Top 10 Best Zero Debt Companies in India 2023
If a company’s balance sheet shows zero debt, it can be said to be debt-free. Businesses like these have better financial management and no outstanding loans. They have greater independence and decision-making speed. In general, a debt-free business is seen favorably since it has fewer obligations to meet and may use its funds to make investments that will boost performance.
Companies with zero debt are those whose balance sheets show no debt. The list of Indian stocks with no obligation is available for 2021. On their balance sheet, more than 550 companies listed on the NSE [National Stock Exchange] have nil or no debt. Here is a list of significant businesses that have zero obligations.
Relevance of the debt-to-equity ratio
The debt-to-equity ratio reveals the degree of risk related to a company’s management and financial structure. The ratio indicates the amount of debt and available financial leverage a company uses to run its operations. Debt is the collective term for an organization’s obligations to repay liabilities over time.
For instance, the debt-to-equity ratio paints a picture of a statement of financial position and chances for success. Business executives who are aware of the advantages, complexities, and importance of the loan ratio may employ it to assist their organization to succeed in cutthroat industries.
Since a large debt ratio reduces a bank’s chances of being reimbursed, it can decline to provide additional money or only do so in dire circumstances. It will be probably be turned down for a loan if your debt-to-equity ratio is two and the bank’s threshold is 1.5. A corporation is less dependent on debt and has a stronger equity position when its debt-to-equity ratio is lower.
(Total Liabilities)/(Debt to Equity Ratio) (Total Shareholder Equity)
How Can I Find Debt-Free Businesses?
Step 1: Search for the website of the screener.
Step 2: Sign up for a screener account or log in using your credentials.
Step 3. Locate the query builder.
Step 4: Enter 0 for Debt to Equity.
Step 5: Press the query run button.
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Use the search builder to generate the following query if you want to find companies with a market value greater than 50,000 crores and a debt-to-equity ratio of zero. AND Market Capitalization is more significant than $50,000. Use this query generator to exclude businesses with specific financial ratios, such as PE, ROE, PEG, and others. The firms with the highest market capitalizations with no debt are listed below.
1. The SBI Life Insurance Company Ltd
It specializes in the sale of annuities and life insurance. In the beginning, it was a joint venture organization between both the State Bank of India and BNP Paribas Cardiff S.A. it is a joint venture between both companies that has a good range of products for both people and groups, including participating and non-participating pensions, group gratuities, leave encashments, group superannuation, group immediate annuities, unit-linked insurance products, flexible insurance products, and more.
2. Procter & Gamble Hygiene and Wellness Care Ltd.
Production and sales of branded packaged consumer goods quickly are the main activities of Proctor & Gamble Hygiene and Care Limited. This firm works in the fem care and hospitality industries. The company’s product lineup includes Old Spice, WHISPER (the top brand of feminine personal hygiene products in India), and VICKS (the leading brand of national healthcare items).
Our brands have been handed down through the generations and are recognized in millions of lounge rooms, kitchens, utility rooms, and bathrooms. They have pushed the boundaries of tradition, driven innovation, and influenced culture throughout the period of 181 years. But despite our continued growth, we never lose sight of our deep-seated purpose, beliefs, and guiding principles.
3. HDFC Asset Management Ltd.
With total assets managed (AUM) of 40,680,00 Cr. as of the close of the year 2020, HDFC Asset Management Company (HDFC AMC), promoted by HDFC Ltd (52.72% of shares) and Standard Life(21.24%), is one of the largest asset management organizations (AMCs) in India. Customers of the company have access to a wide choice of investing and savings options that encompass different asset classes.
High-net-worth individuals (HNIs), wealth management, domestic enterprises, trusts, provident funds, and national and international institutions can also take advantage of the company’s portfolio management and personally managed account services.
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4. Avenue Supermarts (DMart)
Avenue Supermarts is a business that works in the retail industry in India. The corporation runs the DMart shop chain. DMart concentrates on offering a variety of FMCG products, including groceries, milk products, toiletries, and other everyday items. Veteran value investor Mr. Radhakishan Damani was interested in testing his understanding of consumer psychology.
Because of this, DMart was founded in 2000, beginning with just one location in Mumbai. Since then, DMart has steadily expanded into one of India’s largest chain stores, with 234 locations across the country. What benefits DMart is its emphasis on offering substantial discounts to its clients, adding value for them.
DMart has a history of reporting solid financials. Over the past five years, it has increased its revenue and earnings at a CAGR of 14.9% and 19.2%, respectively. As an offline chain store, DMart must expand by opening new locations. Higher Capex results from opening more stores for the Business.
Dmart has been covering its capital expenditures with its earnings as it has no debt on its books. This demonstrates the effectiveness of Dmart’s operations and the robustness of its business strategy. Avenue Supermarts established Avenue E-commerce as a wholly owned subsidiary to compete with newly established online marketplaces like JioMart, Amazon, etc.
Between 2015 and 2019, the Business did have a sizable but manageable debt load. It eliminated it in the fiscal year 2021.
Update: Boulevard Supermarts’ revenue increased by 93.1% YoY in the June 2022 quarter, thanks to a strong resurgence in sales following the epidemic. Also, growing 573.9% YoY was net profit. The company has succeeded in remaining debt-free while building 110 additional locations over the last three years, showing excellent operations.
5. Bayer CropScience
The giant pharmaceuticals and life sciences firm in the world, Bayer AG, which is based in Germany, has an Indian subsidiary known as Bayer CropScience. India and the corporation have been linked since the 19th century. Since then, it has continued to have an amazing impact on India’s agricultural and general well-being.
It has a range of services and goods through its three business divisions—crop science, medical drugs, and consumer healthcare. CropScience is the division of its three that creates the revenue. The Business supplies farmers with landholdings with excellent services like genetically modified seeds and digital farming solutions.
Bayer markets its pharmaceutical goods through Bayer-Zydus Pharma, a partnership between Bayer Crop sciences and Zydus Cadila Healthcare. The corporation uses six production sites spread across the nation to produce these goods.
The heart of Bayer’s Business is the corporation in India that has set up R&D. Three R&D centers. The company has a little indebtedness of Rs 15 m during the 2019–20 fiscal year. However, the Business eliminated all of its debts in the fiscal year 2020–2021 and achieved debt freedom.
It is a very well-managed business, both operationally and financially. Over the past five years, Bayer’s sales and profits increased at a CAGR of 9.9% and 11%, respectively. The company’s main competitive edge continues to be technological advancement and innovation in Hyderabad and Baysprayed agricultural areas using drones.
Update: Again, for June 2022 quarter, Bayer CropScience had a 17.5% YoY increase in revenue and a 19.3% YoY increase in net profit. Volume expansion across all of its product categories was mainly responsible for this.
6. Tata Consultancy Services (TCS)
Tata Consultancy Services is India’s largest IT services provider and second-largest firm in terms of market cap. Operating in 149 sites across 46 countries, the Tata group company. The large IT company recorded Rs. 50,591 crore sales and operating earnings of Rs. 9,926 crores for the quarter ending March 2022.
For more than 50 years, Tata Consultancy Services, an enterprise that provides IT services, consultancy, and enterprise solutions, has worked as a transformation partner with many of the biggest companies in the world.
TCS offers a comprehensive portfolio of Business, information, and technical services and solutions that are consulting-led and cognitive-powered. Its distinctive Location Independent AgileTM delivery model, regarded as a benchmark for excellence in software development, is used to deliver this.
TCS, a part of the Tata group, the most enormous multinational corporation in India, employs over 592,000 of the best-trained consultants in the world across 55 nations. The corporation, listed on the BSE (previously Bse) and the NSE (Stock Market) in India, reported combined sales of US $25.7 billion for the fiscal year that ended on March 31, 2022.
TCS has earned a spot in amazing sustainability indices, that includes the FTSE4Good Emerging Indexes and the MSCI Green Economy Index, because of its proactive approach to addressing global climate and award-winning engagement with communities around the globe.
7. Bharat Electronics
State-owned Bharat Electronics manufactures cutting-edge electronic products on Earth and in space. The company specializes in aerospace and defense electronics. As of January 1, 2022, the company had an order book worth Rs 56,568 crore. On sales of Rs 3,660.84 crore, it made a net profit of Rs 584.87 crore in the third quarter of FY22. An Indian Navratna public sector enterprise is Bharat Electronics (PSU).
The Business produces a variety of specialized electronic equipment for both military and non-military applications. Defense and non-defense products can be broadly categorized as part of its product line. It contains a wide range of primary and complex products, including batteries, radars, digital voting machines, and encryptors. BEL has nine cutting-edge production facilities to complete the requirements of its customers.
BEL has a total of four research and development centers. To provide the armed forces with cutting-edge technology, it invests an equivalent of 7% of its yearly sales in R&D. In order to broaden its revenue streams, the corporation has been looking into various options. It partnered with General Motors Medical Systems to produce electronic medical systems.
Additionally, the Business will help with India’s developing electric vehicle (EV) sector. It will create goods like li-ion batteries and fuel cells that are important for the EV ecosystem. BEL is a lucrative company, with so many sales and profits expanding at CAGRs of 9.4% and 6% during the last five years.
BEL has no debt on its details while working as a capital-intensive company. Bharat Semiconductor has had zero or very little debt on its financial statements for the past 20 years. Over the years, the company has continuously kept and somewhat increased its operating margins. This merely demonstrates that BEL has been able to expand steadily without taking on any debt.
Update: BEL’s revenues and net profit increased by a staggering 90.2% and 2,618% year over year (YoY) in the quarter ending in June 2022. This was primarily because of better order execution.
8. Relaxo Shoes
Regarding volume, Relaxo Footwear is India’s largest producer of footwear goods. Despite the problematic climate created by the pandemic, the company is selling 190 million pairs of shoes in the fiscal year 2021. Relaxo produces a variety of goods under a number of names, including Flite, Sparx, Bahamian, etc.
It is located in New Delhi and has eight production facilities and services. Salman Khan and Akshay Kumar, the two well-known Bollywood actors, serve to be the brand ambassadors for Relaxo. It has enviable financial standing, with revenue and profit expanding at 9.3% and 24.9% over the last five years, respectively.
Relaxo Footwear’s emphasis on providing its customers with high-quality goods at competitive prices benefits the organization. To constantly expand, businesses like Relaxo Footwear must make the necessary investments in production services.
Installing a production facility, however, is costly and will cost crores of rupees. In capital-intensive industries, manufacturing enterprises have some debt on their balance sheets. With Relaxo, this isn’t the case. Since Relaxo has no obligation, internal accruals are used to cover its expenses. The Business is very profitable and generates enough cash from its operations to cover its capital and operational needs.
Update: Relaxo’s revenue increased by 33.6% YoY in the quarter ending in June 2022. Additionally, net profit increased from the prior year by 24.8%.
9. Grindwell Norton
A division of the French multinational Saint Cobain company is Grindwell Norton. By December 2021, the things and keep 51.6% of the Business. With the help of its four business divisions, Grindwell Norton produces a variety of technical goods. Numerous sectors, including jewelry, autos, and others.
The Business was a pioneer in the manufacturing of grinding wheels. In industries, grinding discs are used to polish a number of surfaces. Abrasives, one of the best goods produced and sold by Grindwell Norton, are utilized to make these wheels.
Grindwell Norton is a world leader in geotextiles in addition to abrasives. Polyester-based geotextiles are permeable textiles. These materials are employed in required fields, including road reinforcement and coal mining.
Grindwell Norton uses six production sites across the nation’s central regions to make its goods. The company’s strong financials are a reflection of its amazing position in the industry. Over the last five years, its sales and profit numbers have increased at a CAGR of 7% and 14.5%, respectively.
Additionally, the Business has been paying all of its expenses out of earnings, which suggests that it has no debt. It hasn’t incurred any deficit in the last four years. The company announced a revenue increase of 43.1% YoY and net earnings growth of 45.6% YoY for the quarter ending in June 2022. Volume growth drove the expansion.
10. Hindustan Unilever(HUL)
One of India’s biggest consumer products firms is Hindustan Unilever, a part of the British giant Unilever. The company sells a range of goods, including fast-moving consumer goods, cleaning supplies, personal care products, and food and beverages.
For the quarter that was closed in December 2021, the FMCG major declared a solo net profit of 2,243 crores on sales of Rs 13,092 crore. Hindustan Unilever Limited (HUL), India’s largest manufacturer of fast-moving consumer goods, has a nearly 90-year history in the country.
Nine of every ten Indian households utilize one or more of our products on any given day, giving us a unique chance to create a better future. We are renowned for our great brands, the beneficial social impact we have, and our commitment to ethical business practices. With products and services that are beneficial to both the consumer and the wider community, HUL aims to build a better future each day and makes it easier for people to feel good, look good, and enjoy life more.
With more than 50 brands, including ones from the following categories: fabric solutions, home and hygiene, life necessities, skincare, hair care, colour cosmetics, dental, deodorants, tea, coffee, ice cream & ice creams, and meals. The Business is a fixture in the daily lives of millions of customers throughout India, providing healthy food and beverages.
Should you exclusively make investments in debt-free businesses?
India is a credit-shy nation. Many Indians have opposing views on credit and debt. However, such a perception may work against you in the corporate world.
Think about a tiny business that wants to compete in a capital-intensive industry. Let’s say the company’s owners are determined not to take on debt, despite requiring it to pay for capital expenditures. These choices wouldn’t help the Business expand, would they? It will.
You see, having debt is not illegal. In reality, especially during the early stages of growth, debt could aid businesses in managing their liquidity and accelerating growth. Prudent debt management is more important than anything else. And that is connected to the core values of the Business.
Therefore, making an investment in a firm with solid foundations and manageable debt may be worthwhile. Any company should be chosen over others if its debt-equity ratio is less than 1. These businesses are well-positioned to produce greater returns. The balance does not, however, represent the entire picture.
Investigating a company’s ability to pay off its debt is crucial. Verify the company’s unrestricted cash inflows for this. A corporation can repay its debts in 3 years if its free cash flows are three times greater than its long-term debt. A company’s incapacity to pay a debt is indicated by persistently low free cashflows and a high quantity of debt.
Before investing, an investor should conduct a thorough review of a company’s fundamentals. Invest wisely!
