IPO Details
- IPO opening date: August 19, 2025
- IPO closing date: August 21, 2025
- IPO size: Rs 242.76 crore Fresh issue size: Rs 217.21 crore ; Offer for Sale (OFS) size: Rs 25.55 crore
- Price band: Rs 237 to Rs 255
- Minimum bid lot: 58 equity shares
- Allocation to Qualified Institutional Buyers (QIBs): 30% Allocation to NIIs: 25% A;llocation to Retail: 45%
- Book Running Lead Manager: Fedex Securities Private Limited
- Registrar: Bigshare Services Private Limited
About the Company
- Founder Dhanji Raghavji Patel, started with a retail store in 1990 and the first self-service store in 2003. Patel Retail was incorporated in 2008, venturing into exports in 2010 and processing/manufacturing in 2014. The company recently launched its “Indian Chaska” brand for blended spices.
- Main products/services: Focus on value retailing with an extensive product range including staples, groceries, whole and powder spices, peanuts, and mango pulp. Engaged in export and domestic trading of bulk agriculture products and third-party brands.
- Operates 43 retail stores across 17 cities in the MMRDA region, covering approximately 176,000 square feet. It has two processing facilities and one agri-cluster comprising five units. Four stores are owned, and the rest are leased.
- Promoters: Dhanji Raghavji Patel, Bechar Raghavji Patel, Hiren Bechar Patel, and Rahul Dhanji Patel. The promoters and promoter group collectively held 98% of the pre-offer equity share capital, expected to decrease to around 70% post-IPO.
Financials
| Particulars (Rs. Crore) | FY25 | FY24 | FY23 |
|---|---|---|---|
| Revenues | 820.69 | 814.19 | 1,018.55 |
| EBITDA | 62.43 | 55.84 | 43.24 |
| EBITDA Margin | 7.61% | 6.86% | 4.25% |
| Net Profit | 25.28 | 22.53 | 16.38 |
| Net Profit Margin | 3.08% | 2.77% | 1.61% |
Post-IPO market capitalization: Rs 852 crore Market capitalization to sales (FY25): 1.0 times P/E (FY24): 37.77 times P/E (FY25): 34 times (based on post-issue equity)
Observation on results: Net sales in FY25 saw a marginal increase, The operating profit margin improved, leading to a 12% increase in net profit. However, the company’s inventory turnover significantly halved in FY25, and a substantial portion of its debtors were outstanding for over six months.
Anchor Investors
Patel Retail Ltd. raised ₹43.46 crore from six anchor investors for its IPO. The top anchor investors and their percentage allocations are: Chanakya Opportunities Fund (13.81%), BNP Paribas Financial Markets (3.07%), Maybank Securities (6.31%), Beacon Stone Capital VCC Beacon Stone I (13.81%), Saint Capital Fund (11.51%), and Pine Oak Global Fund (11.51%). There are no additional anchor investors beyond these six. No allocation was made to mutual funds
Salient Points
- Use of funds: The fresh issue proceeds will be used to fund working capital requirements (Rs 109 crore) and repay/prepay certain borrowings (Rs 59 crore), with the remaining amount allocated for general corporate purposes.
- Business scenario: The company emphasizes value retailing and has a broad product range to attract lower-middle and middle-class consumers. Stores are strategically located in residential areas for easy access and cater to both bulk and daily needs. Business operations: Patel Retail operates three main verticals: retail, processing and manufacturing of private labels, and trading. It leverages backward integration through in-house food processing to enhance quality and reduce costs. Revenue model: In FY25, retail sales contributed 44.95% of revenue, processed sales 44.01%, and trading sales 10.13%. Domestic sales have increased, while export sales have declined due to geopolitical situations. Private label products accounted for 17.05% of retail sales in FY25. Business strategy: Plans include expanding the store network in Maharashtra and Pune, and considering organic or inorganic expansion into other cities in Western and Central India. The company aims to strengthen procurement, increase private-label market share, launch new products, and enhance brand awareness.
- Risks: The business is concentrated in Maharashtra, has a significant reliance on third-party suppliers, and is exposed to foreign exchange fluctuations. Concerns include declining inventory turnover and a substantial portion of outstanding debtors being overdue.
- Litigations: The company faces criminal and tax proceedings, with a total disputed amount of Rs 1,463.55 lakhs against it in FY25.
- Revenue split by region: In FY25, domestic sales accounted for 65.91% and export sales for 33.18%.
- Export/import: The company exports to over 35 countries, including the UK, US, Canada, Australia, Sri Lanka, Saudi Arabia, and Yemen.
- Capacity utilization: As of FY25, Facility 1 operated at 45.23%, Facility 2 at 8.53%, and Facility 3 at 16.07%. The company anticipates achieving Rs 600-650 crore in revenue with existing manufacturing facilities.
- Working capital and receivables trend: Inventory turnover decreased significantly in FY25. Outstanding debtors amounted to Rs 125 crore as of March 31, 2025, representing nearly two months of sales, with Rs 34 crore overdue for over six months. EV/EBITDA (FY25): 14.2 times.
Peers
| Company | FY25 Revenue (Rs. Cr) | PAT (Rs. Cr) | PAT Margin (%) | P/E | RoE (%) | D/E |
|---|---|---|---|---|---|---|
| Patel Retail Ltd | 821 | 25 | 3.1% | 33.7 | 7.2% | 0.5 |
| Vishal Mega Mart | 2,548 | 632 | 24.8% | 104 | 9.9% | 0.3 |
| Avenue Supermarts | 59,358 | 2,707 | 4.6% | 102.4 | 12.6% | 0.0 |
| Osia Hyper Retail Ltd. | 1,427 | 20 | 1.4% | 8 | 5.1% | 0.5 |
Management Commentary
Rahul Patel, the CEO, highlighted the company’s journey from humble beginnings to establishing a self-service retail chain, then venturing into exports and manufacturing to control quality and procurement. He emphasized the strategic “hub and spoke” model for efficient distribution in densely populated areas, enabling customized product offerings for diverse local communities. The management noted a shift in focus from exports to domestic sales due to geopolitical situations, which impacted trade receivables. They expressed optimism about the growth potential of their newly launched blended spices line and confirmed that existing manufacturing facilities have ample capacity for future revenue growth.
Opinion
- I may not apply to the IPO. This is due to:
- A good chunk of long outstanding debtors
- Retail share of revenues is < 50%. rest is B2B
- Small regional player.
- Though on PE basis looks attractive compared to peers like VMM but it is not comparable to these large 100% retail chains.
- Post IPO equity capital: Rs 33.4 crore P/E for FY24: 37.77 times P/E for FY25: 34 times
- Still based on tailwinds in retail, it can give listing gains.
- This post is exploratory and educational purposes only.
- Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.