Best Debt Free Large Cap Stocks: Many investors prefer investing in large cap stocks because of their steady returns and a long history of profits. The volatility is low making them suitable for risk-averse investors.
Furthermore, some investors go a step ahead and pick debt free large cap stocks to protect their downside.
In this article, we’ll present you such best debt free large cap stocks which you can add to your watchlists.
Table of Contents
Best Debt Free Large Cap Stocks
For our study of debt free large cap stocks, we’ll look at various companies from multiple industries such as paints, technology, etc. We’ll read about their businesses and financials.
In the end, a table complies such top ten companies in India, followed by a summary which concludes the article.
Best Debt Free Large Cap Stocks #1 – Tata Consultancy Services (TCS)
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹3,411 | Market Cap (Cr.) | ₹12,27,739 |
| EPS | ₹115 | Stock P/E | 28 |
| RoE | 47% | RoCE | 59% |
| Promoter Holding | 72% | Book Value | ₹247 |
| Debt to Equity | 0.09 | Price to Book Value | 13.40 |
| Net Profit Margin | 19% | Operating Margin | 26% |
Founded 55 years ago in 1968, Tata Consultancy Services (TCS) Ltd. is the largest information technology (IT) services and consulting company in India. It is owned by the salt-to-software conglomerate the Tata Group which holds a majority 72.3% stake in the company.
TCS is also dubbed as the crown jewel of the century-old group as it is its most profitable company and is the second-largest listed company after Reliance Industries in terms of market capitalization
Most of the clients of the IT giant are based out of America and Europe. It offers a wide variety of services including analytics & insights, quality engineering, automation & AI, digital engineering, blockchain development, cloud infrastructure, consulting, cyber security, enterprise applications, IoT, and more.
TCS caters to companies from 5 key industries mainly: banking, financial services & insurance, retail & consumer business, communication, media & technology, and manufacturing.
Talking about its revenue growth, the top line of the company grew at a CAGR of 11.83% over the past five years to Rs 2,25,458 crore in FY23. Being a technology company, TCS is a debt free large cap stock with a consistent history of profits and dividend distribution.
Best Debt Free Large Cap Stocks #2 – ITC
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹467 | Market Cap (Cr.) | ₹5,83,896 |
| EPS | ₹15 | Stock P/E | 31 |
| RoE | 29% | RoCE | 39% |
| Promoter Holding | 0% | Book Value | ₹56 |
| Debt to Equity | 0.00 | Price to Book Value | 8.58 |
| Net Profit Margin | 27% | Operating Margin | 36% |
Over a century old, ITC (formerly known as Imperial Tobacco Company) is a monopoly stock with a close of 80% market share in the organised tobacco industry of India. It is the sixth-largest publicly listed Indian company commanding a market value of Rs 5,90,000 crore.
In the past several years, the company has diversified into various other sectors including FMCG, agribusiness, paperboards & packaging, hotels, and technology services. It is engaged in the manufacturing and distribution of cigarettes. cereals, species, flour, frozen foods, instant noodles, incense sticks, shampoo, etc.
As a result, ITC holds well-known brands such as Kings (cigarettes), Gold Flake(cigarettes), Sunfeast (biscuits & cookies), Yippee (instant noodles), Classmate (notebooks), Mangaldeep (incense sticks), Savlon (first-aid), Fiama (personal care), Aashirvad (flour), and many more.
In addition to this, it also operates premium hotels across the country. Talking about the size of the company, ITC has over 200 production sites and 113 hotels employing over 24,000 people.
ITC earned a net profit of Rs 19,477 crore on income of Rs 70,937 crore in FY23 delivery a high net profit margin of 27%. The stock of the debt free tobacco giant presently trades at a P/E of 31 while offering a high return on equity (RoE) of 29%.
Best Debt Free Large Cap Stocks #3 – Asian Paints
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹3,360 | Market Cap (Cr.) | ₹322,352 |
| EPS | ₹43 | Stock P/E | 78 |
| RoE | 28% | RoCE | 35% |
| Promoter Holding | 53% | Book Value | ₹167 |
| Debt to Equity | 0.12 | Price to Book Value | 20.20 |
| Net Profit Margin | 12% | Operating Margin | 18% |
Founded in 1942, Asian Paints is the largest paints company in India and one of the largest paint companies across the world. It controls 59% of the organised paints market in India and has a market capitalization of over Rs 3,22,350 crore.
The company operates 26 paint manufacturing facilities located in 15 countries. It produces and distributes a wide variety of products including paints, wall coverings, and waterproofing.
Furthermore, it also provides other home ancillary products and services such as stickers, adhesives, modular kitchen cabinets, interior design services, furnishings & lighting services, etc.
Asian Paints has formed two joint ventures with the American Paints giant PPG Inc. to venture into the automotive and industrial coatings territory. Presently, decorative coatings account for the majority of the earnings of the company.
Despite its large size, the paints company grew its revenues and net profit at CAGR of 15.7% and 17.4% to Rs 34,489 and Rs 4,195 crore in FY23. Its stock presently trades at a premium P/E of 78 and a price-to-book ratio of 20. The company is debt free with a negligible debt/equity ratio of 0.12.
Best Debt Free Large Cap Stocks #4 – Maruti Suzuki India
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹9,810 | Market Cap (Cr.) | ₹2,92,078 |
| EPS | ₹272 | Stock P/E | 37 |
| RoE | 14% | RoCE | 18% |
| Promoter Holding | 57% | Book Value | ₹2,046 |
| Debt to Equity | 0.02 | Price to Book Value | 4.94 |
| Net Profit Margin | 7% | Operating Margin | 9% |
Maruti Suzuki India Ltd. (MSIL) was established in 1981 as a joint venture of the Government of India and Suzuki Motor Corporation (SMC) with the latter being a minor partner. MSIL initially imported cars and sold them in India. SMC gradually kept increasing its stake in the business until it became a majority shareholder with a 56.4% stake in 2013.
As of the present date, Maruti is the largest passenger car company in the nation with a consolidated manufacturing capacity of roughly 2.25 million units per year. It sold 1.97 million cars in FY23, the highest-ever figure in its history.
Maruti Suzuki’s product portfolio has some of the mass market Indian names including Baleno, Ignis, Ciaz, WagonR, Dzire, Swift and more. But that’s not all. It also exports its vehicles to more than 100 nations worldwide.
As part of its EV efforts, the automobile giant has announced a big capital expenditure of Rs 10,400 crore for EVs and batteries manufacturing. The management plans to launch its EVs in the Indian market by 2025.
Unlike its competitor Tata Motors which has heavy debt, Maruti Suzuki is a debt free automobile company. Furthermore, it has an impeccable track record of profits and consistent dividend payout over the last several years. It earned a whopping Rs 8,211 crore in PAT on sales of Rs 117,571 crore in FY23.
Best Debt Free Large Cap Stocks #5 – Siemens
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹3960 | Market Cap (Cr.) | ₹1,37,337 |
| EPS | ₹54 | Stock P/E | 81 |
| RoE | 14% | RoCE | 15% |
| Promoter Holding | 75% | Book Value | ₹339 |
| Debt to Equity | 0.02 | Price to Book Value | 11.00 |
| Net Profit Margin | 10% | Operating Margin | 11% |
Owned by Siemens AG of Germany, Siemens Ltd. is an electric equipment and industrial goods manufacturer. The German parent owns the majority 75% stake in the company which also provides allied services.
The company is more than a century old with its roots dating as back as 1922 when vo Rziha incorporated it in the country after running a communication network and trading business for many years before that.
As of the present date, the large-cap company is a respectable name in India providing integrated products, solutions and allied services across multiple industries including digital solutions, railways, digital grid, power transmission, chemicals, data centres, pharmaceuticals, and more.
Its range of products includes rail engines, smart power grids, power supply systems, equipments for oil & gas companies, etc.
The company earned 82% of its revenues from sales within India in FY22. The total net profit stood at Rs 1,543 crore. Its stock presently trades at a P/E of 81 giving a market value of Rs 132,238 crore to the company.
List of Debt Free Large Cap Stocks
We are almost at the end of our study debt free large cap stocks. The table below puts together more such stocks along with their CMPs, market capitalization, and respective industries.
| Company Name | CMP | Market Cap (Cr) | Debt/Equity | Industry |
|---|---|---|---|---|
| TCS | ₹3411 | ₹12,27,739 | 0.00 | IT Services |
| HUL | ₹2,560.05 | ₹6,07,369 | 0.02 | FMCG |
| ITC | ₹467.1 | ₹5,83,896 | 0.00 | Cigarettes |
| Infosys | ₹1,353.5 | ₹5,56,271 | 0.11 | IT Services |
| Asian Paints | ₹3,360 | ₹322,352 | 0.12 | Paints |
| Maruti Suzuki India | ₹9,809.95 | 2,92,078 | 0.02 | Automobile |
| Nestle India | ₹22,600 | ₹2,16,809 | 0.11 | FMCG |
| Coal India | ₹227.7 | ₹1,40,048 | 0.08 | Coal |
| Siemens | ₹3,965 | ₹1,37,337 | 0.02 | Electric Equipments |
| Pidilite Industries | ₹2,595 | ₹1,33,044 | 0.05 | Fevicol |
Conclusion
Above we read about some top debt free large cap stocks listed in India. However, debt per se is not a negative thing altogether.
Companies can use leverage in proportion to the confidence they have in their cashflows and ability to service debt. Furthermore, as debt has a lower cost, its presence in the capital helps to boost the return on equity for the investors.
As an investor, are you comfortable with the leverage of our stocks? What are your views on debt? How comfortable are you with the debt-to-equity ratios of your portfolio stocks? How about we continue this conversation in the comments below?
Written By Vikalp Mishra
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