Is Gabriel India (NSE:GABRIEL) Using Too Much Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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. We note that Gabriel India Limited (NSE:GABRIEL) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Gabriel India Carry?

You can click the graphic below for the historical numbers, but it shows that Gabriel India had ₹238.7m of debt in March 2025, down from ₹251.7m, one year before. However, its balance sheet shows it holds ₹2.54b in cash, so it actually has ₹2.31b net cash.

A Look At Gabriel India's Liabilities

We can see from the most recent balance sheet that Gabriel India had liabilities of ₹7.72b falling due within a year, and liabilities of ₹688.5m due beyond that. Offsetting these obligations, it had cash of ₹2.54b as well as receivables valued at ₹6.01b due within 12 months. So these liquid assets roughly match the total liabilities.

Having regard to Gabriel India's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the ₹100.9b company is struggling for cash, we still think it's worth monitoring its balance sheet. Succinctly put, Gabriel India boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Gabriel India

On top of that, Gabriel India grew its EBIT by 31% over the last twelve months, and that growth will make it easier to handle its debt. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Gabriel India's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. Gabriel India may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. In the last three years, Gabriel India created free cash flow amounting to 8.0% of its EBIT, an uninspiring performance. That limp level of cash conversion undermines its ability to manage and pay down debt.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Gabriel India has net cash of ₹2.31b, as well as more liquid assets than liabilities. And it impressed us with its EBIT growth of 31% over the last year. So is Gabriel India's debt a risk? It doesn't seem so to us. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. To that end, you should learn about the 2 warning signs we've spotted with Gabriel India (including 1 which can't be ignored) .

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.