The Reserve Bank of India has hiked interest rates by 40 basis points and the US Fed has hiked rates by 50 basis points. Globally, as central banks tighten rates, there is a tendency of highly leveraged companies to be impacted. For example, companies with high debt burden will have their cost of borrowings increase. At such times, it is best to buy into debt free companies. Here are 2 debt free company stocks you can buy.
This company is a top player in the lubricants space. What is also significant to know is that the stock is very close to its 52-week lows and is available at a p/e of 14.24 times on a trailing basis. This is not to expensive for a company that has a dominant position in its area of activity and is also a multinational company. What is also interesting to note that the company's stock at Rs 106 is available with a dividend yield of 5.61.
We believe that as the economy picks momentum, demand for automotive lubricants would continue to surge. While the company like most other companies may face input costs pressure, there is a possibility that this would be passed onto the consumer. Overall, in terms of its debt free status, past track record, reasonable valuations and good dividend yields, the stock is good to buy for long-term investors. The shares of Castrol were last seen trading at Rs 206.95 on the NSE. The stock has also hit a 52-week high of Rs 155 on the BSE.
Nippon Life India AMC
This is a company that manages the various assets of the Nippon Life India mutual fund schemes. Its fortunes are linked to the mutual fund industry. In a country where most investors are still stuck to bank deposits and real estate investment, the mutual fund industry offers a big scope. Like Castrol India, this company too is a debt free company and is unlikely to be impacted by rising interest rates, which is likely to become a norm.
Earlier this year, CLSA had upgraded Nippon Life India Asset Management from 'outperform' to 'buy', following sharp corrections in them over the past three months. The brokerage sees money managers benefiting from sectoral tailwinds, such as improvement in quantum and quality of flows and increasing penetration. The asset-management industry has had strong tailwinds in 2021-22 (FY22).
The stock is a little expensive at a trailing p/e of 27 times, but, then one is looking at the possibility of good growth potential in the stock. The shares of Nippon Life India AMC have hit a 52-week high levels of Rs 476, with the 52-week low of Rs 282 on the BSE. The stock is now closer to its 52-week low price, thus offering more attractive entry point.
Investing in equities poses a risk of financial losses and investors should understand the nature of the risk. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Markets have also turned volatile with the risk of rising interest rates.