Debt free companies -Firstly, let us first understand the meaning of Debt. Debt is a form of loan that a company takes in order to fulfil its funding requirements.
Debt = Loan by Corporates (Companies or Institutions)
What is Nifty 50 Index
An Index is a collection of securities. Securities may be shares, bonds or commodities or any other basket of assets. The creator of an Index usually deploys a methodology that is fair and transparent. An Index is a representation of similar types or baskets of assets.
An Index is created by an Exchange in consultation with Government and SEBI. Nifty 50 is an index of 50 large-cap companies of India. A large-cap company is one whose market capitalization is more than 1 Lac Crore INR or 13.33 Billion USD.
How to calculate market capitalization of a company?
The total number of securities or sharers issued by entity times the current market price of a share gives us the total market capitalization of that company. For example, let us calculate the market cap of Infosys. The last traded price of Infosys INFY is 1555. The total number of shares of Infy is 4,25,57,79,763 which is 425.56 Crore shares.
Formula of Market cap = Total Shares x Current Market Price
Which is = 4,25,57,79,763 x 1555
Market cap = 6,66,263.60 Cr or 6.66 Lac Crore
As a result, a total market cap which is shown above is useful for traders and investors alike and not a free-float market cap. Therefore, we have only highlighted what is important and meaningful terms.
To purchase the shares of any of these companies contact us or use the link given below and we will be very happy to assist you. The number is 7610213269
A SIP can be done in all these debt free companies rather than buying a Mutual Fund because they are part of the Index and their market capitalization is greater than 1 Lac Cr.
How and when to make an entry in these debt free companies?
- The right time to buy these companies is 1 week after they post a poor result or during market correction.
- The first purchase should not be more than 5% of the total planned investment.
- These companies have their beta close to the Index – (Nifty 50) and therefore every fall is an opportunity.
ALERT NOTE : The P/E ratio for an ideal investment should be in the range of 10 – 15 and P/B should be in the range of 2-4. But since these are debt free gaints. The range can be adjusted to suit our analysis.
List of Debt Free Companies
1 Infosys #1 in the list of debt free companies
Infosys has a debt of 0 INR it is debt free in the true sense. Infosys operates in the IT – Information and Technology sector. The P/E (price to earnings per share) ratio for this company is 35 and P/B (price to book value) is 8 on the record date for 09 July 2021. The market cap is 6.66 lac crore.
The shares of Infosys are true gems and they will always command a premium valuation. The current market price as of record date 09 July 2021 is 1564.90 INR
- P/E = 35
- P/B = 8
- Number of shares ~ 426 Cr Huge supply
- Market Cap ~ 6.66 Lac Cr
- Debt = 0 INR
- CMP = 1565 INR
The flagship company of the TATA Group is synonymous with the word IT – Information and Technology in India. The P/E ratio for TCS is 34.58 and P/B is 12.58. It commands a monopoly in the IT sector. Therefore, the entity is a behemoth of 11.90 Lac Cr.
Finally, the total debt on TCS is also 0 INR and the total number of shares are 3,69,90,51,373 roughly 369 Cr. There is so much that can be written about Tata Group companies and the wealth they created but to cut it short. TCS is a good buy at any price. The current market price as of record date 09 July 2021 is 3211 INR
- P/E = 34.5
- P/B = 12.58
- Number of shares ~ 369 Cr Huge supply
- Market Cap ~ 11.90 Lac Cr Huge cap
- Debt = 0 INR
- Share Price = 3211 INR
Hindustan Unilever is a company from the FMCG sector. HUL is the biggest player in the sector and it is also a part o Nifty 50. HUL has 0 INR debt and a strong network of distribution for its products. It owns brands like dove, wheel, vim and rin. This is a giant with a market cap of 5.75 Lac Crore.
The total number of shares are 2,34,95,88,838 (234.95 Cr). The P/E ratio is very high 72 and P/B is 12. Finally, we can conclude that the companies that have strong visibility for growth and no threats in the near future tend to sustain these valuations. The current market price as of record date 09 July 2021 is 2450 INR
- P/E = 72 Very High
- P/B = 12
- Number of shares ~ 234 Cr Huge supply
- Market Cap ~ 5.75 Lac Cr Huge cap
- Debt = 0 INR
- Share Price = 2450 INR
4SBI LIFE #4 in the list of debt free companies
SBILIFE is a company in the Life Insurance sector. The company has 0 INR net debt. It was listed in the month of October 2017. The P/E for this company is 70 and the P/B is 10 so for a sector such as Insurance, rich valuations are only because the company has 0 debt.
We will have to wait to see in the near future for how long can it sustain without taking debt on its balance sheet as there is uncertainty due to covid-19. The company has a market cap of 1 Lac Crore and is part of Nifty 50. The total number of shares issued by SBI LIFE is 1,00,01,45,445 (100 Cr). The current market price as of record date 09 July 2021 is 1041.70 INR
- P/E = 70 Very High
- P/B = 10
- Number of shares ~ 100 Cr Huge supply
- Market Cap ~ 1 Lac Cr Moderate
- Debt = 0 INR
- Share Price = 1041 INR
These are the only 4 companies out of 50 Nifty companies that are debt free in the true sense with 0 debt.
A company that has a monopoly in the cigarette market and also agricultural products is none other than ITC. ITC has a net debt of 9.58 Cr. Moreover, it earns 15,000 Cr and sits on a cash pile of 25,000 Cr. Therefore, the debt is negligible. The total number of shares of ITC are 12,30,88,44,231 or (1230 Cr) and P/E 18 and P/B is 4.
The supply of shares is huge and the demand is much less due to uncertainty. Consequently, the valuation is good and the stock is trading at 200 INR with a market cap of 2.5 Lac Crore. The current market price as of record date 09 July 2021 is 201 INR
- P/E = 18 Attractive ++
- P/B = 4 Attractive
- Number of shares ~ 1230 Cr extremely Huge supply
- Market Cap ~ 2.5 Lac Cr Moderate to High
- Debt = 9 Cr INR
- Share Price = 200 INR
This is the only debt free company from the pharmaceutical sector. It’s recently made part of Nifty 50. The total debt on the company is 33 Cr. The price of the share is soaring like a rocket and this pricing is due to the lack of supply of shares + minimal debt.
The total number of shares of DIVISLAB are just 26 Crore. It has a market cap of 1.2 Lac crore. The pandemic should boost the sales of DIVISLAB. As a result of announcements like the increasing government spending in the health sector, the company is going to benefit. The current market price as of record date 09 July 2021 is 4599 INR
- P/E = 61 Very High
- P/B = 13
- Number of shares ~ 26 Cr Limited Supply
- Market Cap ~ 1.2 Lac Cr Moderate
- Debt = 33 Cr INR
- Share Price = 4599 INR High
7 NESTLE #almost among debt free companies
This is the most highly valued company in India. The current market price of Nestle India is 17,600 and the P/E ratio is 78 along with the P/B ratio at 64 the record date is 12 July 2021. The supply of this share is limited to 9.64 Cr only and therefore it appears that for 17 grants we are only getting a single share.
There is no doubt that the valuations of Nestle are very stretched but we must also take into account that there is no imminent threat in the near term on the business of this company. Nestle also enjoys a sort of monopoly on the product line. Therefore we can conclude that the premium in valuations is justified. The market cap of Nestle is close to 1.7 Lac Cr and Nesle is also part of the Nifty 50
- P/E = 78 Extremely High
- P/B = 64 Extremely High
- Number of shares ~ only 9.64 Cr Limited Supply
- Market Cap ~ 1.7 Lac Cr Moderate
- Debt = 34.84 Cr INR
- Share Price = 17672 INR Very High
One of the very common names in India Maruti is the Indianization of Maruti Suzuki. The near debt free company stands tall even in the midst of covid-19 with a strong market capitalization of 2.24 Lac crore and a share price of 7425 INR on the record date 12 July 2021. The company is still looking strong.
The P/E ratio is 51 and P/B is 4. The leader among the 4 wheeler auto segment this share still has the potential to deliver 30% returns from this price. The supply of Maruti is restricted to 30 Cr share owing to its high share price.
- P/E = 51 High
- P/B = 4 Moderate
- Number of shares ~ 30 Cr Limited Supply
- Market Cap ~ 2.24 Lac Cr Moderate
- Debt = 114 Cr INR
- Share Price = 7425 INR High
Bajaj auto is one of the leading players in the two-wheeler segment. It has a supply of 28 Cr shares in the market and the share is trading at a hefty price of 4000 apiece as of 12 July 2021. The ratios are P/E = 24 and P/B = 4. This makes its valuation appears at a discount price in comparison to its peers some of which have inflated valuation.
- P/E = 24 Moderate
- P/B = 4 Moderate
- Number of shares ~ 28 Cr Limited Supply
- Market Cap ~ 1.14 Lac Cr Moderate
- Debt = 121.46 Cr INR
- Share Price = 4000 INR High
Eicher motors or Royal Enfield or Himalayan the all-encompassing classic are all its two-wheeler brands. The company has a market cap of 74000 Cr at a price of 2739 INR roughly. The supply of shares stands at 27.33 Crores. The ratios like P/E = 55 and P/B =6.5 which is high. The record date for this observation is 12 July 2021
- P/E =55 High
- P/B = 6.5 Moderate
- Number of shares ~ 27Cr Limited Supply
- Market Cap ~ 0.7 Lac Cr Low
- Debt = 144 Cr INR
- Share Price = 2712 INR High
There are other companies in Nifty 50 that can be considered debt free too and they are Asian Paints and Heromotorcorp.