­Acuité has consolidated the business and financial risk profiles of JWL and all its subsidiaries/associates (Refer Annexure 2) to the extent of its shareholding as they have significant business and financial linkages and common management

­Strong brand,established track record of business operations buoyed by experienced management
JWL is a leading Indian manufacturer of railway wagons, wagon components, castings and advanced railway transportation equipment in the country. With acquisition and merger with CEBBCO, JWL has stepped into inorganic growth thereby foraying into manufacturing local bodies for commercial vehicles with an extensive portfolio of product offerings. Thus, at present the group has been operating in broadly three business segments namely - commercial vehicles applications, railway wagons and container manufacturing. The group has a strong track record of its business operations which has enabled it to gain an in-depth understanding of the market dynamics. JWL was founded by Mr. Murari Lal Lohia and is currently managed by his sons Mr. Vivek Lohia and Mr. Vikash Lohia. The current directors have an extensive experience of nearly 18-20 years in the wagons manufacturing industry. They are further backed by an experienced and qualified pool of management comprising of other Board of Directors and senior level management. Established relationship with customers has ensured brand and product loyalty and that with suppliers has enabled ease procurement of raw materials. Acuité believes the management’s rich expertise will continue to bolster the business, going forward.

Improvement in revenues coupled with strong growth in profitability and robust order book
The group achieved a ~8.77% revenue growth in FY 2025, driven primarily by increased wagon manufacturing and sale of wheelsetwheelsets with acquisition of JTRWFPL. Revenue stood at Rs.3,963.28 Cr. in FY25, with the wagon division contributing around 85% of sales. Despite a slowdown in railway tenders, private sector orders mitigated the impact. Profitability improved significantly, with EBITDA margins rising to 14.57% (PY 13.54%) and PAT margins to 9.59% (PY 9.08%), supported by cost management initiatives and backward integration through acquisitions like JTRWFPL. The order book remains strong at ~Rs. 6,304 crore as on 31st March,2025, with capacity expansion plans expected to double revenue in the medium term. Overall, the group demonstrates robust operational growth, improved margins,and strategic initiatives positioning it well for future expansion. Going forward, Acuité believes JWL will derive significant cost benefit with in-house manufacturing of wheelsets as the same constitute major component for wagon manufacturing, further boosting  profitability in the near term. Moreover, ramp-up in operations of its joint ventures (JVs), which are into manufacturing components for wagons, will aid margin expansion , provide additional revenue wherein JWL DAKO-CZ India Ltd. already has Rs.150-160 Cr. of orders from Indian Railways and also benefit with respect to technical expertise being provided by the partners.

Strong financial risk profile:
The total tangible networth increased to Rs. 2,558.23 Cr. in FY25 from Rs.1,452.82 Cr. in FY24 and Rs. 773.50 Cr. in FY23. Additional share capital was infused by way of issue of warrants and Qualified Institutional Placement (QIP).JWL raised Rs.800 Cr. of QIP in July,24 and the share premium arising from the same has increased reserves to Rs. 2,133.73 Cr. apart from accretion of profits. Gearing of the group stood below unity at 0.20 times as on March 31, 2025, as compared to 0.24 times as on March 31, 2024, although there was some increase in the debt levels in FY2025 due to the higher working capital requirements. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood low at 0.48 times as on 31st March 2025 as against 0.90 times as on March 31, 2024. The coverage ratios moderated on account of higher external debt compared to FY24. However, they still remain strong with Interest Coverage Ratio at 10.09 times and Debt Service coverage ratio at 7.55 times as on 31st March 2025. Commensurate returns from the planned capex in the form of backward integration and optimal capacity utilisation will remain key credit monitorable for JWL. Acuité expects the leverage and coverage indicators to moderate in the medium term owing to debt funded capex in Odisha and improve over the medium term on the back of surge in earnings from commercialisation of JTRWFPL further boosting the profitability of the group.

­Exposure to hazards associated with raw material price fluctuations and competition
Steel and associated items are the primary inputs; while IR projects typically have a long execution time and are heavily reliant on a price-variation clause, private sector orders are typically fixed.As such, cost pass-through is crucial to maintaining strong operating margins. As a result, JWL's operating profitability is affected by fluctuations in steel prices during the project execution period. On the other hand, pricing power is limited because orders are distributed across vendors and selected based on bids given by wagon manufacturers.

Working Capital Intensive nature of operations
The working capital intensive nature of operations is marked by Gross Current Assets (GCA) of 224 days as on 31st March 2025 as compared to 182 days as on 31st March 2024. The working capital intensity remains inherently high in the industry due to milestone-based payments and the sizeable security deposits kept with the Government authorities. The GCA days remained stretched on account of high  inventory period which stood at 83 days in FY2025 and high debtor days which stood at 75 days in FY25. The inventory levels of the group  have been historically high owing to Indian Railway (IR)’s procurement policy, where wheel sets for wagons and other locomotives can be procured only from Rail Wheel Factory (manufacturing unit of IR). Hence the group  must maintain an inventory of around 3 to 4 months for smooth manufacturing process without any interruptions. The debtor days is increased to 75 days in FY25 as compared to 50 days in the previous period. Although, wagons were manufactured they weren’t supplied due to shortage of wheels. This led to stretch in debtors coupled with higher last quarter sales. But the same was mitigated via JWL shifting its focus towards private sector providing comfort to JWL's debtor profile to some extent. Acuité believes, with ~25 percent of the order pipeline being from IR, the group's working capital intensity will remain at similar levels over the medium term with significant inventory holding. Moreover, with the record allocation of Rs. 2.65 lakh Cr. to IR in the union budget 2025-26, Acuité expects the order book to increase further in FY26 and hence inventory holding for the same. Against this the group receives credit of about 50-70 days from its creditors. Acuite believes that owing to large capex plans to augment operational efficiency, the working capital requirement of JWL will remain high over the medium term.

Risks related to the ongoing capital expenditure
JTRWFPL plans to invest approximately Rs 2,500 crore from fiscal years 2025 to 2028, with a funding strategy consisting of a debt-to-equity ratio of 65:35. While the commissioning is stated to occur in stages, the timely acquisition of statutory approvals and project implementation are crucial for successful completion and offtake. Around 80% of the production is anticipated to be utilized by JWL and Tatravagonka, which helps to reduce demand risk. However, the offtake is contingent upon the performance of the freight wagon sector, and any delays or cost increases could impact the group's financial health and flexibility, which will remain key monitorable.