Here's Why Venky's (India) (NSE:VENKEYS) Has A Meaningful Debt Burden

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 note that Venky's (India) Limited (NSE:VENKEYS) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Venky's (India)'s Net Debt?

As you can see below, at the end of September 2025, Venky's (India) had ₹1.85b of debt, up from ₹1.55b a year ago. Click the image for more detail. However, it does have ₹3.07b in cash offsetting this, leading to net cash of ₹1.22b.

A Look At Venky's (India)'s Liabilities

According to the last reported balance sheet, Venky's (India) had liabilities of ₹5.87b due within 12 months, and liabilities of ₹707.9m due beyond 12 months. On the other hand, it had cash of ₹3.07b and ₹5.90b worth of receivables due within a year. So it actually has ₹2.40b more liquid assets than total liabilities.

This surplus suggests that Venky's (India) has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Venky's (India) boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Venky's (India)

Shareholders should be aware that Venky's (India)'s EBIT was down 91% last year. If that earnings trend continues then paying off its debt will be about as easy as herding cats on to a roller coaster. When analysing debt levels, the balance sheet is the obvious place to start. But it is Venky's (India)'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.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While Venky's (India) 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. In the last three years, Venky's (India) created free cash flow amounting to 18% of its EBIT, an uninspiring performance. That limp level of cash conversion undermines its ability to manage and pay down debt.

Summing Up

While it is always sensible to investigate a company's debt, in this case Venky's (India) has ₹1.22b in net cash and a decent-looking balance sheet. So although we see some areas for improvement, we're not too worried about Venky's (India)'s balance sheet. 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 example - Venky's (India) has 3 warning signs we think you should be aware of.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.