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Kesoram Industries (NSE:KESORAMIND) Is Making Moderate Use Of Debt

Simply Wall St · 6d ago

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Kesoram Industries Limited (NSE:KESORAMIND) makes use of debt. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

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. 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. 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 Kesoram Industries's Net Debt?

The image below, which you can click on for greater detail, shows that Kesoram Industries had debt of ₹1.99b at the end of September 2025, a reduction from ₹2.47b over a year. However, because it has a cash reserve of ₹155.4m, its net debt is less, at about ₹1.83b.

debt-equity-history-analysis
NSEI:KESORAMIND Debt to Equity History January 6th 2026

A Look At Kesoram Industries' Liabilities

Zooming in on the latest balance sheet data, we can see that Kesoram Industries had liabilities of ₹1.64b due within 12 months and liabilities of ₹1.45b due beyond that. On the other hand, it had cash of ₹155.4m and ₹326.4m worth of receivables due within a year. So its liabilities total ₹2.61b more than the combination of its cash and short-term receivables.

This deficit is considerable relative to its market capitalization of ₹3.53b, so it does suggest shareholders should keep an eye on Kesoram Industries' use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. There's no doubt that we learn most about debt from the balance sheet. But it is Kesoram Industries's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

View our latest analysis for Kesoram Industries

In the last year Kesoram Industries had a loss before interest and tax, and actually shrunk its revenue by 94%, to ₹2.5b. To be frank that doesn't bode well.

Caveat Emptor

While Kesoram Industries's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Its EBIT loss was a whopping ₹917m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. We would feel better if it turned its trailing twelve month loss of ₹1.7b into a profit. So in short it's a really risky stock. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 3 warning signs for Kesoram Industries (2 can't be ignored!) that you should be aware of before investing here.

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.