Is Pidilite Industries (NSE:PIDILITIND) Using Too Much Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that Pidilite Industries Limited (NSE:PIDILITIND) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

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. If things get really bad, the lenders can take control of the business. 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. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Pidilite Industries Carry?

As you can see below, Pidilite Industries had ₹1.42b of debt, at September 2025, which is about the same as the year before. You can click the chart for greater detail. But on the other hand it also has ₹31.9b in cash, leading to a ₹30.4b net cash position.

How Healthy Is Pidilite Industries' Balance Sheet?

We can see from the most recent balance sheet that Pidilite Industries had liabilities of ₹33.8b falling due within a year, and liabilities of ₹7.63b due beyond that. On the other hand, it had cash of ₹31.9b and ₹21.8b worth of receivables due within a year. So it can boast ₹12.2b more liquid assets than total liabilities.

Having regard to Pidilite Industries' size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the ₹1.51t company is short on cash, but still worth keeping an eye on the balance sheet. Succinctly put, Pidilite Industries boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Pidilite Industries

Also good is that Pidilite Industries grew its EBIT at 12% over the last year, further increasing its ability to manage debt. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Pidilite Industries can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. Pidilite Industries 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 last three years, Pidilite Industries recorded free cash flow worth a fulsome 81% of its EBIT, which is stronger than we'd usually expect. That puts it in a very strong position to pay down debt.

Summing Up

While it is always sensible to investigate a company's debt, in this case Pidilite Industries has ₹30.4b in net cash and a decent-looking balance sheet. And it impressed us with free cash flow of ₹20b, being 81% of its EBIT. So is Pidilite Industries's debt a risk? It doesn't seem so to us. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 1 warning sign for Pidilite Industries you should be aware of.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.