SS Retail Plans 240 New Stores but Funds Fit-Outs at 115

SS Retail plans to open 240 new stores across Fiscal 2027 and Fiscal 2028, but proposes to use IPO net proceeds for fit-outs at only 115 locations. The company has allocated Rs 12.453 crore for those 115 stores, while it says the remaining 125 planned openings will be funded through internal accruals and/or borrowings.

Why will SS Retail fund fit-outs at only 115 of 240 new stores?

SS Retail will deploy IPO net proceeds for 57 new stores in Fiscal 2027 and 58 in Fiscal 2028, against its stated target of 120 openings in each fiscal. The fit-out allocation is Rs 5.813 crore in Fiscal 2027 and Rs 6.64 crore in Fiscal 2028. The company says expenditure for the additional stores planned in the two years will be met through internal accruals and/or borrowings.

The Rs 12.453 crore fit-out allocation is separate from SS Retail’s larger working-capital proposal. The company proposes to use Rs 241.347 crore of net proceeds to part-fund incremental working-capital requirements in Fiscal 2027 and Fiscal 2028, principally for inventory. The fresh issue is proposed at up to Rs 360 crore before offer-related expenses, while the amount earmarked for general corporate purposes cannot exceed 25% of gross proceeds under the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations.

The distinction also reflects SS Retail’s store-opening model. A company-owned and company-operated store, or COCO store, is leased or owned and run by SS Retail, which bears full fit-out expenditure. In a company-owned and franchisee-operated store, or COFO store, SS Retail leases the site and the franchisee operates it; in a franchisee-owned and franchisee-operated store, or FOFO store, the franchisee leases and operates the site. SS Retail owns the inventory under all three models, but franchisees bear part of fit-out costs in COFO and FOFO stores.

How does SS Retail’s franchise model reduce company-funded expansion?

SS Retail’s disclosed plan for the 115 IPO-funded stores is predominantly franchise-led, with 105 stores proposed under COFO or FOFO arrangements and 10 under the COCO model. COFO accounts for 95 planned stores, while FOFO accounts for 10 small-format stores. As a result, 91.30% of the proposed IPO-funded store count uses a model in which franchise partners share responsibility for fit-outs.

The proposed mix follows SS Retail’s existing network composition. At March 31, 2026, the company operated 503 stores, including 316 COFO stores, 103 FOFO stores and 84 COCO stores. COFO represented 62.82% of the network and FOFO represented 20.48%, meaning the two franchise-linked models together accounted for 83.30% of stores.

COFO also represented the largest revenue contribution in Fiscal 2026. COFO stores generated Rs 1,565.647 crore, or 66.59%, of consolidated revenue from operations of Rs 2,351.031 crore. COCO contributed Rs 500.743 crore, or 21.30%, and FOFO contributed Rs 178.617 crore, or 7.60%. The expansion structure therefore depends on SS Retail continuing to appoint a separate franchise partner for each COFO or FOFO location and agreeing the division of fit-out expenditure through franchise agreements.

What will SS Retail spend Rs 12.453 crore on?

SS Retail will use the Rs 12.453 crore allocation for fit-outs comprising furniture and fixtures, office equipment, and computers and information-technology systems. Furniture and fixtures include civil work, furniture, boards, signage and branding. Office equipment includes heating, ventilation and air-conditioning systems, closed-circuit television cameras, motion sensors and burglar alarms.

The planned format mix moves towards more large stores in Fiscal 2028. Fiscal 2027 includes 24 large, 21 medium and 12 small stores, while Fiscal 2028 includes 32 large, 20 medium and six small stores. SS Retail defines a large-format store as exceeding 800 square feet, a medium-format store as 400 to 800 square feet, and a small-format store as below 400 square feet.

The estimates assume average areas of 1,000 square feet for large stores, 600 square feet for medium stores and 300 square feet for small stores. Costs rise in Fiscal 2028 by Rs 2 lakh for large stores, Rs 1.6 lakh for medium stores and Rs 1.1 lakh for small stores. SS Retail attributes the increase over historical Fiscal 2026 fit-out costs to inflation and planned upgrades, including higher-quality boards, signage, security cameras, motion detectors, display cases and lighting.

The estimates exclude goods and services tax and are based on a quotation dated December 15, 2025 from The Red Door Studio. SS Retail had not placed orders for the proposed fit-outs when it filed its red herring prospectus, and had not entered a definitive agreement with the interior designer. Actual expenditure may therefore change when orders are placed in Fiscal 2027 and Fiscal 2028.

Where will SS Retail open its IPO-funded stores?

SS Retail proposes to open the 115 IPO-funded stores across Maharashtra, Karnataka, Madhya Pradesh and Chhattisgarh, with Maharashtra accounting for 54 locations. Karnataka is allocated 27 stores, Madhya Pradesh 22 and Chhattisgarh 12. Maharashtra’s 54 stores represent 46.96% of the disclosed 115-store programme.

Mumbai has the largest proposed city allocation, with 18 stores across the two fiscal years, followed by Pune with nine. Bengaluru and Raipur are each planned for seven stores, while Jabalpur and Gwalior are each planned for five. Chhattisgarh is the adjacent new geography identified by SS Retail, whose operations as of March 31, 2026 covered Maharashtra, Karnataka, Madhya Pradesh, Goa and Gujarat.

The city list is indicative rather than a list of secured sites. SS Retail had not identified precise store locations or entered lease, leave-and-licence or property-purchase agreements for these stores. The company says it will assess location demographics, nearby businesses, site visibility, customer footfall, accessibility, lease rentals, infrastructure and regulatory developments before deciding individual sites.

The plan would extend an already rapid network increase. SS Retail’s store count rose from 236 stores across 109 cities at March 31, 2024 to 503 stores across 215 cities at March 31, 2026, representing a 45.99% compound annual growth rate in net store additions. By July 31, 2026, the network had reached 536 stores occupying 2,60,597 square feet, compared with 2,41,365 square feet at March 31, 2026.

What could change SS Retail’s funding and store-opening plan?

SS Retail’s funding and store-opening plan may change because the stated costs are management estimates rather than project costs appraised by a bank or financial institution. The fit-out quotation has a stated validity period and may be revised for inflation, commercial terms or other cost escalations. Store format, business model, geographic allocation and timing may also change with market conditions, site availability and commercial evaluations.

If total fit-out expenditure exceeds Rs 12.453 crore, SS Retail says additional costs will be met through internal accruals, future debt from lenders or other available funding sources. If scheduled net-proceeds deployment is not completed in a fiscal year because of the timing of the offer, market conditions or commercial considerations, unutilised amounts may be carried into the following fiscal in accordance with applicable law.

Working-capital projections show the separate funding demand created by a larger network. SS Retail estimates working-capital requirements of Rs 534.748 crore at March 31, 2027 and Rs 713.189 crore at March 31, 2028, compared with Rs 296.658 crore at March 31, 2026. Inventory is projected to rise from Rs 311.438 crore at March 31, 2026 to Rs 498.127 crore at March 31, 2027 and Rs 670.006 crore at March 31, 2028, with projected inventory holding periods increasing from 55 days in Fiscal 2026 to 58 days and 62 days.

Conclusion

SS Retail’s 240-store programme is structured around selective IPO-funded fit-outs rather than equal funding for every opening. The company proposes Rs 12.453 crore for 115 stores, with 105 of those locations planned under franchise-linked COFO and FOFO models that require partners to bear part of fit-out expenditure. The remaining 125 planned openings and any excess fit-out costs are intended to rely on internal accruals and/or borrowings.

The next developments to watch are site identification, franchise agreements and final fit-out orders for the 115 disclosed locations. SS Retail has stated that exact sites, formats, business models and costs may change, while any unutilised scheduled proceeds may be deployed in the following fiscal under applicable law.