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Entero Healthcare Solutions (NSE:ENTERO) Has A Pretty Healthy Balance Sheet

Simply Wall St · 4d ago

Warren Buffett famously said, '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 Entero Healthcare Solutions Limited (NSE:ENTERO) does use debt in its business. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Entero Healthcare Solutions's Debt?

As you can see below, at the end of September 2025, Entero Healthcare Solutions had ₹3.33b of debt, up from ₹2.73b a year ago. Click the image for more detail. However, it does have ₹1.63b in cash offsetting this, leading to net debt of about ₹1.71b.

debt-equity-history-analysis
NSEI:ENTERO Debt to Equity History January 2nd 2026

A Look At Entero Healthcare Solutions' Liabilities

We can see from the most recent balance sheet that Entero Healthcare Solutions had liabilities of ₹9.47b falling due within a year, and liabilities of ₹1.08b due beyond that. On the other hand, it had cash of ₹1.63b and ₹11.9b worth of receivables due within a year. So it can boast ₹2.93b more liquid assets than total liabilities.

This surplus suggests that Entero Healthcare Solutions has a conservative balance sheet, and could probably eliminate its debt without much difficulty.

View our latest analysis for Entero Healthcare Solutions

We measure a company's debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.

Entero Healthcare Solutions's net debt is only 0.90 times its EBITDA. And its EBIT easily covers its interest expense, being 94.3 times the size. So we're pretty relaxed about its super-conservative use of debt. On top of that, Entero Healthcare Solutions grew its EBIT by 71% over the last twelve months, and that growth will make it easier to handle its debt. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Entero Healthcare Solutions can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. So it's worth checking how much of that EBIT is backed by free cash flow. During the last three years, Entero Healthcare Solutions burned a lot of cash. While that may be a result of expenditure for growth, it does make the debt far more risky.

Our View

Entero Healthcare Solutions's interest cover suggests it can handle its debt as easily as Cristiano Ronaldo could score a goal against an under 14's goalkeeper. But we must concede we find its conversion of EBIT to free cash flow has the opposite effect. We would also note that Healthcare industry companies like Entero Healthcare Solutions commonly do use debt without problems. When we consider the range of factors above, it looks like Entero Healthcare Solutions is pretty sensible with its use of debt. While that brings some risk, it can also enhance returns for shareholders. Over time, share prices tend to follow earnings per share, so if you're interested in Entero Healthcare Solutions, you may well want to click here to check an interactive graph of its earnings per share history.

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.