Is Le Travenues Technology (NSE:IXIGO) A Risky Investment?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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 note that Le Travenues Technology Limited (NSE:IXIGO) does have debt on its balance sheet. But is this debt a concern to shareholders?

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Why Does Debt Bring Risk?

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. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Le Travenues Technology Carry?

The image below, which you can click on for greater detail, shows that Le Travenues Technology had debt of ₹401.8m at the end of March 2025, a reduction from ₹460.5m over a year. However, it does have ₹3.68b in cash offsetting this, leading to net cash of ₹3.28b.

How Healthy Is Le Travenues Technology's Balance Sheet?

According to the last reported balance sheet, Le Travenues Technology had liabilities of ₹2.57b due within 12 months, and liabilities of ₹121.0m due beyond 12 months. Offsetting this, it had ₹3.68b in cash and ₹368.1m in receivables that were due within 12 months. So it can boast ₹1.36b more liquid assets than total liabilities.

This state of affairs indicates that Le Travenues Technology's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the ₹83.3b company is short on cash, but still worth keeping an eye on the balance sheet. Simply put, the fact that Le Travenues Technology has more cash than debt is arguably a good indication that it can manage its debt safely.

Check out our latest analysis for Le Travenues Technology

Better yet, Le Travenues Technology grew its EBIT by 100% last year, which is an impressive improvement. If maintained that growth will make the debt even more manageable in the years ahead. 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 Le Travenues Technology'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, a business needs free cash flow to pay off debt; accounting profits just don't cut it. While Le Travenues Technology has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Happily for any shareholders, Le Travenues Technology actually produced more free cash flow than EBIT over the last three years. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit.

Summing Up

While it is always sensible to investigate a company's debt, in this case Le Travenues Technology has ₹3.28b in net cash and a decent-looking balance sheet. And it impressed us with free cash flow of ₹1.2b, being 112% of its EBIT. So is Le Travenues Technology's debt a risk? It doesn't seem so to us. 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 - Le Travenues Technology has 2 warning signs we think 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.