Here's Why Tanla Platforms (NSE:TANLA) Can Manage Its Debt Responsibly

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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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies Tanla Platforms Limited (NSE:TANLA) makes use of debt. But the real question is whether this debt is making the company risky.

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Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. 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. 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. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Tanla Platforms Carry?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 Tanla Platforms had ₹640.5m of debt, an increase on none, over one year. However, it does have ₹5.03b in cash offsetting this, leading to net cash of ₹4.39b.

How Healthy Is Tanla Platforms' Balance Sheet?

We can see from the most recent balance sheet that Tanla Platforms had liabilities of ₹10.2b falling due within a year, and liabilities of ₹525.5m due beyond that. Offsetting these obligations, it had cash of ₹5.03b as well as receivables valued at ₹13.2b due within 12 months. So it can boast ₹7.56b more liquid assets than total liabilities.

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

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On the other hand, Tanla Platforms's EBIT dived 15%, over the last year. We think hat kind of performance, if repeated frequently, could well lead to difficulties for the stock. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Tanla Platforms can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. Tanla Platforms may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Over the most recent three years, Tanla Platforms recorded free cash flow worth 61% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Tanla Platforms has net cash of ₹4.39b, as well as more liquid assets than liabilities. So we are not troubled with Tanla Platforms's debt use. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. We've identified 1 warning sign with Tanla Platforms , and understanding them should be part of your investment process.

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.