Inox Green Energy Services (NSE:INOXGREEN) Has Debt But No Earnings; Should You Worry?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We can see that Inox Green Energy Services Limited (NSE:INOXGREEN) does use debt in its business. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Inox Green Energy Services Carry?

As you can see below, at the end of March 2025, Inox Green Energy Services had ₹1.81b of debt, up from ₹1.74b a year ago. Click the image for more detail. However, its balance sheet shows it holds ₹2.29b in cash, so it actually has ₹480.5m net cash.

A Look At Inox Green Energy Services' Liabilities

According to the last reported balance sheet, Inox Green Energy Services had liabilities of ₹2.98b due within 12 months, and liabilities of ₹2.15b due beyond 12 months. Offsetting this, it had ₹2.29b in cash and ₹6.49b in receivables that were due within 12 months. So it actually has ₹3.65b more liquid assets than total liabilities.

This surplus suggests that Inox Green Energy Services has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Inox Green Energy Services boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is Inox Green Energy Services's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

View our latest analysis for Inox Green Energy Services

In the last year Inox Green Energy Services wasn't profitable at an EBIT level, but managed to grow its revenue by 5.0%, to ₹2.4b. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is Inox Green Energy Services?

While Inox Green Energy Services lost money on an earnings before interest and tax (EBIT) level, it actually booked a paper profit of ₹172m. So taking that on face value, and considering the cash, we don't think its very risky in the near term. We'll feel more comfortable with the stock once EBIT is positive, given the lacklustre revenue growth. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 2 warning signs for Inox Green Energy Services that you should be aware of.

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.