PR

Press Release
JUPITER CAPITAL PRIVATE LIMITED
April 08, 2022
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Non Convertible Debentures (NCD)	230.00	Provisional \| ACUITE A- \| Stable \| Assigned	-
Total Outstanding Quantum (Rs. Cr)	230.00	-	-
Total Withdrawn Quantum (Rs. Cr)	0.00	-	-

Rating Rationale

Acuité has assigned the long term rating of ‘ACUITE Provisional A-' (read as ACUITE Provisional A minus) on the Rs. 230.00 Cr. Proposed Secured Redeemable Non-Convertible Debentures of Jupiter Capital Private Limited (JCPL). The outlook is ‘Stable’.

The rating on the Rs. 230.00 Cr. proposed NCD for JCPL is provisional and the final rating is subject to:

Appointment of a SEBI registered Debenture Trustee
Execution of signing of Trust Deed
Receipt of the final term sheet and confirmation from trustee regarding the compliance with all the terms and condition of term sheet????

The rating factors in experienced management and resourceful promoters and the ability of the company to grow its networth by way of internal accruals. The rating also factors in the high capitalization levels and low gearing levels with networth of Rs. 1,649.39 Cr. as on December 31, 2021 (provisional). The capital adequacy ratio stood at 81.19 percent as on December 31, 2021 (provisional) and 75.12 percent as on March 31, 2021 coupled with low gearing of 0.02 times as on December 31, 2021(provisional) and 0.06 times as on March 31, 2021. The rating derives comfort from proven track record of investments and divestments. The rating also derives strength from the underlying DSRA and Structure Payment Mechanism of the proposed Non-Convertible Debentures. The rating is, however, constrained due to its volatile nature of its revenue and high write offs done in the past.

About the company

Jupiter Capital Pvt Ltd (“JCPL”) was founded by Mr Rajeev Chandrasekhar in 2005, is an Investment & Financial services firm headquartered in Bangalore. JCPL has been registered as an NBFC-SI with RBI since September, 2009. JCPL has an extensive portfolio of public and private investments through acquisitions, direct investments joint ventures and debt book. The company makes investment across sectors with focus on Engineering & Technology Services, Media & Entertainment, Hospitality & Wellness, Real Estate & Infrastructure and Technology-enabled consumer internet and business platforms. JCPL’s co-investors include global leaders such as Star, Goldman Sachs, Cisco and NOL. JCPL also owns an aircraft and provides charter flight services.

Analytical Approach

Acuité has considered the standalone financial and business risk profile of JCPL to arrive at the rating. Further, the rating also takes the support of the presence of internal credit enhancement proposed in the form of Debt Service Reserve Account (DSRA) and the Structured Payment mechanism.
The rating in respect of the NCD of Rs. 230.00 Cr. factors in the presence of a DSRA in form of 10 percent of the outstanding principal amount. DSRA needs to be maintained in the form of cash, bank fixed deposit, ‘AAA’ rated debt securities and sovereign debt securities, in any combination, for the minimum duration covering the tenor of the NCDs along with the T structure. The differential in the ratings of regular bank facilities vis. a vis. the rating on the NCDs is on account of these structures.

Key Rating Drivers

Strength

Resourceful promoter supported by experienced management team
The founder, Mr. Rajeev Chandrasekhar, known amongst other things for pioneering private investments into Indian Telecom sector and presently, Member of Parliament at Rajya Sabha started the organisation in 2005. He was on the Board of Directors as promoter director till January, 2020. Though, he has stepped down from the Board, he continues to remain the ultimate shareholder of the company. Presently, the operations are overseen by the Board of Directors with the support of qualified and experienced management team. The management of JCPL is led by Mr. Sudhakar Gande, CEO who has prior experience in the areas of Investment Banking, Corporate Finance, Venture Development and Management, etc and has also held leading positions in banks. The management of JCPL also comprises of CFO and Investment Director, all of whom have prior experience in the Financial Services Sector and have demonstrated the ability to survive through business cycles. Apart from overseeing the day-to-day operations, the management team is responsible for making investments and divestments decisions.
Acuité believes that the company will continue to benefit from its experienced Management Team backed by a resourceful promoter which will aid the company in its future growth trajectory.

Proven track record of investments
JCPL started its operations in the year 2005 and over the years, they have built an equity book having a book value of Rs. 1,266.41 Cr. as on December 31, 2021. These investments have been made out of owned funds and along with large brand strategic investors. These investments are made in emerging sectors especially technology focused sectors, along with strategic global partners, ultimately all critical deciding factors are aimed towards value creation. First set of investments happened in FY2009; followed by another set during FY2014, FY2019 and FY2021.
Acuité believes that the company will benefit from the demonstrated ability of the management in making investments and divestments

Weakness

Volatility of Income
JCPL started its operations with a focus on building its Equity book. However, the revenue from equity book depends highly on the return on investment/gains i.e. profits on sale of investments which in turn depends on the performance of a particular industry/sector in which it has invested. JCPL’s top 3 investments comprise around 73 percent of its total equity book in which JCPL has majority shareholding. JCPL’s earning profile is largely dependent on the performance, profitability and valuations of these companies. In order to mitigate this volatility, JCPL has expanded its operations to creating a debt book as well since FY2018. The debt book however, saw delinquencies with GNPA at 25.70 percent as on March 31, 2021 which JCPL wrote-off and stood at Nil as on December 31, 2021. The company’s debt book of Rs. 191.88 Cr. as on December 31, 2021 is likely to remain stable for near to medium term.
Acuité believes that the ability of the company and management to mitigate the risks associated with volatility of income would be crucial.

Rating Sensitivity

Changes in management
Decline in asset quality
Timeliness of monetization of investments

Material Covenants

JCPL is subject to covenants stipulated by its lenders/investors in respect of various parameters like capital structure, asset quality, among others.

Liquidity: Adequate

JCPL’s liquidity buffers primarily depend on its cash inflows (collections from debt book, charter flight income and divestment income) vis. a vis. the cash outflows (disbursements, new investments, debt servicing commitments, operating expenses). The income by way of divestments has been and is expected to remain volatile owing to its nature of business. However, the liquidity is adequately supported by stable collections from its debt book. JCPL has fixed monthly obligations (Debt servicing obligations and operating expense) range between Rs. 6-7 Cr for the 9MFY22 against which it had liquid balance of Rs. 134.00 Cr. in form of unencumbered cash and bank balance as on December 31, 2021. Apart from the collections from clients, JCPL is also augmenting its resources through the NCD to support their liquidity.

Outlook-Stable

Acuité believes that JCPL will maintain a 'Stable' outlook over the medium term supported by its resourceful promoter, experienced management and high capitalisation levels. The outlook may be revised to 'Positive' in case of higher than expected growth in AUM while maintaining key operating metrics and asset quality, liquidity and timeliness of divestments. The outlook may be revised to 'Negative' in case of any headwinds faced in scaling up of operations or in case of any challenges in maintaining its asset quality, profitability metrics.

Key Financials - Standalone / Originator

Particulars	Unit	FY21 (Actual)	FY20 (Actual)
Total Assets	Rs. Cr.	1762.04	1737.13
Total Income*	Rs. Cr.	150.45	154.24
PAT	Rs. Cr.	21.80	9.92
Net Worth	Rs. Cr.	1612.49	1590.53
Return on Average Assets (RoAA)	(%)	1.25	0.57
Return on Average Net Worth (RoNW)	(%)	1.36	0.62
Debt/Equity	Times	0.06	0.06
Gross NPA	(%)	25.70	33.68
Net NPA	(%)	0.00	0.82

*Total income equals to Total Income net off interest expense

Status of non-cooperation with previous CRA (if applicable):

None

Any other information

Supplementary disclosures for Provisional Ratings

A. Risks associated with the provisional nature of the credit rating
In case there are material changes in the terms of the transaction after the initial assignment of the provisional rating and post the completion of the issuance (corresponding to the part that has been issued) Acuité will withdraw the existing provisional rating and concurrently, assign a fresh final rating in the same press release, basis the revised terms of the transaction.

B. Rating that would have been assigned in absence of the pending steps/ documentation
The rating would be equated to the standalone rating of the entity: ACUITE BBB/ Stable

C. Timeline for conversion to Final Rating for a debt instrument proposed to be issued
The provisional rating shall be converted into a final rating within 90 days from the date of issuance of the proposed debt instrument. Under no circumstance shall the provisional rating continue upon the expiry of 180 days from the date of issuance of the proposed debt instrument.

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
• Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm
• Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm

Note on complexity levels of the rated instrument

https://www.acuite.in/criteria-rating-criteria-55.htm

Rating History

Date	Name of Istruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
23 Jun 2021	Proposed Non Convertible Debentures	Long Term	20.00	ACUITE Provisional A- (Withdrawn)
23 Jun 2021	Proposed Non Convertible Debentures	Long Term	80.00	ACUITE Provisional A- (Withdrawn)
22 Dec 2020	Proposed Non Convertible Debentures	Long Term	80.00	ACUITE Provisional A- \| Stable (Assigned)
22 Dec 2020	Proposed Non Convertible Debentures	Long Term	20.00	ACUITE Provisional A- \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Rating
Not Applicable	Not Applicable	Proposed Non Convertible Debentures	Not Applicable	Not Applicable	Not Applicable	230.00	Provisional \| ACUITE A- \| Stable \| Assigned

About Acuité Ratings & Research

Acuité Ratings & Research Limited is a full-service Credit Rating Agency registered with the Securities and Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI), for Bank Loan Ratings under BASEL-II norms in the year 2012. Since then, it has assigned more than 8,850 credit ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Acuité ratings are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warrant y, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind arising from the use of its ratings. Acuité ratings are subject to a process of surveillance which may lead t o a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité.