at least 65 percent of its liquid assets in equities with the highest dividend yield. Or, in other words, in the cheapest shares. This strategy realizes profits when the stock market declines but loses out when the market rallies.

●      Debt

This part of a firm's total capital commonly comprises loan capital and short-term bank loans such as overdrafts that ask for a fixed return independent of the business's profits. Since there is a fixed return irrespective of the profit or loss, debt-free Companies could be safer investments, which has made debt free companies prosper so much in India in 2021 2022.

A company is termed debt free when it’s not owing or has not taken debt from any financial institution, bank, supplier, or stakeholder to aid its business activities. A company is considered debt free when it doesn't have any loans, any hire purchase, or contract agreements, does not owe any money to Her Majesty's Revenue and Customs(HMRC) in terms of VAT or corporation tax; it has no debts at all.

When a company is debt free, they take their decision independently since they are not considering payment of any interest to any banks or other financial institutions.

Debt-free businesses have many advantages and are solid investment opportunities. Companies use capital to conduct their daily operations. This capital comes from either their fund or credit from somebody.

Stock

A stock is a form of security that signifies the holder has proportionate ownership in the issuing corporation and is bought and sold predominantly on the stock market. Corporations issue stock to raise funds to operate their businesses.

Since debt-free companies are independent of bearing the burden of paying interest on loans.

Debt free companies typically improve the efficiency of revenue-generating processes and afford you the opportunity to turn inventory faster and reduce the inventory balance. Debt free companies also reduce operating expenses and increase the gross margin of products or services.

Debt-free companies would be in a better position to fulfill their Corporate Social Responsibilities (CSR) to their contemporary society. This means it would be contributing time and, in large measure, for the benefit of society and people at large. If more and more companies become debt free, it will contribute to nation-building in a big way.

No matter how good debt-free companies may be, there will always be another side to the coin. One of the disadvantages of debt free companies is that when they are now willing to borrow, their credit rating goes down, and lenders will not lend them money when they may most need it. If equity financing is preferred over Debt, then there will be a low Earning per Share (EPS) Ratio which measures the amount of a company's net income that is theoretically available for payment to the holders of its common stock. Debt free companies also tend to have a higher cost of financing.

1.   Bhansali Engineering Polymers Limited

Acrylonitrile Butadiene Styrene (ABS) of superior quality has been produced by Bhansali Engineering Polymers Limited (BEPL) since its inception. With a market capitalization of Rs 2858.55 crore, the firm is a value-driven enterprise that has strived for excellence in delivering high-quality goods and services since its establishment in 1984.

2.     Rajdarshan Industries Limited

Rajdarshan Industries Limited (formerly A.R. Enterprises Limited), having its registered office at 59 Moti Magri Scheme, Udaipur, was incorporated in 1980 with the object of undertaking drilling operations and business of mining, manufacturing, and trading all kinds of minerals with a market capitalization of  Rs 22.78 crore.

3.     Mindtree

Mindtree Limited is a Larsen and Toubro Group Company, an Indian multinational Information Technology service that enables enterprises to drive competitive advantage, customer experience, and business outcomes using digital and cloud technologies. The company’s consolidated net profit in December 2021 quarter came in at Rs 437.5 crore, while its revenue was Rs 2,750 crore.

4.     ASL Industries Limited

ASL Industries Ltd is engaged in manufacturing forged products and press shops for sheet metal products with various applications used in different companies like railways, security, and carriage.

They have a  market capitalization of Rs 36.2crorese.

5.     Bata Indian

The company Bata Indian was established in 1931. It's a premier manufacturer and retailer of footwear in India. It's a part of the Bata Shoe organization. However, they started as a small-scale operation in Konnagar in 1932. Bata's smart-looking new stores, supported by a range of better quality products, aimed to offer a superior shopping experience to its customers in different categories. The categories of men have: All Days Casual, Hiking, Training, Walking, etc. For the categories of women, they have All Days Casual, Running, Training, Walking, etc. In the Kids categories, they have Running, Walking, etc. Other categories are Mood and Type. They have a market capitalization of Rs 24,793 crore.

6.     ITC Limited

With a Gross Sales Value of Rs 90,104 crore and a Net Profit of Rs 15,058 crore as of 31.03.2022, ITC is one of India's top private sector firms. ITC is present in a variety of industries, including FMCG, hotels, packaging, paperboard and specialty papers, and agribusiness.

7.     Gland Pharma

Gland Pharma is an Indian based Pharmaceutical Company that has grown over the years from a contract manufacturer (HK1) of small volume liquid parenteral products to become one of the largest and fastest growing generic injectables manufacturing companies, with a global footprint across 60 countries with 52,575 Crore market capitalization.

8.     Infosys

In the ranking of I.T. services, Infosys is currently the second-largest I.T. services company in India. It's a global leader in next-generation digital service and consulting. It posted a consolidated net profit of Rs 5,686 crore in Q4FY22 upon the revenue of Rs 32,276 crore during the quarter.

9.     Reliance Industries

The largest firm in India is Reliance Industries, which has a market valuation of Rs 1,901,663 Cr. The firm's numerous competitors keep a close eye on its financial results since even tiny decisions by the company can have a significant impact on the whole sector.

The largest corporate immunization program in India is provided free of charge to Reliance workers and family members. Reliance is also the largest generator of medical-grade oxygen from a single location.

They see education for everybody as a civic responsibility and let dreams to come true. After receiving a number of investments from different investors, the firm is now net debt-free.

10.     Hindustan Unilever Limited

Hindustan Unilever Limited is one of India's largest fast-moving consumer goods companies with nearly 90 years of heritage. Virtually every household in India has one or two HUL brands. They work to create a good future for all people of all sundry in their best capacity. HUL has more than 50 brands like; Sur, Dove, Closeup, Rin, Red Label, Rexona, Domex, etc. With  Rs 545328.38 crore market capitalization.

Debt free stocks simply refer to when the total value of a stock, both in sales and expenditure, is without debt to any lender or shareholders.

Penny Stock

Penny Stock is used in the context of general equities. Stock that typically sells for less than $1 a share, although it may rise to as much as $10/share after the initial public offering, usually because of heavy promotion. All are traded OTC(Over The Counter), many of them in the local markets of Denver, Vancouver, or Salt Lake City.

The term "penny stock" refers to low-priced (typically $10 to $5 and occasionally as low as $1, but not a penny) securities frequently floated by oil, gas, gold, or other prospecting companies with few or no real assets, companies with a short, erratic, or no track record of earnings, or once-strong companies that have struggled and are ready to be sold. Their appeal stems from the possibility of receiving significant percentage returns if the business thrives or is acquired. Still, the speculative character of the underlying businesses leads to erratic market price fluctuations. Only the over-the-counter market is used to sell penny stocks in the United States. But in the UK, they are traded on stock markets (where they are called penny shares).

Debt Free Penny Stock

Every business has a goal of profit-making and the capacity to transcend more than one generation. In such a case, debt will always occupy an important position because of the present and future performance. Most especially when it comes to Penny Stock, the debt volume should be put into consideration and not only the debt volume but also the leverage volume in time like this, and that is the reason during uncertainness your business is to sit on the penny stocks which are debt free, which have a decent track record of generating profits, and the ones which pay a regular benefit.

Debt Free Penny Stocks Below 1 Rupee

Debt Free Penny Stocks Below 1 Rupee are very lucrative stocks, also known as Ultra Penny Stocks, well pronounced in India. Debt free penny stocks below 1 Rupee are stocks that transact sales and purchase at a very low price in the stock market. Investors pull towards it due to the low price, which is why it is called Penny. They have a great prospect of massive Return On Investment to the level of multi-bagger within a short period.

Though debt free penny stocks below 1 Rupee are highly risky because of their inadequate liquidity, they are speculative and illiquid in their references.

●        What is Short-term debt?

Debt payable within 12 months; includes the current portion of the long-term debt. Short-term loans may be accounts payable, wages payable, Short-term notes, Bank overdraft, and Cash credit.

●        What is a Debt-to-Equity Ratio?

It is a capitalization ratio comparing current liabilities plus long-term debt to shareholders' equity. A company's leverage, or gearing, and ability to repay debt are measured by its debt to equity ratio, which also shows what percentage of its total capital was provided by trade creditors and lenders. Formula: Total debt ÷ owners' equity. It's also called leverage ratio or gearing ratio.

●        How to calculate Debt-to-Equity Ratio?

Debt-to-Equity Ratio = Total Liabilities/Total Shareholders’ Equity

●        Is a low Debt-to-Equity ratio favorable?

The major benefit derived from a high debt-to-equity ratio is that the firm will be able to fulfill its debt obligations through its cash flow and leverage it to increase equity returns and strategic growth.

Debt Free Companies are a good option as it does not owe any interest payment to any financial body, supplier, or hire purchase. They are advantageous to society as they perform their social responsibilities, but at any point in time, such companies require funds from an external source; they always experience set back as their credit rating is low, and lenders will not be willing to lend to them.