InfoBeans Technologies (NSE:INFOBEAN) Has A Rock Solid Balance Sheet

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.' 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 InfoBeans Technologies Limited (NSE:INFOBEAN) does use debt in its business. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. 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.

What Is InfoBeans Technologies's Net Debt?

You can click the graphic below for the historical numbers, but it shows that InfoBeans Technologies had ₹197.0m of debt in March 2025, down from ₹244.9m, one year before. But it also has ₹1.73b in cash to offset that, meaning it has ₹1.53b net cash.

A Look At InfoBeans Technologies' Liabilities

We can see from the most recent balance sheet that InfoBeans Technologies had liabilities of ₹342.6m falling due within a year, and liabilities of ₹455.8m due beyond that. Offsetting these obligations, it had cash of ₹1.73b as well as receivables valued at ₹869.7m due within 12 months. So it actually has ₹1.80b more liquid assets than total liabilities.

This surplus suggests that InfoBeans Technologies has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that InfoBeans Technologies has more cash than debt is arguably a good indication that it can manage its debt safely.

See our latest analysis for InfoBeans Technologies

On top of that, InfoBeans Technologies grew its EBIT by 70% over the last twelve months, and that growth will make it easier to handle its debt. The balance sheet is clearly the area to focus on when you are analysing debt. But it is InfoBeans Technologies'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.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. While InfoBeans Technologies 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. Happily for any shareholders, InfoBeans Technologies actually produced more free cash flow than EBIT over the last three years. 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 InfoBeans Technologies has net cash of ₹1.53b, as well as more liquid assets than liabilities. The cherry on top was that in converted 128% of that EBIT to free cash flow, bringing in ₹450m. So we don't think InfoBeans Technologies's use of debt is risky. 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. For example, we've discovered 2 warning signs for InfoBeans Technologies 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.