Industry experts say that mid-cap stocks are able to produce better returns because they are financially stable as compared to small-cap stocks and are quicker to act as compared to large-cap stocks.
The amount of debt that a company has gives key insights into a company’s capital position. The debt-equity ratio is one such ratio that gives an idea of the amount of borrowed capital (debt) that can be fulfilled in the event of liquidation using shareholder contributions. It is used to assess the financial leverage and soundness of a firm.
A low debt-to-equity ratio is considered to be favourable for investors as companies with a low debt-to-equity ratio tend to be less risky in terms of interest rates. They attract additional capital for further investment and expansion of the business. Here are a few targets that analysts have suggested for the following debt-free midcap stocks:
Castrol India Ltd
The company manufactures and markets automotive and industrial lubricants and related services and has a 20% market share in the overall Indian market. It is a mid-cap company with a market capitalization of ₹ 11,350 crores and a debt-equity ratio of 0.
Sharekhan is bullish on the shares of Castrol India and has a buy rating with a target price of ₹135 per share. This translates to an upside of 17.65% as compared to its current share price of ₹ 114.75.
Exide Industries Ltd
The company is primarily engaged in the manufacturing of storage batteries and allied products in India. Further, they were engaged in the business of life insurance products through their wholly owned subsidiary, Exide Life Insurance Co, which they later sold to HDFC Life this year. It has a market capitalization of ₹ 13,332 crores and a negligible debt to equity ratio of 0.02.
Emkay Global has a hold rating on the shares of Exide Industries with a target price of ₹ 175. This implies an upside of 11.61% as compared to its current share price of ₹ 156.80 apiece.
Gujarat State Petronet Ltd
Gujarat State Petronet Ltd is a government company u/s 2(45) under the Companies Act, 2013. It is engaged in the transmission of natural gas through pipelines. Further, it implements and operates City Gas Distribution and generation of electricity through windmills. It has a market capitalization of 13,371 crores and a negligible debt-to-equity ratio of 0.07.
HDFC Securities has an add rating on the shares of the company with a target price of ₹ 265. This indicates an upside of 11.81% as compared to its current share price of ₹ 237.00 apiece.
Written by Simran Bafna
The content in this news article is not investment advice. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
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