Is Kamdar Group (M) Berhad (KLSE:KAMDAR) Weighed On By Its Debt Load?

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.' 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. We can see that Kamdar Group (M) Berhad (KLSE:KAMDAR) does use debt in its business. But should shareholders be worried about its use of debt?

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Why Does Debt Bring Risk?

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. If things get really bad, the lenders can take control of the business. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Kamdar Group (M) Berhad Carry?

The chart below, which you can click on for greater detail, shows that Kamdar Group (M) Berhad had RM43.6m in debt in September 2025; about the same as the year before. However, it does have RM6.91m in cash offsetting this, leading to net debt of about RM36.7m.

How Strong Is Kamdar Group (M) Berhad's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Kamdar Group (M) Berhad had liabilities of RM14.8m due within 12 months and liabilities of RM33.4m due beyond that. Offsetting this, it had RM6.91m in cash and RM5.68m in receivables that were due within 12 months. So its liabilities total RM35.6m more than the combination of its cash and short-term receivables.

When you consider that this deficiency exceeds the company's RM33.7m market capitalization, you might well be inclined to review the balance sheet intently. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Kamdar Group (M) Berhad will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for Kamdar Group (M) Berhad

Over 12 months, Kamdar Group (M) Berhad made a loss at the EBIT level, and saw its revenue drop to RM44m, which is a fall of 18%. We would much prefer see growth.

Caveat Emptor

Not only did Kamdar Group (M) Berhad's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost a very considerable RM6.5m at the EBIT level. When we look at that alongside the significant liabilities, we're not particularly confident about the company. It would need to improve its operations quickly for us to be interested in it. For example, we would not want to see a repeat of last year's loss of RM8.1m. In the meantime, we consider the stock to be risky. 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 example - Kamdar Group (M) Berhad has 3 warning signs we think you should be aware of.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.