Is Indiabulls (NSE:IBULLSLTD) Using Too Much Debt?
The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says '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, Indiabulls Limited (NSE:IBULLSLTD) does carry debt. But the more important question is: how much risk is that debt creating?
When Is Debt A Problem?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.
How Much Debt Does Indiabulls Carry?
As you can see below, at the end of September 2025, Indiabulls had ₹4.69b of debt, up from ₹2.56b a year ago. Click the image for more detail. However, its balance sheet shows it holds ₹6.79b in cash, so it actually has ₹2.09b net cash.
How Healthy Is Indiabulls' Balance Sheet?
The latest balance sheet data shows that Indiabulls had liabilities of ₹562.8m due within a year, and liabilities of ₹10.5b falling due after that. On the other hand, it had cash of ₹6.79b and ₹12.6b worth of receivables due within a year. So it actually has ₹8.33b more liquid assets than total liabilities.
It's good to see that Indiabulls has plenty of liquidity on its balance sheet, suggesting conservative management of liabilities. Because it has plenty of assets, it is unlikely to have trouble with its lenders. Simply put, the fact that Indiabulls has more cash than debt is arguably a good indication that it can manage its debt safely.
Check out our latest analysis for Indiabulls
Notably, Indiabulls made a loss at the EBIT level, last year, but improved that to positive EBIT of ₹1.6b in the last twelve months. There's no doubt that we learn most about debt from the balance sheet. But it is Indiabulls's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.
But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. Indiabulls 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. During the last year, Indiabulls burned a lot of cash. While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.
Summing Up
While we empathize with investors who find debt concerning, you should keep in mind that Indiabulls has net cash of ₹2.09b, as well as more liquid assets than liabilities. So we are not troubled with Indiabulls's debt use. 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 1 warning sign for Indiabulls you should know about.
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.