Debt levels down, Stock prices up - Check out the stocks with a decline in debt and rise in share price

A company’s debt level is a critical factor influencing investor sentiments. Declining debt often signals a company’s improving financial health, making it an attractive investment. By reducing interest expenses and freeing up cash flow, companies can invest more in growth initiatives, leading to increased profitability. This, in turn, can drive stock prices higher.

ICICI Lombard General Insurance Company Ltd - The company has turned debt-free in Q1FY25. The stock price has gained over 39% in the last year and 20% in the last 6 months.

Jio Financial Services Ltd - The subsidiary of Reliance Industries has also become debt-free in FY24, repaying its ₹743 crore loan. Further, in the last 6 months, the stock has surged by over 21%.

Suzlon Energy -The wind energy company has witnessed a significant decline in debt levels from ₹1,938 crore loan in FY23 to ₹150 crore in FY24. This has helped to lower interest costs and improve net profit. The stock has gained over 264% in the last year due to the company's turnaround financial performance.

Garden Reach Shipbuilders & Engineers Ltd -The shipbuilding company has reduced its debt by 79% from ₹312 crore to ₹66 crore in FY24. Further, the stock price has gained almost 269% in the last year and 148% in the last six months.

Top 10 large-cap stocks with over 75% decline in debt

*Since Jio Financial listing 1 year period has not been completed

Conclusion

Stocks from the Insurance and Financial Sector, such as ICICI Lombard, Star Health, and Jio Financial Services, became debt-free compared with the preceding year. Further, power and shipbuilding stocks also observed significant debt reductions of over 75%.

Debt reduction significantly boosted the sentiments of investors in these stocks, except in the health insurance sector stock of Star Health.