Detailed Rationale

Crisil Ratings has reaffirmed its 'Crisil AA-/Stable/Crisil A1+' ratings on the bank facilities of Jupiter Wagons Limited (JWL).

 

The ratings continue to reflect the established market position supported by technology tie-ups and partnerships, healthy scale of operations and order book, and robust financial risk profile. These strengths are partially offset by exposure to risks relating to fluctuation in raw material prices, intense competition, working capital intensive operations and risks associated with ongoing capex.

Analytical Approach

For arriving at the ratings, Crisil Ratings has combined the business and financial risk profiles of JWL, with its joint ventures JWL Dako Cz India Private Limited, JWL Kovis (India) Private Limited, JWL Talegria (India) Private Limited, its step-down subsidiary Jupiter Tsaw Onedrone India Private Limited and its subsidiaries Stone India Limited, Jupiter Tatravagonka Rail Wheel Factory Private Limited (rated, 'Crisil A+/Stable/Crisil A1'), Habitation Realestate LLP & Jupiter Electric Mobility Private Limited.

 

Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

Established market position supported by technology tie-ups and partnerships: JWL is one of India’s largest wagon manufacturers, with a capacity of 10,800 wagons per annum and plans to enhance the capacity to 12,000 wagons per annum by fiscal 2026. Over the years, it has gained significant experience and has established strong relationships with government and private customers in iron and steel, power, logistics, mining, cement sectors, and with other reputed original equipment manufacturers (OEMs), resulting in steady order inflow. Technology tie-ups and partnerships with global entities have strengthened JWL’s technical know-how and capabilities. This has resulted in a wide product portfolio and diversification from core wagon manufacturing business.
 

The forged rail wheelsets manufacturing project through JTRFPL is aimed at improving backward integration, reducing dependence on imported wheelsets, making it strategically important for JWL. JWL also benefits from its strong Slovakia-based technology partner, Tatravagonka, which brings with it extensive experience of the European market, thus mitigates completion and technology risks for JTRFPL. Currently, JWL derives over ~85% revenue from wagon segment, ~5-10% from commercial vehicle (CV) load bodies and remaining ~5-10% from sale of containers and other items which includes weldable CMS Crossing, coupler and bogies to name a few.
 

Product diversity equips JWL to capitalize on robust spendings for developing high speed train infrastructure, and to fortify its market position in this segment. Benefits of robust spendings, strategic tie-up with technology partners, healthy order inflow and investments in capacity expansion and backward integration is expected to drive growth in JWLs scale of operations over the medium term.

 

Healthy scale of operations: Revenue of ~Rs 3,963 crore in fiscal 2025 grew by 9% on year on but was lower than expectation mainly on account of short supply of rail wheels from the Rail Wheel Factory for execution of orders of Indian Railways. Revenue growth in Q1 of fiscal 2026 is expected to be limited by insufficient wheels and labour unrest in JWLs Jabalpur unit that commenced on April 5, 2025, which led to a partial disruption in production upto May 6, 2025. Prolonged short supply of rail wheels could have an adverse impact on the scale of operations and will be closely monitored.

 

Despite robust revenue bookings per quarter, work on hand has sustained in range of Rs 6000-6500 crore in 4 quarters through March 31, 2025. Moreover, JWLs work on hand of Rs 6,303 crore on March 31, 2025 (Rs 6,644 crore on September 30, 2024), from IR and private counterparty provides revenue visibility over the medium term and yield order book to operating income ratio of over around 1.6 times.

 

JTRFPL, under the managerial support of JWL, in fiscal 2025, registered revenue from operations and operating margin of around Rs 340 crore and 12-13%, respectively. Based on business environment, JTRFPLs brownfield capex to increase the installed capacity by 13,000 wheelsets from 12,000 wheelsets currently is rescheduled to conclude by H2 of fiscal 2026 against Q4 of fiscal 2025.

 

Furthermore, its greenfield capex for setting up forged wheelset manufacturing plant in Odisha is expected to conclude by the end of CY 2027. Successful tender bids, steady & healthy inflow of orders, and timely completion of the ongoing capex and ramp-up of the capacity utilization should drive the revenue growth over the medium term and remains a key rating sensitivity factor.

 

Robust financial risk profile: Strong networth of Rs 2558 crore as on March 31, 2025, support capital structure yielding comfortable gearing and total outside liabilities to total networth ratios of 0.2 time and 0.5 times, respectively for fiscal 2025 against 0.2 time and 0.9 time, respectively a year earlier.

 

Healthy operating performance in fiscal 2025 coupled with equity infusion through qualified institutional placement (QIP) and preferential issue of convertible warrants has curtailed reliance on external debt. The funds raised are earmarked for capital expenditure (capex), backward integration and working capital requirement. Debt protection metrices are also comfortable, as reflected in interest coverage and net cash accruals to adjusted debt ratios improving to 9.6 times and 0.8 time, respectively on March 31, 2025.

 

Going forward, despite the planned capex for greenfield rail wheel factory of ~Rs 2,500 crore between fiscals 2026 and 2028, proposed to be funded in debt-to-equity ratio of 65:35, capital structure is expected to remain comfortable on back of healthy operating performance and steady accretion to reserves sufficient to fund incremental working capital requirement arising from growth in scale of operations.

 

Weaknesses:

Exposure to risks relating to fluctuation in raw material prices and intense competition: The key inputs include steel and related products. While the IR projects generally have a long execution period and are covered by a price-variation clause to a large extent, private sector orders are generally fixed in nature. Hence, to an extent, the operating profitability of JWL is susceptible to fluctuations in steel prices during the project execution period. On the other hand, pricing power is restricted as the orders are spread across suppliers and are decided based on bids submitted by wagon manufacturers. However, bid premium covers volatility risk, prudent inventory management and superior integration protect margins. As such, cost passthrough is critical for sustenance of healthy operating margins.

 

Working capital intensive operations: Gross Current Asset (GCA) days were in range of 181-257 days during 3 fiscals through March 31, 2025, driven by inventory and debtors (83 days and 75 days, respectively as on March 31, 2025) as ~50% work on hand comprises of orders from private players. Working capital requirement was also supported by creditors in range of 46-71 days in 3 fiscals through fiscal 2025. Going forward, GCAs are likely to be over 200 days on account of working capital intensity of operations an supported by sizeable funds earmarked for capex and general corporate purposes, cushion in working capital limits, back-to-back contracts with suppliers, and healthy accrual sufficient to meet the incremental working capital requirement.

 

Risks associated with ongoing capex: JTRFPLs planned capex of ~Rs 2,500 crore between fiscals 2026 and 2028, is proposed to be funded in debt-to-equity ratio of 65:35. Though the commissioning is planned in phases, timely receipt of statutory clearances and financial closure have bearing on completion and funding risk. Almost ~80% of the output is expected to be consumed by JWL and Tatravagonka and mitigates the demand risk. However, the offtake is linked with fortunes of the freight wagon and passenger coaches industry and any time or cost overrun may have an impact on the financial position and flexibility and will be closely monitored. Furthermore, long gestation capex results in low return on capital employed (RoCE), thus necessitating a close watch on the improvement in operating efficiency driven by rise in the scale of operations.

Liquidity: Strong

Bank limit utilisation is moderate around 57 percent for the past twelve months ended Feb 2025. Cash accrual are expected to be over Rs 450-550 crore which are sufficient against term debt obligation of Rs 10 crore over the medium term through fiscal 2028. The surplus will act as a cushion to the liquidity of the company. Repayment on the term loan for the greenfield capex of JTRFPL is scheduled in 40 equal quarterly instalments starting June 2029. The current ratio is healthy at 2.5 times on March 31, 2025.

Outlook: Stable

Crisil Ratings believes JWL will continue to benefit from extensive experience of its promoters, its established market position, technology tie-ups and partnerships and continuous backward integration.

Rating Sensitivity Factors

Upward factors:

• Sizeable improvement in market position & revenues, driven by stronger execution capabilities, healthy order inflow, with operating margins sustained over 14% resulting in higher net cash accruals.
• Lower project risk and prudent working capital management resulting in sustenance of financial position and flexibility.

 

Downward factors:

• Delay in offtake of orders due to raw material supply constraints or delays in various regulatory clearances or capacity expansion resulting in interest coverage below 4 times.
• Time or cost overrun in the ongoing capex or increase in share of loss in JV or rise in working capital requirement or sizeable dividend payout exerting pressure on the financial risk profile.

About the Company

JWL (formerly Commercial Engineers and Body Builders Co Ltd [CEBBCO]) was incorporated in 1979. The present management of the company, through the erstwhile JWL, had invested in CEBBCO in 2019 under a debt resolution plan. JWL amalgamated with CEBBCO through a reverse merger and the combined entity has been listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The company’s name (formerly known as CEBBCO) was changed to Jupiter Wagons Ltd (JWL) with effect from May 25, 2022.

 

Mr Murari Lal Lohia is the Chairman Emeritus, Mr Vivek Lohia is the Managing Director and Mr Vikash Lohia is the Deputy Managing Director.

 

JWL manufactures railway wagons, wagon components, weldable CMS crossings, load bodies for commercial vehicles and containers. JWL has its manufacturing units located in Kolkata (West Bengal), Jabalpur (Madhya Pradesh), Jamshedpur (Jharkhand), Indore (Madhya Pradesh). It has capacity to manufacture ~10,800 wagons annually and is backward integrated with a foundry shop to manufacture various components of a typical wagon like couplers, bogies, draft gears and CRF section.

 

JWL has partnerships with leading global companies via joint ventures (JVs) for manufacturing brake disc, brake systems for rolling stock and weldable CMS crossings through JWL Dako Cz India Pvt Ltd, JWL Kovis (India) Pvt Ltd and JWL Talegria (India) Pvt Ltd.

 

It has also entered the electric mobility sector through a subsidiary, Jupiter Electric Mobility Pvt Ltd, concentrating on e-LCV (electric light commercial vehicles) for last mile delivery. Its subsidiary, Habitation Realestate LLP holds property, has no business operations.

 

JTRFPL (earlier known as Bonatrans India Pvt Ltd) was incorporated in June 2013 and is a subsidiary of JWL. On March 20, 2024, JWL acquired Bonatrans India Pvt Ltd and its name was revised to its present name on September 17, 2024. JTRFPL manufactures wheels, axles and wheelsets primarily used in railway rolling stock, locomotives and metro applications, with an annual production capacity of 12,000 wheelsets. Its manufacturing facility is in Chhatrapati Sambhajinagar (Aurangabad), Maharashtra.

Key Financial Indicators (Combined & Crisil Ratings Adjusted)

As on/for the period ended March 31	Unit	2025	2024
Operating income	Rs crore	3963.28	3,647.59
Reported profit after tax	Rs crore	380.27	331.02
PAT margins	%	9.59	9.07
Adjusted Debt/Adjusted Networth	Times	0.19	0.23
Interest coverage	Times	9.56	12.13

 

Any other information: Not applicable