Best Debt Free Mid Cap Stocks: The use of debt in capital structure gives financial leverage to high-growth companies enabling them to post higher returns on equity. However, it can also backfire if the earnings dry up in periods of downturns in the respective sectors.
Thus, a well-balanced portfolio with debt free mid cap stocks will help provide steady returns and protect the downside simultaneously. In this article, we’ll present you a list of such debt free mid cap stocks in India which you can add to your watchlists.
Best Debt Free Mid Cap Stocks
For our study of debt free mid cap stocks, we’ll take a look at companies from different industries. We’ll learn about their businesses and key metrics. In the end, a table puts together a list of India’s best debt free mid cap stocks.
Best Debt Free Mid Cap Stocks #1 – KPIT Technologies
|CMP||₹930||Market Cap (Cr.)||₹25,500|
|Promoter Holding||40%||Book Value||₹60|
|Debt to Equity||0.03||Price to Book Value||15|
|Net Profit Margin||12%||Operating Profit Margin||19%|
Founded in 1990, KPIT Technologies is a prominent software company in India engaged in the business of software development and integration services to automobile companies. It has an international presence with its clients spread across the Americas, Europe, and India.
KPIT employs over 11,000 people worldwide who work together to build software-defined vehicles for leading auto OEMs and tier-1 companies across the globe.
The auto-tech company provides a broad range of services in the following areas: vehicle engineering & design, autonomous driving, advanced driver assistance systems, conventional powertrains, connected vehicles, cloud & analytics, and more.
The IT company runs 7 engineering centres around the world catering. It has an extensive portfolio of 75+ platforms, tools and accelerators to provide integrated services to its clients.
As a technology company, KPIT Technologies is a debt free mid cap stock with a high return on equity of 26%. Its topline grew at a CAGR of 18% from Rs 2,036 crore in FY21 to Rs 3,365 crore in FY23. During the same period, its net profit increased at a much sharper rate of 38% to Rs 387 crore in FY23.
Best Debt Free Mid Cap Stocks #2 – Deepak Nitrite
|CMP||₹1,930||Market Cap (Cr.)||₹26,350|
|Promoter Holding||49%||Book Value||₹300|
|Debt to Equity||0.02||Price to Book Value||6|
|Net Profit Margin||11%||Operating Profit Margin||16%|
Founded over 5 decades ago in 1970, Deepak Nitrite Ltd. is a leading chemical intermediary company in India with market leadership in multiple product lines. It is the nation’s largest manufacturer of sodium nitrite, sodium nitrate, Phenol and Acetone.
The company was set up by C.K. Mehta in Gujarat. His son Deepak C. Mehta currently serves as the chairman and MD.
As of the present date, it has a large portfolio of 30+ products for 56+ applications. Its 6 production facilities serve over 1,000 customers based across 30 countries in 6 contents.
Talking about the product lines of DNL, it makes basic intermediates like sodium nitrite, sodium nitrate, fine & speciality chemicals, performance chemicals and phenolics. These chemicals find uses in a broad range of industries such as petrochemicals, rubber, pharma, paper, automotive, and many more.
The chemical maker achieved a profit after tax of Rs 852 crore on sales of Rs 7,972 crore in FY23. The net profit was lower by 20% on a yearly basis on account of a sharp rise in raw materials. Deepak Nitrite is also a debt free mid cap stock with a market capitalization of Rs 26,350 crore.
Best Debt Free Mid Cap Stocks #3 – Jubilant Foodworks
|CMP||₹470||Market Cap (Cr.)||₹31,000|
|Promoter Holding||42%||Book Value||₹31|
|Debt to Equity||0.06||Price to Book Value||15|
|Net Profit Margin||10%||Operating Profit Margin||25%|
Jubilant Foodworks Ltd. (JFL) was founded by Shyam Sunder Bhartia and Hari Bhartia in 1995. Over the years, it has emerged as the largest franchise of Domino’s Pizza (outside the US).
JFL has exclusive rights to develop and operate pizza stores of Domino’s in India, Sri Lanka, Bangladesh and Nepal. In addition to this, it also holds exclusive rights to own and run Dunkin and Popeyes stores in India. What’s more? Recently, the company set up Ekdum and Hong’s Kitchen, its two in-house brands.
In total, JFL operates 1,928 quick-service restaurants under different brands. It has a strong retail foothold with a presence in over 387 cities of India making it the largest fast-food chain in India.
Additionally, the management of Jubilant has earmarked a CAPEX of Rs 900 crore towards the development of digital infrastructure, launching more outlets and setting up integrated back-end units.
The company earned a profit after tax of Rs 353 crore on sales of Rs 5,158 crore in FY23. It has negligible debt and presently trades at a high P/E ratio of 73.6 and a P/B ratio of 15 times.
Best Debt Free Mid Cap Stocks #4 – Sona BLW Precision Forgings
|CMP||₹550||Market Cap (Cr.)||₹32,000|
|Promoter Holding||33%||Book Value||₹39|
|Debt to Equity||0.13||Price to Book Value||14|
|Net Profit Margin||15%||Operating Profit Margin||25%|
Sona BLW Precision Forgings was set up in 1995. Over the last three decades, the company has grown into a leading auto ancillary company with an international footprint. In 2019, a new brand image was formed when Sona BLW acquired Comstar Automotive Technologies.
Sona is involved in the design, production and sale of critical auto components including differential gears, differential assemblies, BSG systems, EV traction motors (BLDC and PMSM) conventional & micro-hybrid starter motors and motor control units.
The auto ancillary player is well diversified in terms of geographical revenue sources, products and vehicle segments. The image below captures the well-diversified portfolio of Sona BLW Precision Forgings.
The company employs over 3,500 people and has its manufacturing bases spread across India, the USA, Mexico, and China. It owns nine production and assembly facilities out of which 6 are located in India. Furthermore, it owns three R&D sites and eight warehouses.
Its net order book stood at Rs 21,500 crore at the end of FY23. This is 8 times the latest fiscal revenue. What’s more? The company is well-positioned to take advantage of the EV boom globally as it makes up a whopping 77% of the present order book of Sona.
The revenues of the company grew at an impressive CAGR of 30% over the last four years from Rs 1,220 crore in FY20 to Rs 2,676 in FY23. During the same period, global LCV declined at an annualised rate of -2% highlighting how the auto-components manufacturer stole market share from other companies.
Best Debt Free Mid Cap Stocks #5 – Polycab India
|CMP||₹3,400||Market Cap (Cr.)||₹51,000|
|Promoter Holding||66%||Book Value||₹443|
|Debt to Equity||0.02||Price to Book Value||8|
|Net Profit Margin||9%||Operating Profit Margin||13%|
Almost 6 decades old, Polycab India Ltd. (previously known as Polycab Wires Ltd.) is the largest wires, cables and fast-moving electrical goods (FMEG) manufacturer in India. It commands an impressive 22-24% organised cables market in the country.
The company has a large distribution network of 4,60+ dealers and distributors. It has 5 production sites across 5 locations with backward integration capabilities.
Talking about the revenue segments, the wires & cables business brought in 89% of the total income in FY23. The FMEG is a fast-growing division for the company that clocked 9% of the total sales in the period. The copper & EPC sales share stood at a minuscule 2%.
The company plans to touch sales of Rs 20,000 crore by FY26. Polycab is a debt-free mid-cap stock with a high RoE of 21%. Additionally, it has a high promoter holding of 66.2%.
Its top line grew at a CAGR of 17% over the past three fiscals from Rs 8,792 crore in FY21 to Rs 14,108 crore in FY23. During the same period, the bottom line expanded by 13% yearly to Rs 1,282 crore in FY23.
List of Debt Free Mid Cap Stocks in India
The table below puts together the names we covered above and a few others along with their current market prices, market capitalization and respective industries.
|S.No.||Name||CMP Rs.||Mar Cap Rs.Cr.||P/E||Debt / Eq|
|6||New India Assura||119.85||19759.55||55.33||0|
Above we learnt about some of the best debt free mid cap stocks in India. However, the use of debt in capital structure is not entirely a sin. The management can make use of debt in the capital structure of the company in proportion to the confidence they have in their cash flow. Furthermore, mid cap companies despite being large enough may need more funds to finance the whole CAPEX for the reserves.
In your opinion, should investors stick to only debt free stocks? Or stocks with small debt-to-equity ratios are also good bets? How about we continue this conversation in the comments below?
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Vikalp Mishra is a commerce graduate from the University of Delhi. He likes to write on finance, money and business. He is a voracious reader with a genuine interest in investing. Drop him a mail at email@example.com.
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