Top Debt-Free Companies in India
If you’re investing in a company for the long term, you should always look at its financials, which include the existing debts of the company, profits and revenues generated by the firm in the past few years, and its balance sheet.
A company with zero debts is said to be a debt-free company. Investing in debt-free company stocks is considered a good idea as these companies have a greater chance to survive and grow in the long term. Read up to know what debt-free companies are and the names of the top debt-free companies in India.
What are debt-free companies?
Any company, irrespective of its size and nature, needs financing from time to time. Companies usually meet business financing requirements by acquiring debts or loans or selling their equity stakes. When a company has no debt or outstanding on its balance sheet, it is said to be a debt-free company.
Debt-free companies are those with zero outstanding debt or external borrowings. However, this doesn’t mean that these companies have never ever borrowed. It is just that they have no current debt as they have repaid their loans in full (if taken). Debt-free companies are self-reliant and have more control over their finances and business decisions.
Top debt-free companies in 2022
There are more than 6,800 companies listed on the two stock exchanges of India—the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Of these, at least 500 are debt-free companies. Here is a list of the top debt-free companies in India with a market capitalisation of more than Rs 50,000 crore:
Tata Consultancy Services (TCS)
TCS is India’s largest Information Technology (IT) Services and Consultancy company. It is the second-largest company in India in terms of market capitalisation after Reliance Industries. The company was founded in 1995 and has zero debts on the current date. TCS offers services across industries, including healthcare, insurance, telecom, retail, and others. As of 26 September 2022, the market capitalisation of TCS is Rs 10,91,147 crore.
After TCS, Infosys is another IT and consulting company that finds its name on this list. It is the second-largest IT company in India, with a market capitalisation of Rs 5,72,576 crores as of 26 September 2022. This company was founded in 1991 and is one of the top debt-free companies in India at the present date. The core operating countries of Infosys include India, China, and Japan.
SBI Life Insurance
SBI Life Insurance is an India-based life insurance company that offers an array of unit-linked and non-unit-linked insurance products. It also offers savings plans, retirement plans, child plans, and long-term wealth creation plans. SBI Life Insurance is one of the top life insurance companies in India and is listed on both NSE and BSE. As of 26 September 2022, the company has a market capitalisation of Rs. 1,27,381 crores.
ITC is one of the top holding companies in India. It deals in four segments—Fast Moving Consumer Goods (FMCG), Hotels, Paperboards, and Agri-Business. Some of the most well-known brands in India, such as Aashirvaad, Bingo, Fiama, Classmate, Candyman, Gold Flake, and Homelite, are all part of the ITC Group. This company was founded in 1910 and has managed to remain debt-free despite heavy investment across the industries.
Hindustan Unilever (HUL)
Hindustan Unilever, or HUL, is India’s largest FMCG company. It is a subsidiary of a British Company and offers products in several categories, including food, beverages, personal care, and water purifiers. The company’s portfolio includes well-known household brands in India, such as Lux, Lifebuoy, Surf Excel, Lakme, Closeup, Ponds, Vaseline, Brooke Bond, Kissan, Horlicks, and PureIt.
Although the prices of these debt-free stocks are on the higher side, it’s never a bad idea to invest in them. Since there is no financial burden on these companies, they are free from the vagaries of the interest-rate hikes by the Reserve Bank of India (RBI).
Additionally, these companies usually have strong fundamentals and stable financial positions as they have been running their operations without external borrowings. Furthermore, debt-free companies are less risky for investors as they are less likely to go bankrupt.
Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701022, E-mail address: email@example.com. Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.