Brainbees Solutions (NSE:FIRSTCRY) Has Debt But No Earnings; Should You Worry?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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 Brainbees Solutions Limited (NSE:FIRSTCRY) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Why Does Debt Bring Risk?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is Brainbees Solutions's Debt?

The image below, which you can click on for greater detail, shows that at March 2025 Brainbees Solutions had debt of ₹5.53b, up from ₹4.63b in one year. However, its balance sheet shows it holds ₹17.1b in cash, so it actually has ₹11.5b net cash.

How Strong Is Brainbees Solutions' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Brainbees Solutions had liabilities of ₹20.7b due within 12 months and liabilities of ₹15.1b due beyond that. Offsetting these obligations, it had cash of ₹17.1b as well as receivables valued at ₹2.83b due within 12 months. So its liabilities total ₹15.9b more than the combination of its cash and short-term receivables.

Since publicly traded Brainbees Solutions shares are worth a total of ₹198.2b, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, Brainbees Solutions also has more cash than debt, so we're pretty confident it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Brainbees Solutions'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.

View our latest analysis for Brainbees Solutions

Over 12 months, Brainbees Solutions reported revenue of ₹77b, which is a gain of 18%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is Brainbees Solutions?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Brainbees Solutions had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₹3.1b of cash and made a loss of ₹1.9b. But the saving grace is the ₹11.5b on the balance sheet. That means it could keep spending at its current rate for more than two years. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 1 warning sign for Brainbees Solutions 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.