Bench Mark Infotech projects a 103-day cash conversion cycle

Bench Mark Infotech projects its cash conversion cycle will reach 103 days in fiscal 2028 (FY28), from 14 days in fiscal 2026 (FY26). The 89-day increase is driven chiefly by a planned reduction in supplier credit to 183 days from 270 days, while trade receivables remain near 280 days.

Why is Bench Mark Infotech’s cash conversion cycle projected to reach 103 days?

Bench Mark Infotech’s FY28 cash conversion cycle of 103 days is calculated from seven inventory days plus 279 trade-receivable days, less 183 trade-payable days. A cash conversion cycle measures the period for which cash is committed between buying project inputs and collecting from customers. The FY26 cycle was 14 days, based on four inventory days, 280 receivable days and 270 payable days.

Bench Mark Infotech expects the cycle to rise first to 73 days in FY27, when inventory is projected at six days, receivables at 284 days and payables at 217 days. Between FY26 and FY28, the payable period declines by 87 days, inventory adds three days and receivable days decline by one day. The forecast therefore depends materially on management implementing faster vendor payments while collections remain broadly stable in day terms.

Bench Mark Infotech attributes its collection profile to integrated information-technology infrastructure projects involving networking, communication, surveillance, fibre-optic, cloud and data-centre solutions. These turnkey projects require equipment procurement, phased execution and milestone-based billing, while customer inspections, technical certifications, statutory documents and internal approvals can delay payment.

How will receivables affect Bench Mark Infotech’s working-capital need?

Bench Mark Infotech projects trade receivables of Rs 94.52 crore in FY28, compared with Rs 54.98 crore at March 31, 2026, despite projecting the receivable period to ease to 279 days from 280 days. The increase is consequently linked to higher projected project volumes and turnover rather than a longer assumed collection period.

Bench Mark Infotech reported Rs 34.71 crore of FY26 receivables from government entities, including government public sector undertakings (PSUs), and Rs 20.27 crore from non-government entities. Government and PSU balances represented about 63% of the Rs 54.98 crore FY26 total. The company says work for government bodies, PSUs, educational institutions and large enterprises commonly has milestone billing and approval processes that extend collection cycles.

Bench Mark Infotech’s receivables rose from Rs 37.96 crore in FY25 to Rs 54.98 crore in FY26, while receivable days increased from 232 to 280. It said the FY26 non-government increase partly reflected projects undertaken with coal subsidiaries, where significant revenue was booked in the third and fourth quarters and remained outstanding at year-end.

Why is Bench Mark Infotech cutting supplier credit?

Bench Mark Infotech plans to reduce trade-payable credit to 183 days in FY28 from 270 days in FY26, having historically received extended terms from suppliers. Management expects liquidity to improve following the initial public offering (IPO) and intends to settle vendor dues more promptly to strengthen supplier relationships, improve procurement efficiency and seek better pricing and priority supplies.

Bench Mark Infotech projects trade payables will still rise in absolute terms, to Rs 42.64 crore in FY28 from Rs 34.48 crore at March 31, 2026, because procurement is expected to grow. The FY27 estimates are Rs 37.64 crore of payables and 217 payable days. Faster settlement means the company must fund more purchases before collecting related customer payments.

Bench Mark Infotech also projects inventory to increase from Rs 106.94 lakh in FY26 to Rs 176.94 lakh in FY27 and Rs 211.75 lakh in FY28. Inventory days are expected to move from four to six and then seven as simultaneous projects require critical networking equipment, surveillance systems, fibre-optic cables and communication devices across locations.

How much working capital does Bench Mark Infotech project for FY28?

Bench Mark Infotech projects net working capital of Rs 51.59 crore at March 31, 2028, compared with Rs 13.08 crore at March 31, 2026. Net working capital is current assets less current liabilities. The FY28 projection comprises Rs 102.89 crore of current assets and Rs 51.30 crore of current liabilities, making the requirement nearly four times the FY26 level.

Bench Mark Infotech estimates FY27 net working capital at Rs 30.22 crore. Its historical position shifted from Rs 0.55 lakh in FY24 to negative Rs 298.28 lakh in FY25, when current liabilities exceeded current assets, before returning to Rs 13.08 crore in FY26. At March 31, 2026, current assets of Rs 57.57 crore exceeded current liabilities of Rs 44.49 crore.

Bench Mark Infotech’s working-capital turnover ratio, which compares revenue with net working capital, was 23.74 times in FY24, negative 33.61 times in FY25 and 11.98 times in FY26. It is projected at 3.74 times in FY27 and 2.65 times in FY28 because projected net working capital rises faster than revenue. The lower projected ratio reflects a greater amount of funding tied to receivables and inventory for each unit of revenue.

How does Bench Mark Infotech plan to fund the higher requirement?

Bench Mark Infotech proposes to use up to Rs 30 crore of IPO net proceeds for working capital, with up to Rs 10 crore scheduled for FY27 and up to Rs 20 crore for FY28. The company says actual deployment may be reduced, revised or extended according to issue completion, market conditions, business needs, economic trends and the board’s assessment.

Bench Mark Infotech projects Rs 3 crore of working-capital borrowings in each of FY27 and FY28, alongside Rs 17.22 crore and Rs 28.59 crore respectively from net worth or internal accruals. At March 31, 2026, it reported Rs 1.90 crore of working-capital borrowings and Rs 11.18 crore of funding from net worth or internal accruals. Any funding shortfall may be met through internal accruals or permitted borrowings.

Bench Mark Infotech assumes incremental borrowings will primarily use its Punjab National Bank working-capital facility at an effective annual interest rate of 8.45%, based on a repo linked lending rate of 8.10% plus 0.35%. Its projection assumes customer credit policies and the operating model remain substantially unchanged, customer credit quality does not deteriorate materially, and inflation and price escalation remain within normal industry levels.

Conclusion

Bench Mark Infotech’s projected 103-day cash conversion cycle arises from more than a growth assumption. It combines receivable days remaining close to 280, higher inventory for project delivery and an 87-day planned reduction in supplier credit. Together, these assumptions raise projected net working capital from Rs 13.08 crore in FY26 to Rs 51.59 crore in FY28.

The disclosed funding plan is the next measure to watch. Bench Mark Infotech has scheduled up to Rs 30 crore of IPO proceeds for working capital across FY27 and FY28, supplemented by Rs 3 crore of projected borrowings in each year and internal accruals. Its board and audit committee will monitor offer-proceeds use, while the company may revise the deployment schedule if stated business, market or funding conditions change.