BlackBuck (NSE:BLACKBUCK) Has A Rock Solid 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.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We can see that BlackBuck Limited (NSE:BLACKBUCK) does use debt in its business. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

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. 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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is BlackBuck's Net Debt?

The image below, which you can click on for greater detail, shows that BlackBuck had debt of ₹286.9m at the end of September 2025, a reduction from ₹1.27b over a year. But on the other hand it also has ₹7.66b in cash, leading to a ₹7.37b net cash position.

How Strong Is BlackBuck's Balance Sheet?

According to the last reported balance sheet, BlackBuck had liabilities of ₹2.18b due within 12 months, and liabilities of ₹359.7m due beyond 12 months. Offsetting this, it had ₹7.66b in cash and ₹482.4m in receivables that were due within 12 months. So it actually has ₹5.60b more liquid assets than total liabilities.

This short term liquidity is a sign that BlackBuck could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, BlackBuck boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for BlackBuck

It was also good to see that despite losing money on the EBIT line last year, BlackBuck turned things around in the last 12 months, delivering and EBIT of ₹102m. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if BlackBuck can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While BlackBuck 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. Over the last year, BlackBuck actually produced more free cash flow than EBIT. That sort of strong cash conversion gets us as excited as the crowd when the beat drops at a Daft Punk concert.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that BlackBuck has net cash of ₹7.37b, as well as more liquid assets than liabilities. The cherry on top was that in converted 865% of that EBIT to free cash flow, bringing in ₹879m. So is BlackBuck's debt a risk? It doesn't seem so to us. 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. These risks can be hard to spot. Every company has them, and we've spotted 1 warning sign for BlackBuck you should know about.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.