Tata Investment to Techno Electric: Top debt-free midcap stocks with return up to 131% in 2024

Investors often prefer debt-free companies when it comes to picking stocks, as such firms promise strong growth backed by solid fundamentals. Zero-debt companies are also considered to be low-risk compared to others. Such firms enjoy financial stability as they conduct their business with limited liabilities.

Conversely, higher debt affects the company’s profitability and growth plans as a significant portion of the earnings goes towards interest payments.

Before picking a debt-free stock, the key factor to check is the company's debt-to-equity ratio. A debt-free company should have a zero debt-to-equity ratio. A ratio below 1 is considered lower debt, and a ratio above 1 indicates higher borrowings.

Here’s a look at some mid-cap companies that are ‘debt-free’ and have generated upbeat returns for investors so far in 2024. For this list, we are looking at companies with a market capitalisation of at least ₹5,000 crore.

Garware Hi Tech Films (YTD return: 131.7%)

Garware Hi Tech Films is one of the leading manufacturers of high-quality, durable, and highly tensile polyester films, solar control films, and paint protection films.

The company’s stocks have grabbed investors' attention as it is probably the only producer of professional-grade premium paint protection (PPF) film in India. A differentiated and high-margin product portfolio has helped improve the company’s market position and growth prospects.

Garware Hi Tech Films’ consolidated net profit witnessed significant growth in the June quarter of FY25 as it more than doubled to ₹88.35 crore compared to ₹43.69 crore in the corresponding quarter a year ago. The company also witnessed a growth of nearly 25% in its consolidated revenue from operations for Q1FY25 as it surged to ₹474.47 crore compared to ₹379.71 crore in Q1FY24.

Techno Electric & Engineering (YTD return: 89.8%)

Techno Electric & Engineering operates in the power infrastructure industry. The company offers engineering, procurement and construction (EPC) services to other power sector companies.

Consistent order wins and rising demand for power infrastructure in India have boosted the company’s growth prospects. The company’s total order book currently stands at ₹9,100 crore, and the execution timeline extends up to three years, ensuring continued cash flow.

The company has recently entered the data centre space and secured an order from the state-owned RailTel Corporation of India to set up Edge Data Centers (EDCs) in 102 cities.

In Q1FY25, Techno Electric & Engineering Company’s consolidated profit-after-tax witnessed a year-on-year growth of over 288% at ₹98.1 crore, compared to ₹25.26 crore in Q1FY24. The company’s consolidated revenue from operations for Q1FY25 also increased over 37% to ₹375 crore compared to ₹274 crore in Q1FY24.

Tata Investment Corporation (YTD return: 57.2%)

The Tata Group stock closed at ₹6,716 apiece on the NSE on September 20, up by 0.53%. The company's total market capitalisation stood at ₹34,088 crore.

Tata Investment Corporation is primarily engaged in investing in listed and unlisted equity shares, debt instruments, and mutual funds of companies in a wide range of industries. The company is an NBFC registered with the RBI as an Investment Company. Tata Sons currently owns more than 68.5% of Tata Investment Corp.

The stock reached its lifetime high of ₹9,756 per share on 4 March 2024 after reports of Tata Sons' potential stock market listing. The Reserve Bank of India (RBI) classified Tata Sons as an NBFC-Upper Layer (NBFC-UL) in September 2022. An NBFC-UL must be publicly listed within three years of being classified in this category.

However, the company has voluntarily surrendered its certificate of registration to the Reserve Bank of India (RBI) after repaying over ₹20,000 crore in debt to remain an unlisted company.

JSW Holdings (YTD return: 55.7%)

JSW Holdings is a core investment company, which holds stake in various JSW Group companies. It primarily engaged in the business of investing and financing.

In last few months, JSW Holdings along with other holdings companies stocks have caught investors attention after SEBI announced a framework for special call auctions with no price bands for price discovery of such companies.

Most of the holdings companies stocks are traded infrequently and at a price significantly lower than the book value, resulting in lower liquidity and below its fair market value.

Hence to tackle the liquidity issue in these stocks SEBI has announced special call auction framework. Starting in October, this special call auction for holding company stocks will happen once a year. This auctions would help investors find new prices for these stocks and make it easier to buy and sell them.

As a result, JSW Holdings shares have witnessed investors traction ahead of this special call auction session.