S. Chand Group lifts inventory to Rs 217.8 crore in Q2FY27

S. Chand Group raised total inventory to Rs 217.8 crore in September 2026 after bringing forward paper purchases because management expects double-digit paper-price inflation, a temporary working-capital step intended to support its FY27 EBITDA margin guidance of 17% to 19%.

Why did S. Chand Group bring forward paper purchases?

S. Chand Group brought forward raw-paper purchases in Q2FY27 because management said it was seeing double-digit inflation in paper prices ahead. The company described the decision as a short-term strategic move that should help it deliver its guided margins for FY27, when it has set an earnings before interest, tax, depreciation and amortisation, or EBITDA, margin band of 17% to 19%.

The timing matters because Q2FY27 was described as the smallest revenue quarter of the year for the School and Higher Education segments. S. Chand Group said this is normally the quarter in which it executes key marketing initiatives for the upcoming sales season, while the paper-buying decision shifted inventory and working-capital use forward rather than indicating an inventory policy intended to persist through the year.

Management also moved certain marketing expenditure from Q3 to Q2FY27. Those expenses were Rs 5 crore to Rs 6 crore, and S. Chand Group said they should be considered when comparing other expenses in H1FY27 with H1 last year. The spending shift and the paper purchases both place costs or cash requirements earlier in the year, although they involve different operating lines.

How much did S. Chand Group’s inventory increase?

S. Chand Group’s total inventory increased to Rs 217.8 crore at September 2026, from Rs 156.5 crore at September 2025 and Rs 181.8 crore at September 2024. The year-on-year increase was led by both raw materials and finished goods, with management specifically linking raw-material growth to advanced paper procurement.

Raw-material inventory rose by Rs 28.6 crore from September 2025 to September 2026, to Rs 75.5 crore. S. Chand Group said this increase reflected the decision to prepone raw-paper purchases from Q3 to Q2, rather than a stated change in its expected volume of paper consumption.

Finished-goods inventory rose by Rs 32.7 crore year on year to Rs 142.3 crore. S. Chand Group said it had advanced a portion of printing from Q3 to Q2 in order to smooth the printing load in later quarters. Thus, the total-inventory increase combined an input-cost response with an operational timing change in production.

Are S. Chand Group’s inventory days higher than before?

S. Chand Group’s total inventory days were 307 at September 2026, up from 237 at September 2025 but within the historical range disclosed from September 2022 to September 2024. Management said raw-material, finished-goods and total inventory were higher in absolute terms, while inventory days remained comparable with historical levels.

Finished-goods inventory days increased to 201 in September 2026 from 166 a year earlier, while raw-material days rose to 106 from 71. Both measures remained below their September 2022 levels of 221 days and 143 days respectively, which is the basis for management’s view that the current levels are comparable with the company’s disclosed history.

The distinction between value and days is material in this case. Total inventory value climbed by Rs 61.3 crore year on year, while total days rose by 70 days; the company attributes the movement to purchases and printing being brought into Q2FY27. Management expects the effect on inventory days and working-capital days to normalise by Q4.

What happened to S. Chand Group’s working capital and cash?

S. Chand Group’s net working-capital days increased to 147 in Q2FY27 from 123 in Q2FY26, primarily because inventory was higher after paper purchases were moved from Q3 to Q2. Net working capital days had been 171 in Q2FY23, 135 in Q2FY24 and 136 in Q2FY25, placing Q2FY27 below the earliest period shown but above the preceding three years.

Receivable days also rose to 95 in Q2FY27 from 81 in Q2FY26. They were 105 in Q2FY23, 83 in Q2FY24 and 69 in Q2FY25; management said it expects receivable days to improve going forward. The presentation does not quantify the expected improvement or provide a specific collection target.

Despite the higher inventory requirement, S. Chand Group reported a net cash balance of Rs 9.5 crore at the end of Q2FY27. This was lower than Rs 23.5 crore in Q2FY26 and Rs 9.3 crore in Q2FY25, while September 2023 was reported at zero net cash and September 2022 at negative Rs 71.1 crore. Management said the company remained net debt free and was on track to be net debt free for three quarters in FY27.

What does S. Chand Group expect for FY27?

S. Chand Group expects the inventory and net working-capital effects of the advanced paper purchases to normalise by Q4FY27. That expectation is central to the trade-off: management is accepting higher Q2FY27 inventory and working-capital days while seeking to protect margins from anticipated paper-price inflation.

For FY27, management has guided for operating-revenue growth of 10% to 15%, excluding acquisitions, alongside the 17% to 19% EBITDA-margin band. It also targets content-licensing, or AI dataset, revenue above Rs 40 crore. Content-licensing revenue billed in H1FY27 was Rs 14.7 crore, compared with Rs 14.2 crore in H1FY26.

Management said it looks forward to full adoption of new-syllabus books in the FY27 sales season. The stated plan also includes a focus on working-capital metrics and cash flows, as well as evaluation of inorganic opportunities to enhance the product portfolio. The presentation does not identify an acquisition, a purchase price or a timetable for any such opportunity.

Conclusion

S. Chand Group’s Rs 217.8 crore September 2026 inventory reflects a deliberate pull-forward of paper purchases and some printing, not simply a reported stock build without explanation. Compared with September 2025, raw-material inventory rose Rs 28.6 crore and finished-goods inventory rose Rs 32.7 crore, while net working-capital days increased from 123 to 147 in Q2FY27.

The next disclosed checkpoint is Q4FY27, when management expects inventory and net working-capital days to normalise. Readers can also track whether S. Chand Group delivers its 17% to 19% EBITDA-margin band, 10% to 15% operating-revenue growth excluding acquisitions, and content-licensing revenue above Rs 40 crore for FY27.