Leverage is not always bad! These 3 high-debt companies grew sales at over 10% for 5 years

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

When companies borrow large amounts of money from either banks or the market, it is usually for some kind of greenfield or brownfield expansion. Any addition of capacity, overhaul of business or expansion is typically funded by borrowed money.

But even among companies, there are those that borrow heavily and those that do not. The ones that do can be identified by their higher debt-to-equity ratio, which compares a company's total debt to its total equity capital.

From an investor's perspective, it is very important to know which of these companies with high debt-equity ratios have actually managed to use the borrowed money to grow their revenue and create sustainable value for themselves.

A recent examination of companies' financials by Moneycontrol revealed that 755 companies in the BSE universe, barring financial companies, have a debt-to-equity ratio of greater than 1x.

However, when we tried to refine the results to show only those companies who have grown their topline by more than 10 percent for the last five fiscal years while keeping their bottomline growth in the green at the same time, only three companies made the cut -- Adani Ports and Special Economic Zone, Power Grid Corporation of India, and Stylam Industries.

Profit Margins: Interestingly, among the three companies mentioned above, Adani Ports and Stylam Industries also witnessed a continuous uptick in their profit margins over the last four fiscal years. Even Power Grid Corp, despite not expanding its margin, was able to hold it at approximately the same level of around 28 percent.

Return on Equity (RoE):  Adani Ports and Stylam Industries have consistently reported RoE of more than 20 percent over the last 4 fiscal years. On the other hand, Power Grid Corp managed to increase its return on equity from 13.71 percent in FY15 to 17.38 percent in FY17.

Stock Price Performance: Among these three companies, Stylam Industries was clearly at the head of the pack when it came to the performance of its stock, having returned 2850 percent in the last five years. Adani Ports and Power Grid Corp managed to return 201 percent and 77 percent over the same period.

Follow @riteshpresswala