Highly leveraged companies may find the going tough in the next few months, as rapid rise in covid-19 infections, make business prospects highly unpredictable.
Even if infections abate in the next three months or so, companies that have high levels of debt may face the brunt of poor numbers at least for the next three to four quarters.
Look at companies that are debt free
In such times, it's best to look at shares of companies that are debt free and also have high levels of cash, which will help them tide over the crisis. Here are a few stocks that are debt free in India:
|Name of company||Current market price|
|Sun TV||Rs 379|
|Coal India||Rs 138|
|TV Today Network||Rs 194|
|Avanti Feeds||Rs 399|
|ICICI Prudential Life Insurance||Rs 376|
|HDFC Asset Management||Rs 2,505|
There are several other stocks apart from the above that are also debt free. However, we have listed just a few. Some stocks like Coal India are also excellent for their dividend yields, which can be as high as 9 per cent.
In fact, some of these stocks like Sun TV too are very good for their dividend yields.
A word of caution
Even before looking at debt free companies, one must also analyze their business prospects. For example, Coal India is cash rich, debt free and the business prospects for Coal mining are not going to change much, as India imports coal.
Similarly, some companies like TV Today and Sun TV may increase their viewership on account of the present lockdown, though advertising revenues are likely to take a dip.
All in all, what's most important is that every debt free company may not yield terrific returns. However, what we are trying to emphasize is that given the present conditions, debt free companies maybe able to weather the storm better during these difficult times.
About the author: Sunil Fernandes is the Managing Editor of GoodReturns.in with 25-years of experience. Prior to this, he has worked with frontline newspapers and magazines including Dalal Street Investment Journal, Deccan Herald, Hindustan Times, Oman Economic Review and Gulf Times.