Strategic relevance of JVVNL for state government and financial support extended by the state
Established by the State Government of Rajasthan, JVVNL forms the backbone of the power sector infrastructure for Rajasthan by covering operations for 15 districts of the state. The Government of Rajasthan (GoR) has consistently supported JVVNL through regular fund infusions in the form of equity, grants, and subsidies along with corporate guarantees. JVVNL's credit profile is also supported by its access to funds at low cost and its ability to mobilise financial resources from several financial institutions and multilateral development institutions. The financial support along with well-established regulatory framework including multi-year tariff regulations and sanctioned grants has strengthened the operations of JVVNL. During FY25, JVVNL received Rs. 10,725 Cr. of grants from the state as compared to Rs. 8,733 Cr. in FY24. Further, under the additional borrowing limit of 0.50% of Gross State Domestic Product (GSDP) scheme, State Government has agreed to take over the future five-year losses of the discom in a phased manner, and as per guidelines, GoR has taken over and in lieu of that released a sum equivalent to 90% of the losses reported in FY24. 
Acuité believes that JVVNL, being a fully owned undertaking of GoR, shall continue to benefit from the financial, operational and management support of GoR from time to time. Any event that impinges GoR's overall credit profile shall remain a key rating sensitivity.

Reduced AT&C and T&D Losses in FY25 post slippage in FY24
The operating performance of the company is highly dependent on technical parameters including aggregate technical & commercial (AT&C) and transmission & distribution (T&D) losses, billing and collection efficiency along with gap between average cost of supply (ACS) and average revenue realised (ARR). The collection efficiency stood improved at 99.46 percent in FY25 compared to 94.91percent in FY24 (98.51% in FY23) and the billing efficiency stood at 86.25 percent in FY25 compared to 84.23 percent in FY24 (85.41% in FY23). Therefore, the AT&C losses stood improved at 14.22% in FY25 as compared to 20.05% in FY24 (15.96% in FY23). Further, the T&D losses stood marginally improved at 21.20% in FY25 as compared to 22.19% in FY24 (21.45% in FY23). However, the ACS-ARR gap stood widened at Rs. 0.38 per unit in FY25 as against Rs. 0.30 per unit in FY24 and Rs. 0.09 per unit in FY23 on account of increase in finance costs. While, owing to quarterly revision in tariff rates, the company is not able to fully pass on the increased input costs to the customers often leading to the losses, however, owing to the government's Fuel Surcharge Adjustment (FSA) policy, the company recovered losses to the tune of Rs. 992 Cr. in FY25 (RS. 2,800 Cr. in FY24).

Average financial risk profile
The financial risk profile remains modest marked by negative net worth and deterioration in the coverage indicators. The discom reported net losses in FY25 that resulted in further decline in the net worth. The debt levels stood similar at Rs. 35,254 Cr. as on March 31, 2025 (Est.) (Rs. 34,012.24 Cr. as on March 31, 2024) due to the highly capital-intensive nature of business wherein to maintain the operational efficiencies, the company has to regularly incur capital expenditures. This higher debt has resulted in the deterioration of the debt protection metrics, reflected by moderate interest coverage ratio (ICR) of 1.32 times in FY24 (1.31 times in FY23) and low debt service coverage ratio (DSCR) of 0.58 times in FY24 (0.71 times in FY23). While the company’s DSCR has been weak in the past three years ended FY25, Acuité notes that JVVNL has received regular support from GoR in the form of grants and equity infusion to support their operations which is expected to continue going forward.

Regulated nature of operations
The revenues are influenced by the regulatory framework governing the power sector. The revenues of players such as JVVNL are determined by Rajasthan Electricity Regulatory Commission (RERC) through revision in tariff. Any significant delays in tariff approvals or a reduction in return on equity or a tightening of the RERC norms could result in lower operating cash flows.