S S Retail

S S Retail

By Geetanjali Kedia
about 1 day ago

IPO Size: Rs. 500 cr

  • Fresh Issue of Rs. 360 cr (11% dilution) for (i) working capital Rs. 241 cr (ii) capex of Rs. 12 cr for 87 new stores till FY28E
  • Offer for Sale (OFS) of Rs. 140 cr, 50% by promoter (76% to drop to 65%) and 50% by an individual shareholder (5% to reduce to 2% post IPO)

Price band: Rs. 403-424 per share

M cap: Rs. 3,153 cr (IPO is 16% of m cap)

IPO Date: Wed 16th Sep to Fri 18th Sep 2026, Listing Wed 23rd Sep 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

 

West India’s Largest Mobile Retail Chain

SS Retail is a Kolhapur-headquartered multi-brand retailer of mobile phones and accessories, operating 536 stores, mostly in tier 2 and 3 cities, of which ~90% are in Maharashtra and balance in Karnataka, Madhya Pradesh, Goa, Gujarat.

63% of the stores are on Company Owned Franchisee Operated (COFO) model, accounting for 66% of FY26 topline of Rs. 2,351 cr while 17% stores on Company Owned Company Operated (COCO) model contributed to 21% of topline. This contribution from Franchises Owned Franchisee Operated (FOFO) stores is only 8%, lower than count mix of 20%.  

 

Slim Margins

Company’s topline has grown from Rs. 832 cr in FY23 to Rs. 2,351 cr in FY26, implying 41% revenue CAGR, as store count increased from 181 as of 31.3.23 to 503 as of 31.3.26. For FY26, EBITDA was Rs. 125 cr, translating into 5.3% EBITDA margin while PAT of Rs. 59 cr implies a slim net margin of 2.5%. FY26 EPS stood at Rs. 9.1 on equity of Rs. 66 cr (face value Rs. 10 each). Net worth stood at Rs. 226 cr with net debt to EBITDA of 1.05 times.

 

Weaking Business Parameters

Same stores sales growth (SSSG) contracted from 13.4% in FY25 to 11.1% in FY26. For FY23 and FY24, company’s RHP and DRHP mention SSSG as NA! We wonder how ‘not applicable’ even applies to SSSG as company was incorporated 10 year ago having 181 stores as of 31.3.23. Is this a means to withheld unfavorable information?

The inventory turnover ratio, the most important parameter for any retail business, contracted from 10.5x in FY23 to 8.8x in FY26. While 8.8x is still healthy, vis-à-vis other consumer durable retailers’4-7x due to fast moving nature of mobile phones, the decline will impact return rations going forward.

Gross debt swelled from Rs. 161 cr as of 31.3.26 to Rs. 261 cr as of 31.7.26. As business is highly working capital intensive, with 46 days or Rs. 300 cr working capital in FY26, against a net worth of Rs. 226 cr. Going forward, RoE may contract to mid-teens, from 30-31% presently. Company estimates to fund Rs. 241 cr of Rs. 427 cr incremental working capital from IPO proceeds, with balance requiring debt as internal accruals may not suffice.

 

50% Store Addition till FY28E

Company guides 120 new stores per year in FY27E and FY28E, fit-out for only half to be funded via IPO proceeds. While margin may not improve, partly due to huge competition from online commerce (e-commerce and emerging quick commerce), profit in absolute terms has potential to rise with new store addition planned over the next 2 years.

  

Fully Priced

Market Cap of Rs. 3,153 cr and Enterprise Value of Rs. 3,384 cr leads to a PE multiple of nearly 37x, on FY2YE estimated EPS of above Rs.11.50. 

It will be imprudent to compare SS Retail with consumer electronics retailers operating on lower inventory turn, highly seasonal business models, such as Bihar-based Aditya Vision (4.4% net margin on Rs. 2,700 cr topline) and Telangana-based Electronics Mart (Rs. 7,200 cr revenue), both ruling near 60x PE multiple.

SS Retail’s closest comparable peer is Gujarat based Bhatia Communications, operating 363 stores for mobile phone, although much smaller topline of Rs. 600 cr, but higher net margin of 2.9%. Bhatia’s 7.4x inventory turn is also comparable to SS Retail, with its PE multiple being 25x. Accounting for higher topline and marginally better inventory turn, but slimmer net margin, SS Retail’s IPO is fully priced at 37x PE.

Online competition will increasingly keeping company’s margin under check. While store count addition is a positive, the declining inventory turn and rising debt are not comforting. A small cap stock with presence concentrated in Maharashtra keeps risks higher than potential return.