Is ideaForge Technology (NSE:IDEAFORGE) Using Debt In A Risky Way?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, ideaForge Technology Limited (NSE:IDEAFORGE) does carry debt. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is ideaForge Technology's Debt?

As you can see below, at the end of September 2025, ideaForge Technology had ₹298.0m of debt, up from none a year ago. Click the image for more detail. However, its balance sheet shows it holds ₹1.47b in cash, so it actually has ₹1.17b net cash.

How Strong Is ideaForge Technology's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that ideaForge Technology had liabilities of ₹1.06b due within 12 months and liabilities of ₹146.4m due beyond that. On the other hand, it had cash of ₹1.47b and ₹684.9m worth of receivables due within a year. So it actually has ₹950.7m more liquid assets than total liabilities.

This short term liquidity is a sign that ideaForge Technology could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, ideaForge Technology boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine ideaForge Technology's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for ideaForge Technology

In the last year ideaForge Technology had a loss before interest and tax, and actually shrunk its revenue by 71%, to ₹915m. That makes us nervous, to say the least.

So How Risky Is ideaForge Technology?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months ideaForge Technology lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of ₹1.6b and booked a ₹929m accounting loss. With only ₹1.17b on the balance sheet, it would appear that its going to need to raise capital again soon. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Case in point: We've spotted 1 warning sign for ideaForge Technology you should be aware of.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.