Companies manage their funding requirements through equity or debt or internally generated cash. The most preferred source of funding is internally generated cash, followed by debt and then equity, mainly because of the associated costs.
However, many companies claim that they have zero debt or are debt free, sending a signal to stakeholders that they are able to manage their funding requirements predominantly through internally generated cash and thus they are cash-rich firms.
FII holding is another factor on which investors keep a close watch. FIIs generally invest in companies based on analysis of their strong research teams. While a lot of factors are to be considered before making an investment decision, high FII holdings in a company’s stock is a positive signal to begin with.
Here are three debt-free stocks with high FII holdings:
SBI Life Insurance Company Ltd
The company is engaged in the business of life insurance and annuity. It was started as a Joint-venture between the State Bank of India and BNP Paribas Cardif S.A.
SBI Life Insurance Company is debt-free and FIIs hold a 25.14% stake in it, as of the March quarter of 2023 (Q4FY23). In fact, they have continuously been increasing their stake. They held a 24.15% in the March quarter of the previous year (Q4FY22).
With a market capitalization of ₹ 1,19,683 crores, SBI Life Insurance Company is a large-cap stock. Its shares gained 5.74% in the past year and were trading at ₹ 1214 levels on Monday.
Voltamp Transformers
Voltamp Transformers is mainly into manufacturing of various types of electrical transformers including oil-filled power & distribution transformers of various classes.
The company is debt free and FIIs hold a 13.66% stake in it, as of the March quarter of 2023 (Q4FY23). Their stake in the company increased from 15.83% in the March quarter of the previous year (Q4FY22).
With a market capitalization of ₹ 3,917 crores, Voltamp Transformers is a small-cap stock. Its shares gained 78.63% in the past year and were trading at ₹ 3,875 levels on Monday.
Bharat Electronics Ltd
Bharat Electronics (BEL) is a state-owned aerospace and defence company with about nine factories and several regional offices in India.
The company is debt free and FIIs hold a 16.42% stake in it, as of the March quarter of 2023 (Q4FY23). Their stake in the company has marginally decreased from 16.77% in the March quarter of the previous year (Q4FY22).
With a market capitalization of ₹ 80,919 crores, BEL s is a large-cap stock. Its shares gained 44.77% in the past year and were trading at ₹ 111 levels on Friday.
Written By Simran Bafna
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