Here's Why Maxvolt Energy Industries (NSE:MAXVOLT) Can Manage Its Debt Responsibly

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.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Maxvolt Energy Industries Limited (NSE:MAXVOLT) does use debt in its business. But the real question is whether this debt is making the company risky.

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Maxvolt Energy Industries's Net Debt?

As you can see below, at the end of September 2025, Maxvolt Energy Industries had ₹408.4m of debt, up from ₹95.0m a year ago. Click the image for more detail. But it also has ₹489.4m in cash to offset that, meaning it has ₹81.0m net cash.

A Look At Maxvolt Energy Industries' Liabilities

We can see from the most recent balance sheet that Maxvolt Energy Industries had liabilities of ₹628.7m falling due within a year, and liabilities of ₹89.0m due beyond that. Offsetting these obligations, it had cash of ₹489.4m as well as receivables valued at ₹427.7m due within 12 months. So it can boast ₹199.3m more liquid assets than total liabilities.

This surplus suggests that Maxvolt Energy Industries has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Maxvolt Energy Industries has more cash than debt is arguably a good indication that it can manage its debt safely.

See our latest analysis for Maxvolt Energy Industries

Even more impressive was the fact that Maxvolt Energy Industries grew its EBIT by 164% over twelve months. If maintained that growth will make the debt even more manageable in the years ahead. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Maxvolt Energy Industries's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. Maxvolt Energy Industries 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. Over the last three years, Maxvolt Energy Industries saw substantial negative free cash flow, in total. While that may be a result of expenditure for growth, it does make the debt far more risky.

Summing Up

While it is always sensible to investigate a company's debt, in this case Maxvolt Energy Industries has ₹81.0m in net cash and a decent-looking balance sheet. And we liked the look of last year's 164% year-on-year EBIT growth. So we are not troubled with Maxvolt Energy Industries's debt use. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example Maxvolt Energy Industries has 3 warning signs (and 2 which don't sit too well with us) we think you should know about.

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.