Is Ather Energy (NSE:ATHERENERG) Using Debt In A Risky Way?

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, Ather Energy Limited (NSE:ATHERENERG) does carry debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Ather Energy's Net Debt?

The image below, which you can click on for greater detail, shows that Ather Energy had debt of ₹2.67b at the end of September 2025, a reduction from ₹11.2b over a year. However, it does have ₹12.7b in cash offsetting this, leading to net cash of ₹10.1b.

A Look At Ather Energy's Liabilities

The latest balance sheet data shows that Ather Energy had liabilities of ₹12.8b due within a year, and liabilities of ₹4.47b falling due after that. Offsetting this, it had ₹12.7b in cash and ₹196.0m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₹4.30b.

Having regard to Ather Energy's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the ₹282.9b company is short on cash, but still worth keeping an eye on the balance sheet. Despite its noteworthy liabilities, Ather Energy boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Ather Energy'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.

Check out our latest analysis for Ather Energy

In the last year Ather Energy wasn't profitable at an EBIT level, but managed to grow its revenue by 44%, to ₹29b. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is Ather Energy?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Ather Energy had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₹5.6b of cash and made a loss of ₹7.6b. But at least it has ₹10.1b on the balance sheet to spend on growth, near-term. Ather Energy's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. 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. For instance, we've identified 1 warning sign for Ather Energy that you should be aware of.

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.