Is Agria Group Holding AD (BUL:AGH) A Risky Investment?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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. As with many other companies Agria Group Holding AD (BUL:AGH) makes use of debt. But should shareholders be worried about its use of debt?

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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. If things get really bad, the lenders can take control of the business. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Agria Group Holding AD's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Agria Group Holding AD had лв339.3m of debt in September 2025, down from лв372.0m, one year before. However, it does have лв45.6m in cash offsetting this, leading to net debt of about лв293.7m.

How Healthy Is Agria Group Holding AD's Balance Sheet?

We can see from the most recent balance sheet that Agria Group Holding AD had liabilities of лв275.6m falling due within a year, and liabilities of лв123.4m due beyond that. Offsetting these obligations, it had cash of лв45.6m as well as receivables valued at лв114.1m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by лв239.4m.

The deficiency here weighs heavily on the лв92.1m company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we definitely think shareholders need to watch this one closely. At the end of the day, Agria Group Holding AD would probably need a major re-capitalization if its creditors were to demand repayment. When analysing debt levels, the balance sheet is the obvious place to start. But it is Agria Group Holding AD'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 Agria Group Holding AD

Over 12 months, Agria Group Holding AD reported revenue of лв753m, which is a gain of 17%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Over the last twelve months Agria Group Holding AD produced an earnings before interest and tax (EBIT) loss. Indeed, it lost лв7.6m at the EBIT level. Combining this information with the significant liabilities we already touched on makes us very hesitant about this stock, to say the least. Of course, it may be able to improve its situation with a bit of luck and good execution. However, we note that trailing twelve month EBIT is worse than the free cash flow of лв71m and the profit of лв2.3m. So there is arguably potential that the company is going to turn things around. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 6 warning signs for Agria Group Holding AD (2 are concerning!) that you should be aware of before investing here.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.