Debt free stocks instill confidence among investors as they rely on internal accruals for expansion and growth needs. Further these debt free companies or stocks are awarded a higher P/E for valuations by the markets in contrast to companies with debt. So, here are 3 virtually debt free companies from the chemical sector to add to your watchlist:
Clean Science and Technology:
The specialty chemicals company made its stock market debut last year in July at a price of Rs. 1784.4 apiece on the BSE and currently commands a market cap of Rs. 25,621.61 crore. The company incorporated in 2003 as a family-owned business has grown to be the largest manufacturer of some of the chemicals globally. The company is focused on manufacturing green chemicals.
As per the consolidated statement of assets and liabilities of the company as at September 30, 2021, the company's borrowings are at Rs. 3.31 million or Rs. 33 lakhs. This is negligible when compared to the company's total equity of Rs. 6,479.84 million. The company last traded at a price of Rs. 2413.5.
Navin Fluorine International Ltd.:
Founded in the year 1967, the Mumbai-based company is into manufacturing and selling speciality fluorochemicals in India and global markets. The company is the pioneer in manufacture of refrigerant gases and its other business units include Inorganic Fluorides, Speciality Fluorochemicals and CRAMS. As of January 19, 2022, the company commands a m-cap of Rs. 19741 crore with the last trading price of the scrip at Rs. 3981. The company is a virtually debt free company maintaining a debt to equity ratio of zero for the last 3 years that indicates that the company is relatively safer.
Vinati Organics Ltd (VOL) is a specialty chemical entity engaged in the manufacturing of organic intermediates, monomers and polymers. The product line of the company includes Aromatics,Industrial Monomers and Industrial Polymers. The company's m-cap is at Rs. 21,328 crore while the stock's last traded price as on January 19, 2022 is Rs. 2075 apiece on the BSE. The company is virtually debt free with debt to equity at 0 for three consecutive years through 2021.
The other positives of the scrip include decent profit growth of over 23% over the past 3 years. Also the company has maintained a solid ROE of 26.10% during the similar horizon. Furthermore, ROCE has been robust at 35.38% over the similar period.
Other debt free chemical stocks
Should you be investing in these debt free chemical stocks?
Speciality chemicals company during last year's bull run garnered huge attention and even offered multibagger returns. Furthermore, as per experts the long term outlook for the sector remains intact with valuations also turning reasonable now. Nevertheless, relying solely on debt to equity ratio or more so low debt to equity ratio for investment shall never be a good idea. So, debt to equity has to be looked into in sync with other parameters including valuations, company's earnings visibility etc. Furthermore, low Debt to equity ratio may also be implying that the entity is not capitalizing on the financial leverage for maximizing its profitability.
The stocks mentioned in the article are just for informational use. Readers and investors should engage in their own analysis and even exercise extreme caution as high volatility has set in the markets before taking any risky bet.