Core4 plans Rs 40.48 crore IPO working-capital deployment

Core4 plans to deploy Rs 40.48 crore of initial public offering, or IPO, net proceeds for incremental working-capital requirements in Fiscal 2027. The amount is the largest quantified issue object and is intended to fund a projected 122.45% increase in working-capital requirements to Rs 100.18 crore from Rs 45.04 crore in Fiscal 2026.

What will Core4 spend the quantified IPO proceeds on?

Core4 has earmarked Rs 40.48 crore for incremental working capital and Rs 4.12 crore for acquiring a property to house a manufacturing facility and corporate office in Fiscal 2027. The working-capital allocation is 9.83 times the property allocation, making it the principal disclosed use among quantified objects.

Core4 had not finalised the amount for general corporate purposes in the offer document because it depends on the issue price. The company said this use cannot exceed 15% of gross proceeds or the applicable monetary cap, whichever is lower. Both the Rs 40.48 crore working-capital amount and the Rs 4.12 crore property amount are scheduled for deployment in Fiscal 2027.

The Rs 4.12 crore property payment concerns an industrial plot and existing building at Plot Q-140, Industrial Estate, Hebbal, Mysore. Core4 signed an agreement to sell with P. S. Electricals on October 20, 2025, for Rs 4.12 crore and paid an advance of Rs 30 lakh from internal accruals on October 30, 2025. The stated property cost is Rs 4.42 crore before deducting that advance.

Why does Core4 need Rs 40.48 crore of IPO working capital?

Core4 projects that working-capital requirements will more than double in Fiscal 2027 because current assets are forecast to grow faster than current liabilities. The filing defines working capital as current assets less current liabilities, with the requirement projected at Rs 100.18 crore in Fiscal 2027, against Rs 45.04 crore at March 31, 2026.

The Fiscal 2027 increase is Rs 55.15 crore, or 122.45%, according to Core4’s estimates. Fiscal 2028 working-capital requirements are projected to increase by another Rs 26.13 crore, or 26.08%, to Rs 126.31 crore. Core4’s board approved the projections on February 21, 2026, but the disclosed fund requirements have not been appraised by a bank, financial institution or independent agency.

Core4’s Fiscal 2027 funding pattern includes Rs 15 crore of borrowings from banks, financial institutions and non-banking financial companies, plus Rs 44.70 crore of internal accruals and equity. The remaining Rs 40.48 crore is the net working-capital gap proposed to be met from IPO proceeds. Core4 said any balance in its incremental requirement would be funded through internal accruals and borrowings.

How does Core4's EPC cash cycle create the funding need?

Core4’s Engineering, Procurement, Construction and Commissioning, or EPCC, business model requires spending before full project collections are received. The company designs, procures, erects, tests and commissions infrastructure projects, while milestone certification, client approvals and retention money can postpone cash receipts after work is completed.

Trade receivables were Rs 73.25 crore at March 31, 2026, compared with Rs 37.07 crore at March 31, 2025 and Rs 7.53 crore at March 31, 2024. Core4 projects receivables of Rs 100 crore in Fiscal 2027. The company attributes the increase to projected activity in railway infrastructure, power transmission and distribution, and water and wastewater treatment, where billing follows project milestones.

Inventory is projected to rise to Rs 40 crore in Fiscal 2027 from Rs 7.51 crore at March 31, 2026. Core4 said the Rs 32.49 crore increase reflects purchases of electrical components, raw materials and project inputs for EPCC work, as well as manufacturing of high-tension and low-tension panels and compact substations.

Bank guarantees, or BGs, and letters of credit, or LCs, are another stated call on liquidity. Core4 may use funds as margin money and fixed deposits to obtain or enhance these non-fund-based facilities. BGs support contractual performance and security obligations, while LCs support procurement, meaning their availability can affect Core4’s ability to bid for, secure and execute EPCC contracts.

Are Core4's projected collection assumptions below recent levels?

Core4 projects a shorter receivables period in Fiscal 2027 even as the absolute receivables balance rises with planned operating scale. Trade-receivable days, measured against revenue from operations, are projected at 128 days in Fiscal 2027 and 137 days in Fiscal 2028, versus 309 days in Fiscal 2026 and 407 days in Fiscal 2025.

Trade-receivable days were 247 for the period ended June 30, 2026, calculated using a 90-day basis, compared with 309 days in Fiscal 2026. Core4 links the projected Fiscal 2027 reduction to collections from large projects and timely milestone billing on new contracts. The outcome depends on certifications and payments by customers, including government departments, public-sector undertakings and large private clients.

Inventory days are projected at 80 in Fiscal 2027 and 91 in Fiscal 2028, after 46 days in Fiscal 2026 and 26 days for the period ended June 30, 2026 on a 90-day basis. Trade-payable days are projected at 87 and 104 days, respectively, compared with 104 days in Fiscal 2026. The estimates therefore depend on procurement timing, supplier credit and material consumption following Core4’s management assumptions.

What could change Core4's deployment schedule?

Core4 may revise deployment timing or allocations if business, financial, market or external conditions change. The offer document identifies interest rates, exchange-rate movements, regulatory conditions, access to capital, competitive conditions and the ability to implement growth initiatives as factors that could require rescheduling or reallocation, subject to applicable law.

If an object requires more funds than planned, Core4 said it may use internal accruals, additional equity or debt arrangements. If an object requires less, the balance may be used for another existing object or for general corporate purposes within the stated limit. Core4 also said it may accelerate an object, while funds not used in a scheduled fiscal may be deployed in a later fiscal.

Core4 disclosed no bridge loans from banks or financial institutions that would be repaid from net proceeds. Pending use after listing and trading approvals, the company plans to deposit net proceeds only with scheduled commercial banks included in the Second Schedule to the Reserve Bank of India Act, 1934. A variation in issue objects requires shareholder authorisation through a special resolution under the Companies Act, 2013 and applicable Securities and Exchange Board of India regulations.

Conclusion

Core4’s quantified IPO allocation puts the principal funding emphasis on the operating cash cycle rather than fixed-asset expansion. The Rs 40.48 crore working-capital deployment is intended to support receivables, inventory, supplier and subcontractor activity, and deposits backing BGs and LCs, while Rs 4.12 crore is earmarked for the manufacturing and office property.

The next measure to watch is Core4’s Fiscal 2027 performance against its board-approved projection of Rs 100.18 crore in working-capital requirements, including 128 receivable days and Rs 40 crore of inventory. Core4 has disclosed that the objects were not independently appraised and that changes in project execution, collections, procurement, financing or regulation could alter the amount or timing of deployment.