IPO closes on 21 Aug'25
Patel Retail Ltd
Minimum Investment
₹ 14,790 / 58 shares
Grey market premium
₹ 46 (18% premium)
Our Verdict:
Neutral
- Patel Retail Ltd (PRL) has demonstrated strong earnings growth over the past three years, though its revenue trajectory has been inconsistent. The company faces risks from regional concentration, high working capital needs and stiff competition from both organised and unorganised players.
- In terms of valuation, the IPO appears attractively priced at a P/E of 25 based on FY25 earnings. Additionally, the grey market premium (GMP) indicates a positive listing on the stock exchanges.
- Given these factors, investors with a higher risk tolerance may consider subscribing for potential listing gains. For those with a long-term investment horizon, it's important to closely monitor the company’s ability to address its geographic concentration, underutilization and debt concerns before making a decision.
About the company
Founded in
13 Jun'07
Managing director
Dhanji Patel
- PRL is a value-focused retail supermarket chain with presence in tier-III cities and suburban areas. As of May 31, 2025, it operates 43 stores covering ~1.79 lakh sq. ft. The business has two segments—Retail and Non-Retail.
- The Retail segment includes private labels such as Patel Fresh (pulses, ready-to-cook items), Indian Chaska (spices, ghee, papad), Blue Nation (men’s wear) and Patel Essentials (home products), along with reputed third-party and unbranded goods. It also operates two exclusive apparel outlets under the R Choice brand.
- The Non-Retail segment covers manufacturing, processing and trading, including domestic and international trade of FMCG, household goods, kitchen appliances and bulk commodities like rice, sugar, pulses, and edible oils.
STRENGTHS
- Financial Performance: Although revenue has declined, profitability has grown, with a CAGR of 20% in in EBITDA and 24% in net profit between FY23-25.
- Return Metrics: PRL demonstrates healthy operational efficiency, with a Return on Equity (RoE) of 19.02% and a Return on Capital Employed (RoCE) of 14.43% in FY25.
- Expanding Margins: Profit margins have consistently strengthened, with the EBITDA margin reaching 7.61% and the net profit margin improving to 3.08% by FY25.
- Diverse Product Offering: PRL sells a wide range of products across various categories, including Food, Non-Food (FMCG), General Merchandise and Apparel. Each retail store offers over 10,000 SKUs, highlighting the extensive variety available to customers.
RISK FACTORS
- Geographic Concentration: PRL's retail stores are concentrated in Maharashtra, particularly in the Thane and Raigad districts, which increases vulnerability to localized risks such as changes in state policies, regulatory actions and economic slowdowns. In FY25, retail revenue accounted for 44.95% of total revenue.
- Decline in Non-Retail Revenue: Revenue from the Non-Retail Business (bulk trading of agricultural produce) dropped sharply from ~Rs 394 crore in FY23 to ~Rs 51.33 crore in FY25. This was mainly due to reduced revenue from bulk sugar exports, impacted by export restrictions imposed by the Government of India. This highlights the risks tied to regulated and policy-sensitive sectors.
- Underutilization of Facilities: Capacity utilization was low across several facilities in FY25, with Facility 1 at 58.92%, Facility 2 at just 10.49%, Facility 3 Unit I at 13.54%, Unit II at 15.66%, Unit IV at 14.05% and Unit V at 4.42%. This underutilization indicates inefficiencies and potential fixed-cost burdens.
- High Debt Levels: PRL has a high debt-to-equity ratio of 1.34 in FY25, posing funding risks. Any further increase in borrowings could negatively impact the company’s financial stability, business operations, and results.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 242.76 crore
Fresh Issue
₹ 215.91 crore
OFS
₹ 25.55 crore
Price range
₹ 237 - 255
Lot size
58 shares
Issue Objective
The net proceeds from the fresh issue will be utilized for:
- Repayment/prepayment of certain borrowings availed by the company;
- Funding the working capital requirements of the company; and
- General corporate purposes.
Dates
Bidding open
19 Aug'25
Bidding close
21 Aug'25
Allotment date
22 Aug'25
Refund date
25 Aug'25
Listing
26 Aug'25
IPO Reservations
Qualified institutional buyers
<30%
Non-institutional investors
>25%
Retail individual investors
>45%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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