Nasdaq
華爾街日報Astral (NSE:ASTRAL) Has A Pretty Healthy Balance Sheet
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.' 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 can see that Astral Limited (NSE:ASTRAL) does use debt in its business. But the real question is whether this debt is making the company risky.
Why Does Debt Bring Risk?
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. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.
What Is Astral's Net Debt?
You can click the graphic below for the historical numbers, but it shows that as of September 2025 Astral had ₹1.55b of debt, an increase on ₹1.07b, over one year. But on the other hand it also has ₹5.55b in cash, leading to a ₹4.00b net cash position.
How Strong Is Astral's Balance Sheet?
According to the last reported balance sheet, Astral had liabilities of ₹11.9b due within 12 months, and liabilities of ₹2.36b due beyond 12 months. Offsetting these obligations, it had cash of ₹5.55b as well as receivables valued at ₹3.73b due within 12 months. So it has liabilities totalling ₹4.94b more than its cash and near-term receivables, combined.
This state of affairs indicates that Astral's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the ₹385.5b company is short on cash, but still worth keeping an eye on the balance sheet. Despite its noteworthy liabilities, Astral boasts net cash, so it's fair to say it does not have a heavy debt load!
Check out our latest analysis for Astral
But the other side of the story is that Astral saw its EBIT decline by 2.6% over the last year. That sort of decline, if sustained, will obviously make debt harder to handle. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Astral'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. Astral 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. In the last three years, Astral's free cash flow amounted to 38% of its EBIT, less than we'd expect. That's not great, when it comes to paying down debt.
Summing Up
We could understand if investors are concerned about Astral's liabilities, but we can be reassured by the fact it has has net cash of ₹4.00b. So we don't have any problem with Astral's use of debt. Over time, share prices tend to follow earnings per share, so if you're interested in Astral, you may well want to click here to check an interactive graph of its earnings per share history.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.