Does Maha Capital (STO:MAHA A) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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. As with many other companies Maha Capital AB (publ) (STO:MAHA A) makes use of debt. But is this debt a concern to shareholders?

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Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Maha Capital Carry?

As you can see below, Maha Capital had US$12.5m of debt at September 2025, down from US$14.8m a year prior. But on the other hand it also has US$83.9m in cash, leading to a US$71.4m net cash position.

How Healthy Is Maha Capital's Balance Sheet?

We can see from the most recent balance sheet that Maha Capital had liabilities of US$13.0m falling due within a year, and liabilities of US$15.1m due beyond that. Offsetting this, it had US$83.9m in cash and US$868.0k in receivables that were due within 12 months. So it can boast US$56.7m more liquid assets than total liabilities.

This excess liquidity is a great indication that Maha Capital's balance sheet is almost as strong as Fort Knox. With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Simply put, the fact that Maha Capital has more cash than debt is arguably a good indication that it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Maha Capital will need earnings to service that debt. 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.

View our latest analysis for Maha Capital

In the last year Maha Capital had a loss before interest and tax, and actually shrunk its revenue by 68%, to US$1.8m. To be frank that doesn't bode well.

So How Risky Is Maha Capital?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months Maha Capital lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through US$1.9m of cash and made a loss of US$668k. But the saving grace is the US$71.4m on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for Maha Capital (of which 2 are concerning!) you should know about.

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.

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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.