Debt free smallcap stocks with strong financials to add to your watchlist

Investing in debt-free small-cap stocks with strong financials offers a unique opportunity for growth and stability. These companies typically exhibit robust fundamentals, including low or no debt levels, high return on equity, and net profit margin coupled with consistent revenue growth. As they operate in growth markets, they often present significant potential for capital appreciation, making them attractive options for long-term investors seeking to diversify their portfolios.

1. eMudhra Limited 

eMudhra Limited was founded in 2008, specializing in digital identity and trust solutions. The company offers a range of services including authentication, digital signatures, and paperless platforms, catering to governments and enterprises globally. Their business model focuses on improving secure digital interactions, enabling clients to streamline processes and improve compliance while fostering a secure digital ecosystem.

With a market capitalization of Rs. 6,971 crore, the company had a debt of Rs. 8 crore in March FY24 and as of September FY25, the debt was nil. The company has a RoE of 14.57 percent as of FY24 and a net profit margin of 20.46 percent. In Q2 FY25 eMudhra reported a 46 percent year-over-year increase in revenue from operations to Rs.141 crore and a 15.78 percent increase in net profit to Rs.22 crore, in the same period.

In Tuesday’s trading session, the company’s share price was trading at Rs.892.90 per share, a 0.23 percent decline from its previous close.

2. Shilchar Technologies Limited

Shilchar Technologies Limited is an Indian manufacturer specializing in power and distribution transformers. The company was established in 1990, focusing on producing high-quality transformers for various industries which include renewable energy and utilities. Their business model concentrates on quality control, innovation, and export growth, generating over 50% of its revenue from international markets.

With a market capitalization of Rs. 6,025 crore, the company had nil debt as of FY24 and stayed consistent from FY23 to the current September quarter of FY25. The company has a RoE of 55.52 percent as of FY24 and a net profit margin of 23.15 percent. In Q2 FY25 Shilchar Technologies reported a 23.58 percent year-over-year increase in revenue from operations to Rs.131 crore and a 37.5 percent increase in net profit to Rs.33 crore, in the same period.

In Tuesday’s trading session, the company’s share price was trading at Rs.7880 per share, a 0.88 percent up from its previous close.

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3. Shanthi Gears Limited

Shanthi Gears Limited was established in 1972 and based in Coimbatore, India, which specializes in manufacturing gears and gearboxes. They produce a wide range of power transmission products for various industries which include automotive and engineering. Their business model focuses on quality manufacturing, innovation, and customer service, catering to both domestic and international markets while maintaining strong financial performance.

With a market capitalization of Rs.4,161 crore, the company had  nil debt as of FY24 and stayed consistent from FY13 to the current September quarter of FY25. The company has a RoE of 25.40 percent as of FY24 and a net profit margin of 15.34 percent. In Q2 FY25 Shanthi Gears reported a 14.81 percent year-over-year increase in revenue from operations to Rs.155 crore and a 23.8 percent increase in net profit to Rs.26 crore, in the same period.

In Tuesday’s trading session, the company’s share price was trading at Rs.542.40 per share, a 0.52 percent up from its previous close.

Written by Santhosh

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