Does Network18 Media & Investments (NSE:NETWORK18) Have A Healthy Balance Sheet?

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.' 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 note that Network18 Media & Investments Limited (NSE:NETWORK18) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

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. If things get really bad, the lenders can take control of the business. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Network18 Media & Investments's Debt?

The image below, which you can click on for greater detail, shows that Network18 Media & Investments had debt of ₹27.9b at the end of March 2025, a reduction from ₹73.2b over a year. However, because it has a cash reserve of ₹1.15b, its net debt is less, at about ₹26.7b.

How Strong Is Network18 Media & Investments' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Network18 Media & Investments had liabilities of ₹34.5b due within 12 months and liabilities of ₹2.40b due beyond that. On the other hand, it had cash of ₹1.15b and ₹6.60b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₹29.1b.

Network18 Media & Investments has a market capitalization of ₹73.4b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Network18 Media & Investments will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for Network18 Media & Investments

Over 12 months, Network18 Media & Investments made a loss at the EBIT level, and saw its revenue drop to ₹69b, which is a fall of 26%. To be frank that doesn't bode well.

Caveat Emptor

While Network18 Media & Investments's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Indeed, it lost ₹5.5b at the EBIT level. 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. Another cause for caution is that is bled ₹28b in negative free cash flow over the last twelve months. So in short it's a really risky stock. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 3 warning signs for Network18 Media & Investments that you should be aware of before investing here.

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.