We Think Auro Holdings Berhad (KLSE:AURO) Can Afford To Drive Business Growth

Just because a business does not make any money, does not mean that the stock will go down. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. Having said that, unprofitable companies are risky because they could potentially burn through all their cash and become distressed.

Given this risk, we thought we'd take a look at whether Auro Holdings Berhad (KLSE:AURO) shareholders should be worried about its cash burn. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.

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Does Auro Holdings Berhad Have A Long Cash Runway?

A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. When Auro Holdings Berhad last reported its August 2025 balance sheet in October 2025, it had zero debt and cash worth RM2.0m. In the last year, its cash burn was RM997k. So it had a cash runway of about 2.0 years from August 2025. That's decent, giving the company a couple years to develop its business. The image below shows how its cash balance has been changing over the last few years.

View our latest analysis for Auro Holdings Berhad

How Well Is Auro Holdings Berhad Growing?

Over the last year, Auro Holdings Berhad maintained its cash burn at a fairly steady level. But the good news is that its operating revenue showed verdant growth, up 109%. We think it is growing rather well, upon reflection. In reality, this article only makes a short study of the company's growth data. You can take a look at how Auro Holdings Berhad is growing revenue over time by checking this visualization of past revenue growth.

Can Auro Holdings Berhad Raise More Cash Easily?

We are certainly impressed with the progress Auro Holdings Berhad has made over the last year, but it is also worth considering how costly it would be if it wanted to raise more cash to fund faster growth. Companies can raise capital through either debt or equity. Many companies end up issuing new shares to fund future growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.

Auro Holdings Berhad has a market capitalisation of RM99m and burnt through RM997k last year, which is 1.0% of the company's market value. That means it could easily issue a few shares to fund more growth, and might well be in a position to borrow cheaply.

So, Should We Worry About Auro Holdings Berhad's Cash Burn?

It may already be apparent to you that we're relatively comfortable with the way Auro Holdings Berhad is burning through its cash. For example, we think its revenue growth suggests that the company is on a good path. Its weak point is its cash burn reduction, but even that wasn't too bad! Looking at all the measures in this article, together, we're not worried about its rate of cash burn, which seems to be under control. On another note, Auro Holdings Berhad has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

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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.