Wipro (NSE:WIPRO) Seems To Use Debt Rather Sparingly

Warren Buffett famously said, '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. Importantly, Wipro Limited (NSE:WIPRO) does carry debt. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Wipro's Net Debt?

The image below, which you can click on for greater detail, shows that Wipro had debt of ₹128.5b at the end of September 2025, a reduction from ₹165.8b over a year. But on the other hand it also has ₹511.2b in cash, leading to a ₹382.7b net cash position.

How Healthy Is Wipro's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Wipro had liabilities of ₹341.0b due within 12 months and liabilities of ₹107.1b due beyond that. Offsetting this, it had ₹511.2b in cash and ₹224.3b in receivables that were due within 12 months. So it can boast ₹287.5b more liquid assets than total liabilities.

This surplus suggests that Wipro has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Wipro has more cash than debt is arguably a good indication that it can manage its debt safely.

See our latest analysis for Wipro

Fortunately, Wipro grew its EBIT by 6.8% in the last year, making that debt load look even more manageable. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Wipro's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While Wipro has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Over the last three years, Wipro actually produced more free cash flow than EBIT. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit.

Summing Up

While it is always sensible to investigate a company's debt, in this case Wipro has ₹382.7b in net cash and a decent-looking balance sheet. And it impressed us with free cash flow of ₹146b, being 107% of its EBIT. So we don't think Wipro's use of debt is risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. We've identified 1 warning sign with Wipro , and understanding them should be part of your investment process.

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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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.