SJP Ultrasonics seeks IPO funding as working capital nearly doubles

SJP Ultrasonics plans to use Rs 4.92 crore of IPO net proceeds for FY 2027 working capital, when projected net working capital is Rs 36.1015 crore, versus Rs 18.2095 crore in FY 2026. The near-doubling reflects inventory held for 484 days in FY 2026, lengthening receivables and projected expansion in production.

Why is SJP Ultrasonics seeking IPO working-capital funding?

SJP Ultrasonics is seeking IPO working-capital funding because its FY 2027 net working-capital requirement is projected at Rs 36.1015 crore, almost twice the Rs 18.2095 crore reported in FY 2026. Net working capital means current assets minus current liabilities. For FY 2027, the company projects Rs 49.2421 crore of current assets and Rs 13.1407 crore of current liabilities.

SJP Ultrasonics proposes to meet Rs 31.1815 crore of its FY 2027 requirement through internal accruals and Rs 4.92 crore through IPO proceeds. The company says it ordinarily funds working capital through bank and financial-institution facilities and internal accruals. Total indebtedness stood at Rs 6.4946 crore on September 10, 2026, while projected short-term borrowings decline from Rs 5.6764 crore in FY 2026 to Rs 0.5723 crore in FY 2027.

The requirement is projected to rise further to Rs 42.8183 crore in FY 2028, although the stated IPO allocation applies only to FY 2027. The FY 2027 increase is driven by projected inventory of Rs 19.32 crore, trade receivables of Rs 19.74 crore and other current assets of Rs 6.805 crore. These current assets must convert into cash broadly as assumed for the internal-accrual contribution to fund the projected gap.

What keeps SJP Ultrasonics inventory above 450 days?

SJP Ultrasonics projects inventory holding of 454 days in FY 2027 and 451 days in FY 2028, after 484 days in FY 2026. The company makes customised plastic-joining and industrial-automation equipment, requiring inventory across raw materials, fabrication, assemblies and finished goods until customer-specific delivery, inspection and site-readiness requirements are met.

Inventory was Rs 16.4303 crore at March 31, 2026, compared with Rs 10.6025 crore in FY 2025 and Rs 8.7915 crore in FY 2024. FY 2026 inventory comprised Rs 6.7424 crore of raw materials and components, Rs 5.5893 crore of work-in-progress, or WIP, and Rs 4.0986 crore of finished goods. The company describes average stages of 163 days for raw-material storage, 148 days for WIP and 225 days for finished-goods storage.

Inventory days fell from 668 in FY 2024 to 470 in FY 2025, then rose to 484 in FY 2026. SJP Ultrasonics attributes the FY 2024 level to customised, engineering-intensive production, inventory build-up before orders executed in the second half of the year, and longer WIP timelines. Its stated plan is to hold inventory at no more than 460 days in FY 2027 and FY 2028 while adding capacity.

The projected inventory balance nevertheless rises to Rs 19.32 crore in FY 2027 and Rs 25.85 crore in FY 2028. This means lower holding days do not imply lower cash tied up in stock, because the company expects a larger operating scale. Achieving the projected days depends on procurement, production and delivery schedules moving in line with the company’s estimates.

Why have SJP Ultrasonics receivable days lengthened?

SJP Ultrasonics reported trade-receivable days of 147 in FY 2026, up from 136 in FY 2025 and 87 in FY 2024. The company attributes the longer cycle to milestone-based billing for customised machinery and greater revenue concentration near the financial year-end. It projects 131 receivable days for FY 2027 and 129 days for FY 2028.

The billing mechanism includes an advance when a purchase order is issued, subsequent payments during manufacturing or assembly, a payment after machine trials or pre-dispatch inspection, and final payment after installation, commissioning and customer acceptance. SJP Ultrasonics says trade receivables are recognised when the machine-trial milestone is billable and collectible. Customer inspections, site readiness, technical validation and internal approvals can extend final payment beyond four months.

FY 2025 shows the effect of late-year billing. SJP Ultrasonics says 57.12% of FY 2025 revenue was generated in the fourth quarter, compared with 30.48% in FY 2024. Trade receivables were Rs 11.6257 crore at March 31, 2025, and Rs 7.9664 crore, or 68.52%, had been realised by November 20, 2025; the company said the remaining amount mainly comprised retention linked to contractual milestones or post-supply obligations.

Receivables are projected to increase from Rs 9.7819 crore in FY 2026 to Rs 19.74 crore in FY 2027, before easing to Rs 19.25 crore in FY 2028. The projected reduction in receivable days therefore relies on higher projected revenue and collections occurring under the assumed project-execution schedules. SJP Ultrasonics also says it intends to extend credit to customers to build relationships and support sales growth.

How do expansion plans affect SJP Ultrasonics’ cash cycle?

SJP Ultrasonics projects revenue from operations of Rs 42 crore in FY 2027, following Rs 31.60 crore in FY 2026, Rs 21.0573 crore in FY 2025 and Rs 15.2107 crore in FY 2024. Its disclosed strategy includes expanding geographical reach, broadening its presence among original equipment manufacturers, or OEMs, and optimising production capacity. Higher revenue is therefore accompanied by larger projected inventory, receivables, supplier advances and indirect-tax credits.

Following planned machinery purchases, installed capacity is estimated at 2,150 units in FY 2026-27, with estimated production of 2,050 units and utilisation of 95%. For FY 2027-28, SJP Ultrasonics estimates 2,300 units of capacity, 2,150 units of production and 93% utilisation. The company links additional working-capital deployment to higher production volumes and the need to hold materials before customer collections are received.

Trade payables provide a smaller timing offset than in FY 2024. Payable days declined from 210 in FY 2024 to 106 in FY 2025 and 89 in FY 2026, while SJP Ultrasonics projects 110 days in FY 2027 and 107 days in FY 2028. It says certain specialised raw materials may require upfront payment or shorter credit terms, creating a cash-flow mismatch between supplier payments and customer collections.

SJP Ultrasonics plans to diversify its supplier base geographically and seek suppliers able to provide larger quantities, lower lead times and more favourable terms. FY 2027 trade payables are projected at Rs 4.56 crore, compared with Rs 2.402 crore in FY 2026, while short-term borrowings are projected at Rs 0.5723 crore in both FY 2027 and FY 2028. The cash-cycle assumptions consequently depend on supplier terms improving while inventory and receivable targets are met.

Conclusion

SJP Ultrasonics’ Rs 4.92 crore IPO allocation is designed to fund part of a defined FY 2027 working-capital requirement, rather than replace internal funding. The projected rise from Rs 18.2095 crore in FY 2026 to Rs 36.1015 crore in FY 2027 is tied to a customised manufacturing cycle, inventory projected at Rs 19.32 crore and receivables projected at Rs 19.74 crore.

The next measure to watch is delivery against SJP Ultrasonics’ disclosed FY 2027 assumptions of 454 inventory days, 131 receivable days, 110 payable days and Rs 42 crore of revenue from operations. No agency has appraised the issue objects, and the company says its Board and Audit Committee will monitor net-proceeds use, with half-yearly disclosures to the Audit Committee and stock exchange.