We Think Sandur Manganese & Iron Ores (NSE:SANDUMA) Can Stay On Top Of Its Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. As with many other companies The Sandur Manganese & Iron Ores Limited (NSE:SANDUMA) makes use of debt. But should shareholders be worried about its use of debt?

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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. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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.

How Much Debt Does Sandur Manganese & Iron Ores Carry?

The image below, which you can click on for greater detail, shows that at September 2025 Sandur Manganese & Iron Ores had debt of ₹18.5b, up from ₹2.73b in one year. However, it does have ₹2.89b in cash offsetting this, leading to net debt of about ₹15.6b.

How Strong Is Sandur Manganese & Iron Ores' Balance Sheet?

We can see from the most recent balance sheet that Sandur Manganese & Iron Ores had liabilities of ₹15.6b falling due within a year, and liabilities of ₹13.3b due beyond that. Offsetting this, it had ₹2.89b in cash and ₹4.05b in receivables that were due within 12 months. So it has liabilities totalling ₹21.9b more than its cash and near-term receivables, combined.

This deficit isn't so bad because Sandur Manganese & Iron Ores is worth ₹95.0b, 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.

Check out our latest analysis for Sandur Manganese & Iron Ores

We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.

Looking at its net debt to EBITDA of 1.4 and interest cover of 5.9 times, it seems to us that Sandur Manganese & Iron Ores is probably using debt in a pretty reasonable way. So we'd recommend keeping a close eye on the impact financing costs are having on the business. Notably, Sandur Manganese & Iron Ores's EBIT launched higher than Elon Musk, gaining a whopping 135% on last year. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Sandur Manganese & Iron Ores will need earnings to service that debt. 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.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. So we always check how much of that EBIT is translated into free cash flow. During the last three years, Sandur Manganese & Iron Ores produced sturdy free cash flow equating to 74% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.

Our View

Sandur Manganese & Iron Ores's EBIT growth rate suggests it can handle its debt as easily as Cristiano Ronaldo could score a goal against an under 14's goalkeeper. And the good news does not stop there, as its conversion of EBIT to free cash flow also supports that impression! Zooming out, Sandur Manganese & Iron Ores seems to use debt quite reasonably; and that gets the nod from us. While debt does bring risk, when used wisely it can also bring a higher return on equity. 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 Sandur Manganese & Iron Ores has 3 warning signs (and 1 which is significant) we think you should know about.

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.