Cinevista (NSE:CINEVISTA) Has Debt But No Earnings; Should You Worry?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that '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. We can see that Cinevista Limited (NSE:CINEVISTA) does use debt in its business. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Cinevista's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 Cinevista had ₹250.6m of debt, an increase on ₹159.5m, over one year. However, it also had ₹10.6m in cash, and so its net debt is ₹240.1m.

A Look At Cinevista's Liabilities

Zooming in on the latest balance sheet data, we can see that Cinevista had liabilities of ₹705.0m due within 12 months and liabilities of ₹245.8m due beyond that. On the other hand, it had cash of ₹10.6m and ₹236.0k worth of receivables due within a year. So it has liabilities totalling ₹940.0m more than its cash and near-term receivables, combined.

This is a mountain of leverage relative to its market capitalization of ₹1.10b. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Cinevista'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.

View our latest analysis for Cinevista

In the last year Cinevista wasn't profitable at an EBIT level, but managed to grow its revenue by 3,385%, to ₹162m. When it comes to revenue growth, that's like nailing the game winning 3-pointer!

Caveat Emptor

Even though Cinevista managed to grow its top line quite deftly, the cold hard truth is that it is losing money on the EBIT line. Its EBIT loss was a whopping ₹154m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. We would feel better if it turned its trailing twelve month loss of ₹291m into a profit. So to be blunt we do think it is risky. 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 Cinevista has 3 warning signs (and 1 which makes us a bit uncomfortable) 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.