Interest rates are at a 12-year high. Just as a person with little or no debt is the most stress free today, companies which have little or no debt are probably the safest bets. It is not that every zero debt company is a good bet. There are companies with no debt but with suspicious management and even fishier fundamentals. It could also indicate very low risk ability which for long term growth is not prudent. But in today's time, where interest cost, combined with inflationary pressure is expected to eat away the margins, it is best to go for companies where one does not have to worry about the debt component. Inflationary pressure is something which even the RBI and the Govt seem to have no handle on. Thus best to bank on some zero/low debt companies. 

Complied below is a list of companies who have very low debt, which is evident from their miniscule interest outgo. Take a look and make a well informed choice. 

Companies which are zero debt are:

Infosys, Crisil, Gillette, P&G Hygiene, Pfizer, AstraZeneca, NMDC, Nalco, Concor, Engineers India, Bajaj Finserve, Lakshmi Machine Works, Honeywell Automation, Tata Sponge, Chemfab Alkalies, Praj Industries, Lakshmi Automatic Loom. 

Companies which have very low debt, where interest outgo per quarter is less than even Rs.50 lakh:

Aventis, PTC India, Zydus Wellness (Rs.1 lakh in Q1FY12), TTK Prestige (Rs.49 lakh in Q1FY12), Shanthi Gears (Rs.16 lakh in Q1FY12), KSB Pumps, Foseco India, Castrol India, Kansai Nerolac, IFB Industries, Eicher Motors, Balmer Lawrie, HUL, CMC, MRO-TEK, Infotech Entp, Oberoi Realty, Wyeth, Thermax. 

What came as a revelation was that apart from the cash rich MNCs, which we all knew were debt free and cash rich, were some of the PSU companies which figured in the zero debt companies. Realty companies probably figure highest in terms of high debt companies and in that scenario, to see Oberoi Realty as a low debt company came as a complete surprise. As at 31st March 2011, it had an interest outgo of just Rs.16 lakh. An unheard of phenomenon in realty companies! 

Companies like PTC, Zydus, Kansai, Foseco, IFB industries, CMC, MRO-TEK, Infotech Entp, have debt which is extremely paltry with their interest outgo for entire year being not over even Rs.10-15 lakh. 

All the above mentioned companies are doing well financially. And being zero/low debt is like the perfect icing on the cake. Infact, coming across cake itself has become a rarity and here, cakes with icing, holds promise! 

Most of these companies are fundamentally sound and one can afford to stay put. But in companies where you are not sure about the fundamentals but are going purely based on low debt, then its best to constantly monitor the stock every quarter. Like Lakshmi Automatic Loom – it is a part of the Coimbatore based Lakshmi group but its financials are not steady, though it has been in the black in Q1FY12 and Q4FY11. 

Many of the NBFCs have very low debt but in today's circumstances where brokerage houses are finding it difficult to keep things together, going for these stocks, despite being low debt makes no sense. 

24% of the stocks listed on the BSE are zero or low debt. That's over 800 shares. Yet not all are great. Thus looking at all debt free stocks with the same outlook would be a folly. 

At the same time, a quick look at companies which have huge debt and in the current scenario are sure to face more heat.

Realty companies like DLF, Unitech, Omaxe, HCC, HDIL, Ansal Properties. And after this comes big ticket infra companies like GTL Infra, Lanco Infra, GMR, IVRCL. Others with very high debt are – Kingfisher Airlines, Jet Airways, Rcom, RIL, Alok Industries, Bhushan Steel, Ispat Industries, JSW Steel, JSW Energy, Rajesh Exports, Jaiprakash Associates, SAIL, Adani Power, Suzlon, GE Shipping, Essar Oil, HPCL, BPCL, NTPC, Videocon Industries. 

The same logic for low debt companies (but inversely) applies here – not all high debt companies are bad. Here, we have to view debt in terms of its revenue. Heavy debt companies, where continuity of revenue and profitability is visible, the return on equity capital invested is usually higher. And that's not bad!

But currently, its best to go for zero/low debt companies as that is what the high interest regime demands. Its best to have a portfolio based on current macro conditions. Gone are the days of buy it and forget it!