Rating Rationale

Brickwork Rating has assigned the long-term ratings for bank loan facilities of J P CONSTRUCTIONS at BWR BB+ /Stable and the short-term rating of BWR A4+  for the bank loan facilities of Rs 50.94 Crs.

The rating draws strength from the Experienced Partners and Long Track Record of Operations, Moderate financial risk profile, and a sizeable order book ensuring revenue visibility over the medium term. However, the rating is constrained by the Moderate scale of operations with revenue concentration, Volatility in operating margin due to the tender-based nature of operations, and client concentration risk. 

The rating outlook has been retained as "Stable" as BWR believes that the company's business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the scale of operations and profitability margins, and DSCR show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down. 

For assigning the rating, BWR has relied upon the last three years of Standalone financial statements up to FY24 & FY25 audited, the provisional for FY 2026 &  the projected financials for  FY27 and FY28, and information and clarifications provided by the management, along with publicly available information. 

The terms of sanction include standard covenants normally stipulated for bank loan facilities

• Healthy growth in scale of operations :

  Operating income increased from Rs 38.92 crore in FY23 to Rs 119.26 crore in FY25, with projected turnover of Rs 125 crore in FY27.

• Improving net worth and moderate leverage: :

  TNW increased to Rs 21.59 crore in FY25 and is projected at Rs 34.65 crore in FY27, while Total Debt/TNW is projected at 1.06x by FY27.

• Adequate debt-servicing capability :

  DSCR is projected at 4.76x in FY26 and 2.36x in FY27, while ISCR remains comfortable at 4.97x and 3.84x, respectively.

• Working-capital intensive operations: :

  Trade receivables remain high at Rs 36.21 crore in FY25 and are projected at Rs 33.50 crore in FY27, indicating dependence on timely collection from customers.

• Increase in debt levels :

  Total Debt/TNW is expected to increase from 0.22x in FY25 to 1.06x in FY27, mainly due to higher projected borrowings.

• Low liquidity buffer :

  Cash and bank balance remains low at Rs 0.49 crore in FY25, projected at Rs 0.04 crore in FY26, making timely realisation of receivables and efficient working-capital management important

Positive factors:

• Operating income increasing above Rs 200 Cr on a sustained basis / maintaining OPBDIT margin above 15%, resulting in substantial improvement in the overall credit risk profile, would be a trigger for positive sensitivities.
• It is desirable to convert the entity into a private Ltd Company for better corporate governance.
• Timely execution of the Rs 450.29 Cr executable order book, together with maintenance of the current ratio above 1.60x and effective control over receivables, would support business and liquidity strength.

Negative factors:

• Operating income declining below Rs 100 Cr or OPBDIT margin falling below 12% on a sustained basis could adversely impact the credit profile.
• Current ratio declining below 1.25x, coupled with material delays in execution/realisation of the Rs 450.29 Cr balance order book or significant build-up in receivables above the current  Rs 36 Cr, could weaken liquidity and the business risk profile.

• The company’s liquidity position is adequate, supported by an improving current ratio of 1.35x in FY25, 1.49x in FY26, and 1.63x in FY27.
• ISCR remains comfortable at 4.25x, 4.97x, and 3.84x, while DSCR stands at  4.76x and 2.36x.
• Cash and bank balances remain at ₹0.49 crore in FY25, ₹0.04 crore in FY26, and ₹0.33 crore in FY27.
• Net Cash accruals stood at Rs.8.86 Crs in FY25 & at 11.37 crs in FY26 (Prov) & is projected to be at Rs. 11.15 Crs in FY27.
• CPLTD remains at 3.36 Cr for FY 2026 & FY27.

The company demonstrates an evolving ESG profile based on its environmental, social, and governance practices.

Environmental: The company’s environmental risks primarily arise from construction, repair, and rehabilitation activities involving dust generation, emissions, and construction waste. J P Construction follows prescribed environmental and site safety norms, including controlled disposal practices and execution methodologies aimed at minimising disruption during live infrastructure repairs. However, formal ESG disclosures and defined carbon emission reduction targets remain limited.

Social: J P Construction places significant emphasis on employee safety, technical expertise, and retention of experienced engineering personnel. The company conducts specialised technical and safety training programs considering the critical nature of rehabilitation works executed under live traffic conditions. Its long-standing workforce and association with reputed institutions such as IITs/NITs for technical validation further support operational reliability.

Governance: Governance profile remains adequate, supported by established operational processes, satisfactory regulatory compliance, grievance handling mechanisms, and long-standing relationships with government authorities and reputed infrastructure clients. No major regulatory or governance-related concerns have been reported against the company

JP Constructions , established in 2001, is an infrastructure construction company mainly engaged in the construction of railway and highway bridges . The company also undertakes related works such as earthwork, building, electrical, and mechanical works , depending on project requirements.

The company has experience in executing technically challenging bridge projects  and has built a track record of completing projects with focus on quality and timely execution.

JP Constructions has undertaken projects for reputed clients such as RVNL, DFCC, Tata Projects, Gujarat State Petroleum Corporation, L&T Construction, Gayatri Projects, Afcons, DCS Limited, KEC International, and Welspun Enterprises Limited .

The company's key strengths include its long operating experience, expertise in bridge construction, ability to execute complex projects, and established relationships with reputed clients.
 

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Not Applicable

BWR Board of Directors have no influence over rating decisions, nor do they sit on the rating committee or review, discuss or evaluate any credit rating during the Board meetings.

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara bank is an institutional investor in Brickwork.

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