SS Retail earmarks IPO proceeds as inventory days rise to 62

SS Retail plans to use Rs 241.35 crore of net fresh-issue proceeds to part-fund working capital in Fiscal 2027 and Fiscal 2028, principally for inventory. SS Retail projects inventory of Rs 670.01 crore and inventory holding of 62 days of cost of goods sold by March 31, 2028, compared with Rs 311.44 crore and 55 days at March 31, 2026.

Why is SS Retail earmarking IPO proceeds for working capital?

SS Retail is earmarking Rs 241.35 crore of IPO proceeds for working capital because inventory purchases for its stores and warehouses are its primary stated funding requirement. The Board approved the Fiscal 2027 and Fiscal 2028 business plan, financial projections and funding pattern on September 8, 2026. The inventory covered includes mobile phones, accessories, smart televisions, laptops and tablets.

The working-capital allocation is separate from SS Retail's planned store fit-outs. SS Retail estimates fit-out expenditure of Rs 5.81 crore for 57 stores in Fiscal 2027 and Rs 6.64 crore for 58 stores in Fiscal 2028, compared with Rs 241.35 crore proposed for incremental working capital across the two fiscal years. Fit-outs comprise furniture and fixtures, office equipment, and computers and information-technology systems.

The fresh-issue proceeds are intended to fund only part of the requirement and are not intended to repay short-term borrowings. SS Retail projects total working-capital requirements of Rs 534.75 crore at March 31, 2027 and Rs 713.19 crore at March 31, 2028. Its projected funding includes internal accruals of Rs 283.88 crore and Rs 371.65 crore, respectively, and short-term borrowings of Rs 130.19 crore and Rs 100.19 crore.

How quickly is SS Retail's inventory requirement increasing?

SS Retail projects inventory to increase from Rs 311.44 crore at March 31, 2026 to Rs 498.13 crore at March 31, 2027 and Rs 670.01 crore at March 31, 2028. The projected two-year increase is Rs 358.57 crore. Inventory is the largest projected current-asset category in both forecast years, exceeding trade receivables, other financial assets and other current assets.

Standalone inventory had already risen from Rs 140.50 crore at March 31, 2024 to Rs 210.16 crore at March 31, 2025 and Rs 311.44 crore at March 31, 2026. Over the same period, SS Retail's standalone store count increased from 236 to 347 and then 469. Standalone revenue from operations rose from Rs 1,206.74 crore in Fiscal 2024 to Rs 1,597.93 crore in Fiscal 2025 and Rs 2,334.23 crore in Fiscal 2026.

Inventory represented about 85% of SS Retail's Rs 366.92 crore total current assets at March 31, 2026, based on the disclosed standalone balance-sheet amounts. Net working-capital requirement, defined as current assets excluding cash and cash equivalents and other bank balances less current liabilities excluding short-term borrowings, was Rs 296.66 crore at that date. This compared with Rs 222.72 crore at March 31, 2025 and Rs 155.69 crore at March 31, 2024.

Why are SS Retail inventory days projected to reach 62?

SS Retail projects inventory days to reach 58 in Fiscal 2027 and 62 in Fiscal 2028 because it plans further store openings, deeper penetration in Karnataka and Madhya Pradesh, and entry into Chhattisgarh. Inventory days measure inventory against cost of goods sold, which SS Retail defines as purchases of traded goods plus changes in inventories of traded goods.

The 62-day estimate is seven days above the 55 actual days at March 31, 2026. Inventory days were 48 in Fiscal 2024, increased to 55 in Fiscal 2025 and remained at 55 in Fiscal 2026. SS Retail attributes the initial increase to extensive store openings, expansion into Karnataka and Madhya Pradesh, and the inventory needed to introduce Mobile Exchange Wala, its shop-in-shop brand, within existing stores.

Premiumisation is another stated driver of higher inventory value. SS Retail says higher-end models have higher procurement costs even when inventory levels are similar. It also expects Mobile Exchange Wala to form a larger share of business and require a wider product range, while a planned expansion in accessories and other electronic items is expected to add to stocking requirements.

Fiscal year-end holding levels may also be affected by seasonal demand. SS Retail says stock tends to be higher at fiscal year-end to serve Gudi Padwa, which falls in March or April. The 62-day projection therefore depends on the planned store rollout, geographic expansion and category strategy proceeding as approved, while product availability is maintained across the network.

How does SS Retail's projected funding mix differ from its past?

SS Retail's projected funding mix adds fresh-issue proceeds to internal accruals and bank borrowings, while historical working capital was funded through borrowings and internal accruals. At March 31, 2026, short-term borrowings funded Rs 160.60 crore of the Rs 296.66 crore working-capital requirement, while internal accruals funded Rs 136.05 crore. There was no IPO-proceeds component in the historical funding pattern.

For March 31, 2027, SS Retail projects Rs 120.67 crore from net fresh-issue proceeds, Rs 130.19 crore from short-term borrowings and Rs 283.88 crore from internal accruals. For March 31, 2028, it projects another Rs 120.67 crore from fresh-issue proceeds, Rs 100.19 crore from borrowings and Rs 371.65 crore from internal accruals. The stated plan does not use IPO proceeds to repay short-term borrowings.

Current liabilities are projected to be Rs 47.57 crore at March 31, 2027 and Rs 62.97 crore at March 31, 2028, compared with Rs 70.26 crore at March 31, 2026. Trade payables are assumed at one day of cost of goods sold in each forecast year, versus eight days in Fiscal 2026. SS Retail attributes the Fiscal 2026 level to year-end purchases ahead of Gudi Padwa and Akshaya Tritiya, as well as the timing of vendor payments.

What assumptions support SS Retail's working-capital plan?

SS Retail assumes trade receivables of three days of revenue from operations in Fiscal 2027 and Fiscal 2028, matching Fiscal 2026 and the average of the preceding three fiscal years. SS Retail says customers generally settle payments at purchase and credit-financing partners typically release funds within the stated periods. Corporate sales may have longer receivable cycles, but SS Retail says their share of revenue has not been significant.

Other financial assets are projected at two days of revenue in each forecast year, while other current assets are projected at three days. Other financial assets principally comprise supplier claims for purchase-linked incentives, sales schemes, quarterly performance programmes and credit notes. SS Retail expects direct tie-ups with brands to improve supplier terms and make credit-note settlement and reconciliation more predictable.

Lease liabilities are assumed at three days of cost of goods sold in Fiscal 2027 and Fiscal 2028, compared with two days in Fiscal 2026. Under Indian Accounting Standard 116, lease liabilities are recognised as the present value of future rental payments. SS Retail attributes the projected increase to new stores and renewals of lease deeds for stores where terms have expired, meaning variation in these balances could alter the funding requirement.

Conclusion

SS Retail's disclosed use of proceeds identifies inventory financing, rather than store fit-outs, as the main capital requirement in its expansion plan. The company projects working-capital requirement to rise from Rs 296.66 crore at March 31, 2026 to Rs 713.19 crore at March 31, 2028, while inventory is projected to increase by Rs 358.57 crore and inventory days rise from 55 to 62.

The disclosed plan calls for 57 new stores in Fiscal 2027 and 58 in Fiscal 2028, deeper presence in Karnataka and Madhya Pradesh, and entry into Chhattisgarh. What follows will depend on whether premium products, Mobile Exchange Wala and a broader accessories and electronics range require the forecast inventory levels, while SS Retail has stated that any higher-than-estimated fit-out costs would be funded through internal accruals or future debt from lenders.