Deepa Jewellers directs ₹215 crore IPO funds to working capital

Deepa Jewellers plans to allocate ₹215 crore of net proceeds from its proposed initial public offering (IPO) fresh issue to long-term working capital rather than the proposed Hyderabad manufacturing facility. The funding reflects upfront gold procurement, display inventory and customer credit, with trade receivables reaching ₹252.36 crore in Fiscal 2026.

Why is Deepa Jewellers directing ₹215 crore to working capital?

Deepa Jewellers is directing ₹215 crore to procure, maintain and scale inventory for its business-to-business, or B2B, gold-jewellery supply operations. The proposed fresh issue is up to ₹250 crore before offer expenses, while the balance of net proceeds is proposed for general corporate purposes. Under the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations, general corporate purposes cannot exceed 25% of gross proceeds.

Deepa Jewellers plans to deploy ₹125 crore in Fiscal 2027 and ₹90 crore in Fiscal 2028, for a cumulative ₹215 crore. The board approved the objects of the issue and the proposed allocation on August 25, 2026. The company says actual deployment can change because of gold-price movements, business conditions, exchange-rate exposure where applicable, and revisions to its growth strategy.

Working capital is the amount invested in current assets after deducting current liabilities. Deepa Jewellers’ reported working-capital requirement increased from ₹158.15 crore in Fiscal 2024 to ₹213.40 crore in Fiscal 2025 and ₹344.02 crore in Fiscal 2026. The increase followed growth in trade receivables and inventory while trade payables remained limited because gold purchases are generally made against upfront payment.

How does Deepa Jewellers’ B2B model create the funding requirement?

Deepa Jewellers needs liquidity because it pays for raw materials before processing jewellery and collects from customers after an agreed credit period. The company designs gold jewellery and uses an outsourced manufacturing network of 41 karigars, or jewellery artisans, to process designs. Deepa Jewellers supplies the gold, alloys and precious stones, while karigars return finished ornaments in exchange for making charges.

Deepa Jewellers says processing customised designs takes two to 15 days, depending on the design and order size, requiring holdings of both raw material and finished-goods inventory. Its processing capacity through karigars rose from 2,155 kilograms a year in Fiscal 2024 to 2,925 kilograms in Fiscal 2026. The company reported a 37.13% compound annual growth rate in revenue from operations across that period.

Deepa Jewellers also needs finished ornaments for product displays, exhibitions and customer orders. As of July 31, 2026, its network included 373 customers across 13 states and one union territory, comprising 47 jewellery retail chains and 326 standalone stores. The company does not own standalone stores, but it supplies retail chains and independent jewellery stores and maintains inventory to present collections to those customers.

What changed in Deepa Jewellers’ receivables, inventory and funding?

Deepa Jewellers’ receivables increased more sharply than its inventory between Fiscal 2024 and Fiscal 2026. Trade receivables rose from ₹88.45 crore in Fiscal 2024 to ₹131.73 crore in Fiscal 2025 and ₹252.36 crore in Fiscal 2026. Total inventories increased from ₹72.26 crore to ₹82.79 crore and then ₹87.36 crore over the same periods.

Deepa Jewellers attributed the receivables increase to higher sales volumes, customer demand and higher gold prices, while stating that credit terms did not materially change across Fiscal 2024, Fiscal 2025 and Fiscal 2026. Retail chains accounted for ₹201.08 crore of the ₹252.36 crore receivable balance in Fiscal 2026, while standalone stores accounted for ₹51.28 crore. Of the Fiscal 2026 total, ₹247.73 crore was due in less than six months and ₹4.63 crore was due between six months and one year.

The timing of collection and payment moved in opposite directions in Fiscal 2026. Trade receivable days fell from 32 days in Fiscal 2024 to 29 days in Fiscal 2025, then increased to 36 days in Fiscal 2026. Inventory days, measured against raw-material consumption, declined from 22 days to 21 days and then 18 days, but trade payable days remained one day in all three fiscal years because gold bullion is generally bought on an upfront-payment basis.

Deepa Jewellers had ₹82.98 crore of fund-based working-capital facilities outstanding as of July 31, 2026, within a total sanctioned working-capital limit of ₹115 crore from Yes Bank. The outstanding amount included cash credit, a gold metal loan sub-limit and a working-capital demand loan sub-limit. Promoter and promoter-group unsecured loans outstanding at March 31, 2026 totalled ₹43.65 crore, compared with ₹38.22 crore in Fiscal 2025.

What must hold for Deepa Jewellers’ projected working-capital plan to work?

Deepa Jewellers’ plan depends on its projected working-capital requirement rising to ₹397.24 crore in Fiscal 2027 and ₹487.24 crore in Fiscal 2028. The projections assume inventory holding of 23 days in Fiscal 2027 and 24 days in Fiscal 2028, compared with 18 days in Fiscal 2026. They also assume receivable days of 27 and 29 days, respectively, below the 36 days recorded in Fiscal 2026.

The forecast is concentrated in finished goods and receivables. Finished-goods inventory is projected at ₹188.63 crore in Fiscal 2027 and ₹227.66 crore in Fiscal 2028, while trade receivables are projected at ₹253.97 crore and ₹315.95 crore, respectively. Hyderabad is projected to hold 59.26% of finished-goods inventory in Fiscal 2027, Vijayawada 21.29%, and the planned Bengaluru office 14.33%, together representing 94.88%.

Deepa Jewellers opened a Vijayawada sales office in November 2025 and plans an additional Bengaluru sales office in Fiscal 2027. The company expects the expanded sales network to require more display stock, logistics spending and liquidity buffers. Its top 10 customers contribute more than 50.00% of revenue, making payment patterns and recurring orders from that customer group relevant to the receivables projection.

The projected requirements are management estimates that have not been appraised by an external agency, bank or financial institution. Deepa Jewellers says it does not maintain an order book, meaning the Fiscal 2027 and Fiscal 2028 forecasts are not based on contracted orders. Any additional working-capital requirement beyond the planned fresh-issue deployment may be funded through internal accruals, cash credit or working-capital borrowings.

Conclusion

Deepa Jewellers’ planned allocation is primarily a liquidity measure for an operating model that pays for gold before receiving customer collections. From Fiscal 2024 to Fiscal 2026, receivables rose by ₹163.91 crore to ₹252.36 crore, while trade payables remained at ₹0.09 crore in Fiscal 2026 and payable days stayed at one day.

The next disclosed milestones are the planned ₹125 crore deployment in Fiscal 2027, the proposed Bengaluru office in Fiscal 2027 and the further ₹90 crore deployment in Fiscal 2028. Deepa Jewellers says the proposed Hyderabad facility, which was in installation phase as of the filing date, is expected to become operational before the end of the first half of Fiscal 2027; expenditure of ₹2.28 crore incurred through March 31, 2026 was funded through internal accruals.