FIIs bet on Low-Debt smallcaps: 9 stocks rally up to 165% in FY26, 2 turn multibaggers
Published on: Feb. 9, 2026, 3:17 p.m. | Source: The Economic Times
In the high-risk arena of smallcap investing, one factor that consistently commands attention is a clean, debt-free balance sheet. Companies carrying little to no debt tend to benefit from stronger financial flexibility, lower risk, and enhanced investor confidence—particularly during periods of market volatility. After excluding banking and financial companies, and considering only firms that reported net profits exceeding Rs 100 crore in FY25, we identified about 184 BSE-listed smallcap companies that are either entirely debt-free or carry minimal leverage, with a debt-to-equity ratio below 0.10x.The analysis became even more compelling when we applied an additional filter: rising Foreign Institutional Investor (FII) ownership in the December quarter, a sign of renewed institutional interest. This refinement narrowed the list to a concentrated universe of 57 smallcap stocks that met all key parameters.So far in FY26, the performance of these stocks has been mixed. Slightly over half delivered positive returns, while nine stocks posted strong price gains ranging from 25% to 165% over a roughly 10-month period. Notably, two of these emerged as multibaggers, more than doubling investor wealth. While the combination of low or zero debt and increasing FII participation is certainly attractive, investors must still evaluate each company’s fundamentals, business quality, and growth prospects. Remember, past performance isn’t a guarantee of future returns. (Data Source: ACE Equity) Debt-Free Smallcaps
