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Investment
Debt Free Companies In India – Good for Investment?

Debt Free Companies In India – Good for Investment?

Raviraj Parekh June 6, 2020

debt free companies

Debt Free Companies are companies with no or minimum debt. These companies are cash rich and they can withstand in any type of economic conditions. The Best example of debt free company in India is Infosys. Infosys doesn’t have any outstanding debt. Infosys is generates enough revenue to finance all internal operations and investment requirements. Infosys has given very good returns to investors. Debt Free Companies enjoys many benefits and are a good bet for investment.

Let’s have a look at Debt Free Companies as an Investment option.

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Why Debt Free Companies is good for Investment?

Few pointers about why debt free companies are good bet for investment is given below:-

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  • Debt free companies are not affected by economic slowdown or interest rate hike. They can sustain their business in economic slowdown condition also.
  • Profitability of debt free (Zero debt) companies will be high compared to high debt companies. High-Interest rate negatively affects profit margin of high debt companies.
  • In India Interest rate and inflation rate are unpredictable which makes debt free companies more suitable for investment.
  • These companies enjoy extra income as interest on cash balance which is added surplus in profitability.
  • High profitability means good dividend to investors.
  • These companies can expand their business due to ample amount of cash or can acquire other businesses.
  • Low debt companies need not to keep cash aside to meet the cost of capital, which high debt companies have to set aside.
  • Debt free companies are low-risk companies preferred by common man and expert investors.

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Debt Free Companies In India

debt free companies

Should you invest in Debt Free Companies?

It is but obvious that debt free companies are good for investment. However, all debt free companies are not good. It is a good idea to check company’s fundamentals, valuation, profit margin, future business opportunities and other factors before making an investment. You should debt free companiesalso check that company is able to maintain debt free status for several years or not, maintaining status only for one year will not serve any purpose.

These companies should be growing in terms of turnover and business growth. Low debt companies limiting business growth for maintaining debt free status is not good for investment.

Do proper study before making an investment in any debt free companies.

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Tags:best debt free companies Debt Free Companies debt free stocks good debt free companies india list debt free low debt companies

About The Author

Raviraj Parekh

Raviraj is the man behind moneyexcel.com. He is PGDBA, engaged in blogging for 10 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. He is not affiliated with any financial product, service provider, agent or broker. The purpose of this blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

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