JTL Industries Ltd (NSE: JTLIND; BSE: 534600) Shares of JTL Industries Ltd (NSE: JTLIND; BSE: 534600) closed at ₹75.96 in the latest trading session, declining 1.38% as the market assessed the company’s leverage position and cash flow performance following its third-quarter earnings release.
The steel pipes manufacturer maintained a conservative capital structure, reporting a debt-to-equity ratio of 0.07x as of December 31, 2025. While total debt remains low relative to peers, the company’s finance costs increased to ₹1.85 crore for the quarter, up from ₹1.26 crore in the same period last year. This rise is attributed to increased working capital requirements and interest obligations related to recent capacity expansion activities.
Cash Flow and Working Capital Management
The company’s cash flow from operating activities was impacted by a build-up in inventory, which rose to ₹217.39 crore. Management stated this accumulation was necessary to support the production ramp-up at the Mangaon facility and to hedge against potential price volatility in hot-rolled coils.
- Operating Cycle: The cash conversion cycle stabilized at approximately 55 days, with an average collection period of 27 days.
- Capital Expenditure: JTL continues its phase-wise investment toward a 2.25 million MTPA capacity target by FY27. These projects are primarily funded through internal accruals and prior equity infusions, limiting the need for fresh long-term debt.
Credit Rating Status and Liquidity
The company currently holds a long-term credit rating of ‘IVR A’ with a Positive Outlook from Infomerics Ratings, assigned in October 2024. Short-term facilities are rated ‘IVR A1’.
- Liquidity Buffer: JTL reported unutilized working capital limits of approximately ₹90 crore, providing a liquidity cushion for operational exigencies.
- Rating Constraints: Credit analysts have identified volatility in raw material prices and the highly fragmented nature of the ERW steel pipe industry as primary hurdles to a further rating upgrade. A sustained EBITDA per tonne above ₹5,200 is cited as a key monitorable for future positive rating actions.
Management Q&A on Financial Health
During the earnings call, management responded to questions regarding the impact of rising interest rates and the acquisition of a stake in RCI Industries:
- Acquisition Funding: Management confirmed that the 95% stake acquisition in RCI Industries was funded through a mix of internal accruals and equity, without significantly altering the consolidated debt profile.
- Finance Cost Outlook: In response to queries on surging finance costs, management indicated that interest outgo is expected to stabilize as the newly added capacities begin contributing to cash inflows in the final quarter of the fiscal year.
Receivables Management
Addressing concerns over credit risk, management noted that a substantial portion of domestic sales is backed by letters of credit or remains within the 30-day credit window, keeping bad debt provisions minimal.