A good debt-to-equity ratio suggests a relatively lower level of financial risk and is often considered a favorable financial position and a debt-to-equity ratio less than 1 indicates that a company relies more on equity financing than debt.
Here are a few pharmaceutical companies known for having low debt-to-equity ratios and have been reducing their debt over the past few financial years:
Cipla Limited:
With a market capitalization of Rs. 1,28,750.40 crores, Cipla Limited closed at Rs. 1,594.30 apiece on Friday, 1.52% below its previous close of Rs. 1,618.90 per share.
The company reported a Debt to Equity ratio of 0.02 in FY24, with a total debt of Rs. 5,915.49 crore. Over the past three financial years, the company has successfully reduced its debt, bringing the Debt-to-equity ratio down from 0.08 in FY22 to 0.03 in FY24.
In terms of financial performance for Q1FY25 the company reported a net profit increase of 18% to Rs. 1,176.29 crore compared to Rs. 996.58 crore in Q1FY24, while revenue from operations also marked an increase of 5.67% to Rs. 6,624.86 crore from Rs. 6,269.38 crore in comparison to the same period.
Dr Reddys Laboratories:
With a market capitalization of Rs. 1,10,138.78 crores, DR. Reddy’s Laboratories Limited closed at Rs. 6,600 apiece on Friday, slightly above its previous close of Rs. 6,583.10 per share.
The company reported a Debt to Equity ratio of 0.06 in FY24, with a total debt of Rs. 10,609 crore. Over the past three financial years, the company has successfully reduced its debt, bringing the Debt-to-equity ratio down from 0.17 in FY22 to 0.06 in FY24.
In terms of financial performance for Q1FY25 the company reported a slight decrease in net profit to Rs. 1,392.4 crore compared to Rs. 1,405 crore in Q1FY24, while revenue from operations marked an increase of 13.86% to Rs. 7,672.7 crore from Rs. 6,738.4 crore in comparison to the same period.
Zydus Lifesciences Limited:
With a market capitalization of Rs. 1,07,143.80 crores, Zydus Lifesciences Limited closed at Rs. 1,064.80 apiece on Friday, slightly above its previous close of Rs. 1057.00 per share.
The company reported a Debt to Equity ratio of 0.05 in FY24, with a total debt of Rs. 7179.2 crore. Over the past three financial years, the company has successfully reduced its debt, bringing the Debt-to-equity ratio down from 0.29 in FY22 to 0.05 in FY24.
In terms of financial performance for Q1FY25 the company reported a net profit increase of 31.06% to Rs. 1,463.6 crore compared to Rs. 1,112.1 crore in Q1FY24, while revenue from operations marked an increase of 19.66% to Rs. 6,046.5 crore from Rs. 5,052.8 crore in comparison to the same period.
Written By: Joseph pv
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