Would Banka BioLoo (NSE:BANKA) Be Better Off With Less Debt?

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. We can see that Banka BioLoo Limited (NSE:BANKA) does use debt in its business. But is this debt a concern to shareholders?

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. 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.

How Much Debt Does Banka BioLoo Carry?

The chart below, which you can click on for greater detail, shows that Banka BioLoo had ₹323.6m in debt in September 2025; about the same as the year before. However, it also had ₹19.7m in cash, and so its net debt is ₹303.9m.

How Strong Is Banka BioLoo's Balance Sheet?

According to the last reported balance sheet, Banka BioLoo had liabilities of ₹408.1m due within 12 months, and liabilities of ₹86.2m due beyond 12 months. Offsetting these obligations, it had cash of ₹19.7m as well as receivables valued at ₹257.8m due within 12 months. So its liabilities total ₹216.8m more than the combination of its cash and short-term receivables.

This deficit isn't so bad because Banka BioLoo is worth ₹701.8m, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Banka BioLoo'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.

Check out our latest analysis for Banka BioLoo

In the last year Banka BioLoo had a loss before interest and tax, and actually shrunk its revenue by 4.6%, to ₹530m. That's not what we would hope to see.

Caveat Emptor

Importantly, Banka BioLoo had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₹24m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through ₹790k of cash over the last year. So to be blunt we think it is risky. 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. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for Banka BioLoo 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.