3 'Debt Free' Stocks with 20-30% Upside Potential


4 min read
3 'Debt Free' Stocks with 20-30% Upside Potential

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Nifty50 has rallied almost 100% from its march lows. On one side FIIs invested 65,317.13 Crore in Nov 2020 (highest investment in a month in the last 20 years) and on the other side DIIs sold 48,319.17 Crore worth of stocks.

It's hard to select stock when market is at all time high.

Based on Pure Fundamental and Technical research here are 3 'Debt Free' Stocks with 30-40% Upside Potential:

1) Oracle Financial Services Software Ltd

(Current Price: 3117 Rs, Target: 4000 Rs, Upside Potential: 28%, Tenure: 4-6 Months)

About the Company:

Oracle Financial Services Software is principally engaged in the business of providing information technology solutions and business processing services to the financial services industry worldwide. It is a retail banking, corporate banking, and insurance technology solutions provider for the banking industry.

Ten point Analysis (Fundamental):


1) Company is almost debt free.
2) Stock is providing a good dividend yield of 5.77%.
3) Company has a good return on equity (ROE) track record: 3 Years ROE 28.05%
4) Pledged percentage 0.00 %
5) Contingent liability: ₹ 0.32 Cr.
6) Promoter holding 73.3 %
7) Current ratio 6.09 | Quick ratio 6.09
8) ROCE 39.6 %
9) Company has 40 times potential to pay its debt (Interest Coverage: 40)
10) Company has highest operating margin of 45% and lowest valuation among all its peers (L&T Infotech, MphasiS, MindTree, L&T Tech)

Technical Analysis: 18 out of 28 major indicators show that this stock is Bullish on charts Plus we can observe the Golden cross.

Also Read: 6 Big Reasons why Joe Biden is 'Better' for Indian Economy

2) HDFC Asset Management Company Ltd

(Current Price: 2816 Rs, Target: 3600 Rs, Upside Potential: 28%, Tenure: 4-6 Months)

About the Company:

HDFC Asset Management Company Ltd is an India-based asset management company for the Housing Development Finance Corporation Limited (HDFC) Mutual Fund. The Company offers portfolio management / investment advisory services. It offers management and/or advisory services to: Category I foreign portfolio investors and/or Category II foreign portfolio investors. Its services also include India focused research, statistical and analytical information, investment management and investment advice.

Ten point Analysis (Fundamental):


1) Company is almost debt free.
2) ROCE: 46.8% | ROE :35.6% | ROA: 35.6 %
3) Company has a good return on equity (ROE) track record: 3 Years ROE 36.08%
4) Company has been maintaining a healthy dividend payout of 49.80%
5) Pledged percentage 0.00 %
6) Contingent liability: ₹ 5.5 Cr.
7) Promoter holding 73.9 %
8) Free Cash Flow 5Yrs₹ 3,907 Cr.
9) Company increased its revenue on a continuous basis for the last 5 years with a similar trend in net margins over the last 3 years.
10) Company has 187 times potential to pay its debt (Interest Coverage: 187)


Technical Analysis: Stock witnessed more than 2 times the average volume of the last 10 trading session. 50 DMA is above 200 DMA for the first time since march 2020.

Also Read: Market at 'All-time High', 5 Things you must know before Investing

3) ITC Ltd. 202 Rs.

(Current Price: 202 Rs, Target: 240 Rs, Upside Potential: 20%  Tenure: 4-6 Months)

About the Company:

ITC has a diversified presence in FMCG, Hotels, Packaging, Paperboards & Specialty Papers and Agri-Business. Most of its revenue comes from cigarette manufacturing and sales.

Ten point Analysis (Fundamental):


1) Company is almost debt free.
2) ROCE: 32.6% | ROE :25.3% | ROA: 25%
3) Stock is providing a good dividend yield of 5.01%
4) Company has been maintaining a healthy dividend payout of 64.42%.
5) Pledged percentage 0.00 %
6) Free Cash Flow 5Yrs ₹ 47,103 Cr.
7) The Covid crisis helped the company to increase its presence in this space -- especially in the hygiene segment. A slew of launches in the first half of the current fiscal year will increase advertisement and selling expenses. But on the positive side, its food segment products have made deeper inroads into the market.
8) Current ratio 3.08 | Quick ratio 2.12
9) Company increased its revenue on a continuous basis for the last 5 years with a similar trend in net margins over the last 3 years.
10) Company has 326 times potential to pay its debt (Interest Coverage: 326)

Credit Suisse On ITC Upgrade to outperform from neutral Price target raised to Rs 255 from Rs 200

Road ahead: A reorganization of its hotel business is on the cards. This should help in improving the balance sheet, as the hotel business had largely been a drag on overall performance.

Technical Analysis: 18 out of 28 major indicators show that this stock is Bullish on charts Plus we are yet to observe the Golden cross, 50 DMA is above 200 DMA for the first time since May 2019.

Also Read: 3 Mid/SmallCap Stocks with 30-40% Upside Potential

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Akshay Seth
Research Analyst (SEBI Regd.)
Linkedin | akshay.equity@gmail.com

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