Net Debt
Total borrowings less cash and readily realisable investments, measuring debt after the cash available to repay it.
Formula
Net Debt = Short-Term Borrowings + Long-Term Borrowings + Lease Liabilities - Cash and Cash Equivalents
Unit
₹ crore
In depth
Net debt is the leverage figure that matters for valuation, because a company holding ₹500 crore of cash against ₹500 crore of debt is economically unleveraged. The netting only holds where the cash is genuinely available: balances pledged as security, held in escrow, or trapped in subsidiaries should not be deducted. Since Ind AS 116, lease liabilities belong in the calculation, which raised net debt for retailers and airlines without any change in borrowing. Negative net debt — more cash than debt — is a net cash position, and it lowers enterprise value below market capitalisation.
Worked example
Borrowings of ₹500 crore against cash of ₹100 crore gives net debt of ₹400 crore. With EBITDA of ₹220 crore, net debt to EBITDA is 400 / 220 = 1.8 times — comfortable, and it would be 2.3 times if the cash turned out to be pledged.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Net Debt” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.