Warren Buffett famously stated, ‘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. As with many other companies Syrma SGS Technology Limited (NSE:SYRMA) builds utilize of debt. But is this debt a concern to shareholders?
Why Does Debt Bring Risk?
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. 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, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business utilizes is to see at its cash and debt toreceiveher.
What Is Syrma SGS Technology’s Debt?
You can click the graphic below for the historical numbers, but it reveals that Syrma SGS Technology had ₹2.82b of debt in September 2025, down from ₹6.03b, one year before. However, it does have ₹7.58b in cash offsetting this, leading to net cash of ₹4.76b.
How Healthy Is Syrma SGS Technology’s Balance Sheet?
We can see from the most recent balance sheet that Syrma SGS Technology had liabilities of ₹21.7b falling due within a year, and liabilities of ₹1.55b due beyond that. Offsetting these obligations, it had cash of ₹7.58b as well as receivables valued at ₹19.0b due within 12 months. So it can boast ₹3.33b more liquid assets than total liabilities.
This surplus suggests that Syrma SGS Technology has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Syrma SGS Technology has more cash than debt is arguably a good indication that it can manage its debt safely.
See our latest analysis for Syrma SGS Technology
In addition to that, we’re happy to report that Syrma SGS Technology has boosted its EBIT by 87%, thus reducing the spectre of future debt repayments. There’s no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Syrma SGS Technology’s ability to maintain a healthy balance sheet going forward. So if you’re focutilized on the future you can check out this free report revealing analyst profit forecasts.
Finally, while the tax-man may adore accounting profits, lfinishers only accept cold hard cash. Syrma SGS Technology may have net cash on the balance sheet, but it is still interesting to see at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, becautilize that will influence both its necessary for, and its capacity to manage debt. During the last three years, Syrma SGS Technology burned a lot of cash. While that may be a result of expfinishiture for growth, it does build the debt far more risky.
Summing Up
While we empathize with investors who find debt concerning, you should keep in mind that Syrma SGS Technology has net cash of ₹4.76b, as well as more liquid assets than liabilities. And it impressed us with its EBIT growth of 87% over the last year. So we don’t have any problem with Syrma SGS Technology’s utilize of debt. 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. For example – Syrma SGS Technology has 1 warning sign we consider you should be aware of.
If, after all that, you’re more interested in a quick 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 utilizing an unbiased methodology and our articles are not intfinished to be financial advice. It does not constitute a recommfinishation to purchase or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focutilized 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.
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