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華爾街日報These 4 Measures Indicate That Pearl Global Industries (NSE:PGIL) Is Using Debt Reasonably Well
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.' 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. We note that Pearl Global Industries Limited (NSE:PGIL) does have debt on its balance sheet. But is this debt a concern to shareholders?
What Risk Does Debt Bring?
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 usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.
How Much Debt Does Pearl Global Industries Carry?
As you can see below, Pearl Global Industries had ₹4.94b of debt, at September 2025, which is about the same as the year before. You can click the chart for greater detail. However, it does have ₹6.17b in cash offsetting this, leading to net cash of ₹1.23b.
How Strong Is Pearl Global Industries' Balance Sheet?
We can see from the most recent balance sheet that Pearl Global Industries had liabilities of ₹11.3b falling due within a year, and liabilities of ₹3.87b due beyond that. Offsetting these obligations, it had cash of ₹6.17b as well as receivables valued at ₹4.09b due within 12 months. So its liabilities total ₹4.87b more than the combination of its cash and short-term receivables.
Since publicly traded Pearl Global Industries shares are worth a total of ₹72.0b, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. While it does have liabilities worth noting, Pearl Global Industries also has more cash than debt, so we're pretty confident it can manage its debt safely.
See our latest analysis for Pearl Global Industries
And we also note warmly that Pearl Global Industries grew its EBIT by 18% last year, making its debt load easier to handle. 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 Pearl Global 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. Pearl Global 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. During the last three years, Pearl Global Industries produced sturdy free cash flow equating to 57% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.
Summing Up
While it is always sensible to look at a company's total liabilities, it is very reassuring that Pearl Global Industries has ₹1.23b in net cash. And it impressed us with its EBIT growth of 18% over the last year. So we don't think Pearl Global Industries's use of debt is risky. 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. Case in point: We've spotted 2 warning signs for Pearl Global Industries 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.