|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Non Convertible Debentures (NCD) | 230.00 | ACUITE A- | Stable | Reaffirmed | - |
| Total Outstanding | 230.00 | - | - |
|
Rating Rationale |
|
Acuité has reaffirmed the long term rating of 'ACUITE A-' (read as ACUITE A minus) on the Rs. 230.00 Cr. Secured Redeemable NonConvertible Debentures of Jupiter Capital Private Limited (JCPL). The outlook is 'Stable'
Rationale for the rating The rating continues to factor 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. 1664.14 Cr. as on March 31, 2023. The capital adequacy ratio stood at 61.82 percent as on September 30,2023 and 62.05 percent as on March 31, 2023 coupled with low gearing of 0.13 times as on September 30,2023 and 0.12 times as on March 31, 2023. 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 incorporated in 2004, as 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.
|
| Unsupported Rating |
| ACUITE BBB/ Stable |
| 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 Proven track record of investments |
| 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 75 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 has moderate asset quality, albiet improving, where the debt book saw delinquencies with GNPA at 25.70 percent as on March 31, 2021 which JCPL wrote-off and stood at 3.29 as on March 31, 2022. GNPA further stood at 3.58 percent as on H1FY2024.The company’s debt book of ~Rs. 274.52 Cr. as on September 30, 2023 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. |
| ESG Factors Relevant for Rating |
|
Jupiter Capital Private Limited (JCPL), has a diversified revenue stream with a majority portion accruing from the financial services sector. Adoption and upkeep of strong business ethics is a sensitive material issue for the financial services business linked to capital markets to avoid fraud, insider trading and other anti-competitive behavior. Other important governance issues relevant for the industry include management and board compensation, board independence as well as diversity, shareholder rights and role of audit committee. As regards the social factors, product or service quality has high materiality so as to minimise misinformation about the products to the customers and reduce reputational risks. For the industry, retention, and development of skilled manpower along with equal opportunity for employees is crucial. While data security is highly relevant due to company’s access to confidential client information, social initiatives such as enhancing financial literacy and improving financial inclusion are fairly important for the financial services sector. The material of environmental factors is low for this industry. The company’s board comprises of a total of three directors.
|
| Rating Sensitivity |
|
| Liquidity Position |
| 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 maintained Rs. 78 Cr. in form of unencumbered cash and bank balance as on March 31, 2023. Apart from the collections from clients, JCPL is also augmenting its resources through the NCD to support their liquidity.
|
| Outlook: |
|
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.
|
| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None |
| 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 |
|
In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
|
|
| |
|
|
||||||||||||||||||
|
|
Contacts |
|
|
|
About Acuité Ratings & Research |
