We Think Amines & Plasticizers (NSE:AMNPLST) Can Stay On Top Of Its Debt
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.' 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. Importantly, Amines & Plasticizers Limited (NSE:AMNPLST) does carry debt. But is this debt a concern to shareholders?
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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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 uses is to look at its cash and debt together.
How Much Debt Does Amines & Plasticizers Carry?
The image below, which you can click on for greater detail, shows that Amines & Plasticizers had debt of ₹304.9m at the end of September 2025, a reduction from ₹804.2m over a year. But it also has ₹318.4m in cash to offset that, meaning it has ₹13.4m net cash.
How Strong Is Amines & Plasticizers' Balance Sheet?
According to the last reported balance sheet, Amines & Plasticizers had liabilities of ₹1.00b due within 12 months, and liabilities of ₹206.3m due beyond 12 months. Offsetting these obligations, it had cash of ₹318.4m as well as receivables valued at ₹1.17b due within 12 months. So it actually has ₹281.0m more liquid assets than total liabilities.
This surplus suggests that Amines & Plasticizers has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Amines & Plasticizers boasts net cash, so it's fair to say it does not have a heavy debt load!
View our latest analysis for Amines & Plasticizers
But the bad news is that Amines & Plasticizers has seen its EBIT plunge 13% in the last twelve months. If that rate of decline in earnings continues, the company could find itself in a tight spot. When analysing debt levels, the balance sheet is the obvious place to start. But it is Amines & Plasticizers'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 company can only pay off debt with cold hard cash, not accounting profits. Amines & Plasticizers 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, Amines & Plasticizers recorded free cash flow worth 62% 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 it is always sensible to investigate a company's debt, in this case Amines & Plasticizers has ₹13.4m in net cash and a decent-looking balance sheet. So we don't have any problem with Amines & Plasticizers's use of debt. Over time, share prices tend to follow earnings per share, so if you're interested in Amines & Plasticizers, you may well want to click here to check an interactive graph of its earnings per share history.
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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