Beating odds: 16 stocks that with rising debt ratios fetch up to 114% returns in FY25
debt levels, a handful of India's top 500 companies managed to deliver stellar returns to investors in the current fiscal year. An analysis by ETMarkets showed that 16 companies, which saw their debt-to-equity ratios increase in FY24, still outperformed, offering returns above 50% up to 114%.
Rising debt levels aren’t always a red flag, especially when companies maintain a safe debt-to-equity (D/E) ratio. Most of these 18 outperformers have a D/E ratio around or below 1, which is seen as healthy by market participants.
A ratio of 1 implies that a company has an equal mix of debt and equity, allowing it to leverage borrowings for growth while maintaining financial stability. A D/E ratio exceeding 2 is often viewed as a warning sign, as it indicates the company's debt levels are twice compared to the equity, increasing financial risks.
Motilal Oswal, Dixon Technologies and Tejas Networks turned multibaggers during the current fiscal even as their D/E ratios increased towards the end of FY24. While shares of Motilal gained 119% so far, Dixon and Tejas jumped just over 100% in this period.
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