Is Ola Electric Mobility (NSE:OLAELEC) Using Too Much Debt?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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 can see that Ola Electric Mobility Limited (NSE:OLAELEC) does use debt in its business. But is this debt a concern to shareholders?

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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. 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. 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.

What Is Ola Electric Mobility's Debt?

As you can see below, Ola Electric Mobility had ₹27.6b of debt at September 2025, down from ₹30.9b a year prior. However, it does have ₹29.3b in cash offsetting this, leading to net cash of ₹1.62b.

A Look At Ola Electric Mobility's Liabilities

The latest balance sheet data shows that Ola Electric Mobility had liabilities of ₹31.2b due within a year, and liabilities of ₹21.9b falling due after that. Offsetting this, it had ₹29.3b in cash and ₹450.0m in receivables that were due within 12 months. So its liabilities total ₹23.4b more than the combination of its cash and short-term receivables.

Given Ola Electric Mobility has a market capitalization of ₹165.5b, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. Despite its noteworthy liabilities, Ola Electric Mobility boasts net cash, so it's fair to say it does not have a heavy debt load! 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 Ola Electric Mobility'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.

See our latest analysis for Ola Electric Mobility

Over 12 months, Ola Electric Mobility made a loss at the EBIT level, and saw its revenue drop to ₹32b, which is a fall of 45%. That makes us nervous, to say the least.

So How Risky Is Ola Electric Mobility?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year Ola Electric Mobility had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₹23b of cash and made a loss of ₹23b. However, it has net cash of ₹1.62b, so it has a bit of time before it will need more capital. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. 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. Case in point: We've spotted 1 warning sign for Ola Electric Mobility 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.