Here's Why Welspun Living (NSE:WELSPUNLIV) Has A Meaningful Debt Burden

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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. We note that Welspun Living Limited (NSE:WELSPUNLIV) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. What Risk Does Debt Bring? Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together. What Is Welspun Living's Net Debt? You can click the graphic below for the historical numbers, but it shows that Welspun Living had ₹23.9b of debt in September 2025, down from ₹28.8b, one year before. However, it also had ₹8.16b in cash, and so its net debt is ₹15.7b. NSEI:WELSPUNLIV Debt to Equity History January 21st 2026 How Healthy Is Welspun Living's Balance Sheet? The latest balance sheet data shows that Welspun Living had liabilities of ₹33.3b due within a year, and liabilities of ₹21.1b falling due after that. Offsetting these obligations, it had cash of ₹8.16b as well as receivables valued at ₹14.8b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₹31.5b. Welspun Living has a market capitalization of ₹108.8b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. View our latest analysis for Welspun Living In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio). Welspun Living has net debt worth 1.7 times EBITDA, which isn't too much, but its interest cover looks a bit on the low side, with EBIT at only 5.1 times the interest expense. While these numbers do not alarm us, it's worth noting that the cost of the company's debt is having a real impact. Shareholders should be aware that Welspun Living's EBIT was down 41% last year. If that earnings trend continues then paying off its debt will be about as easy as herding cats on to a roller coaster. 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 Welspun Living can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting. Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So we clearly need to look at whether that EBIT is leading to corresponding free cash flow. In the last three years, Welspun Living's free cash flow amounted to 30% of its EBIT, less than we'd expect. That's not great, when it comes to paying down debt. Our View Mulling over Welspun Living's attempt at (not) growing its EBIT, we're certainly not enthusiastic. Having said that, its ability handle its debt, based on its EBITDA, isn't such a worry. Once we consider all the factors above, together, it seems to us that Welspun Living's debt is making it a bit risky. That's not necessarily a bad thing, but we'd generally feel more comfortable with less leverage. 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 instance, we've identified 2 warning signs for Welspun Living that 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.