Endurance Technologies (NSE:ENDURANCE) Has A Pretty Healthy Balance Sheet

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Endurance Technologies Limited (NSE:ENDURANCE) does carry debt. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Endurance Technologies Carry?

As you can see below, at the end of March 2025, Endurance Technologies had ₹9.04b of debt, up from ₹7.40b a year ago. Click the image for more detail. But on the other hand it also has ₹18.1b in cash, leading to a ₹9.03b net cash position.

How Healthy Is Endurance Technologies' Balance Sheet?

The latest balance sheet data shows that Endurance Technologies had liabilities of ₹26.9b due within a year, and liabilities of ₹7.30b falling due after that. Offsetting these obligations, it had cash of ₹18.1b as well as receivables valued at ₹15.0b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₹1.16b.

This state of affairs indicates that Endurance Technologies' balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So while it's hard to imagine that the ₹337.7b company is struggling for cash, we still think it's worth monitoring its balance sheet. While it does have liabilities worth noting, Endurance Technologies also has more cash than debt, so we're pretty confident it can manage its debt safely.

Check out our latest analysis for Endurance Technologies

And we also note warmly that Endurance Technologies grew its EBIT by 19% last year, making its debt load easier to handle. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Endurance Technologies can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While Endurance Technologies has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. In the last three years, Endurance Technologies's free cash flow amounted to 37% of its EBIT, less than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Summing Up

While it is always sensible to look at a company's total liabilities, it is very reassuring that Endurance Technologies has ₹9.03b in net cash. And it impressed us with its EBIT growth of 19% over the last year. So we don't think Endurance Technologies's use of debt is risky. Over time, share prices tend to follow earnings per share, so if you're interested in Endurance Technologies, you may well want to click here to check an interactive graph of its earnings per share history.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.