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Patel Retail Click here for Rating Reckoner
Value-focused retail supermarket chain
(14 Aug 2025)

Patel Retail is a retail supermarket chain that operates primarily in tier-III cities and nearby suburban areas. The stores offer a wide range of products, including food, non-food (FMCG), general merchandise, and apparel catering to the needs of the entire family.

Operates on a value retail model aimed at serving the growing lower-middle, middle, and aspiring upper-middle income segments, with a business approach centered on providing quality goods at competitive prices.

Opened the first store under the brand “Patel’s R Mart” in Ambernath, Maharashtra, and has since expanded to suburban areas in Thane and Raigad districts. As of May 31, 2025, operates 43 stores across 17 cities and suburbs, with a total retail space of about 178,946 sq. ft.

The average annual revenue per store was Rs 87.82 crore in Fiscal 2025, Rs 87.79 crore in Fiscal 2024, and Rs 83.29 crore in Fiscal 2023.

The business operates across two segments: Retail and Non-Retail. The Retail segment includes private label products such as pulses and ready-to-cook items under “Patel Fresh,” spices, ghee, and papad under “Indian Chaska,” men’s wear under “Blue Nation,” and home improvement products under “Patel Essentials.” Additionally, it operates two exclusive ready-made garment outlets under the brand “R Choice.” The retail offering also features a wide range of reputed third-party brands and unbranded goods.

In FY25, retail revenue accounted for 44.95% of total revenue, with the food segment contributing 32.83%, non-food (FMCG) 8.8%, and general merchandise & apparel 3.32%.

In FY25, revenue from private label product sales accounted for 17.05% of retail sales and 7.66% of total sales. There are plans to develop new products and further strengthen private label offerings.

The Non-Retail segment comprises manufacturing, processing, and trading activities. It includes domestic and international trade of products such as FMCG goods, household items, and kitchen appliances, from reputed third-party brands, along with bulk trading of agricultural commodities like rice, sugar, pulses, and edible oils.

In FY25, bulk trading accounted for 6.39% of total revenue, while reputed third-party brand trading contributed 3.75%.

Exports include products such as whole spices, powdered spices, pulses, staples, groceries, and wheat flour. These products are shipped under in-house brands like “Patel Fresh” and “Indian Chaska,” as well as unbranded. In FY25, exports made up roughly 33.33% of total sales, spanning over 35 countries.

Since inception in FY 2008, the product range has expanded to around 38 categories with over 10,000 SKUs available in stores as of May 31, 2025.

Operates three manufacturing facilities. As part of a backward integration strategy to control the supply chain, a processing and packaging facility along with a product testing lab was established at Facility 1. This facility processes whole spices such as coriander and cumin seeds, pulses, staples, and groceries. Facility 1, including the testing lab, spans 7,678 sq. ft. (excluding the Distribution Centre) and is equipped with modern semi-automated and manual machinery.

Facility 2 occupies 3.27 acres of freehold land, with a built-up area of 7,460.54 sq. meters. Separate sections within Facility 2 are designated for processing spices and peanuts to prevent cross-contamination. To further expand product offerings across the value chain, an agro-processing cluster (Facility 3) was established on 15.925 acres at Bhuj Bachau Highway, Village Dudhai, Taluka Anjar, District Kutch, Gujarat. This cluster comprises five production units, a fruit pulp processing unit, a dry warehouse with a 3,040 MT storage capacity, cold storage with 3,000 MT capacity, and an in-house testing and research laboratory.

In addition to walk-in customers, sales are made through a mobile application launched in Fiscal 2021. Revenue from e-tail sales amounted to Rs 12.47 crore in Fiscal 2025, Rs 9.55 crore in Fiscal 2024, and Rs 10.40 crore in Fiscal 2023.

Opened 9 new stores in FY25, following a cluster-based expansion strategy focused on geographic adjacencies. The approach emphasizes supply chain efficiency and targets densely populated residential areas with a high concentration of lower-middle, middle, and aspiring upper-middle-class consumers.

Plans to expand the store network further in the western suburbs of the MMR (Mumbai Metropolitan Region), such as Mira Road, Bhayander, Virar, and Vasai as well as in Pune’s municipal region.

Additionally, there are plans to expand organically or inorganically into other cities across Western and Central India by acquiring controlling stakes or through full acquisitions.

Offer and its objects

The IPO comprises a fresh issue of 85,18,000 equity shares worth up to Rs 217.21 crore and an offer for sale of 10,02,000 equity shares amounting to Rs 25.55 crore by existing shareholders Dhanji Raghavji Patel and Bechar Raghavji Patel.

Price band for the IPO is Rs 237 to Rs 255 per equity share of face value Rs 10 each.

The objectives for the fresh issue includes Rs 109 crore for funding working capital requirement, Rs 59 crore for Repayment/prepayment of certain borrowings, and remaining amount for general corporate purpose.

The promoters are Dhanji Raghavji Patel, Bechar Raghavji Patel, Hiren Bechar Patel, and Rahul Dhanji Patel. The promoters and promoter group hold an aggregate of 2,43,82,528 equity shares, aggregating to 98% of the pre-offer issued and paid-up equity share capital. Their post IPO shareholding is expected to be around 70%.

The issue, through the book-building process, will open on 19 Aug 2025 and will close on 21 Aug 2025.

Strengths

Strong emphasis on value retailing, combined with an extensive product range, enhances the ability to attract and retain lower-middle and middle-class consumers.

Strong retail networkwith presence across multiple locations in Maharashtra. Moreover, stores are located within residential areas, enabling easy access for customers and catering to both bulk purchases and daily top-up needs.

Backward integration through in-house food processing facilities streamlines its supply chain, enhances quality control, and reduces costs.

Robust distribution and logistics network, along with robust inventory management systems, have minimized the need for dedicated storage space at every store. This allows efficient stock replenishment and minimize stock outs.

Strategically located manufacturing facilities around agricultural belts in Gujarat allows cost efficiencies in procurement and transportation of raw materials.

Strong potential for e-commerce expansion to capitalize on the growing online retail market.

Extensive experience of promoters and senior management personnel.

Weaknesses

All retail stores are concentrated in the state of Maharashtra, more particularly within the Thane and Raigad district. This increases vulnerability to localized adverse events, such as changes in state policies, regulatory actions, and economic slowdowns. In FY25, retail revenue accounted for 44.95% of total revenue.

Revenue from the Non-Retail Business declined significantly from Rs 7,416.31 crore in FY23 to Rs 4,443.49 crore in FY25, marking a 40% drop. This was primarily due to reduced revenue from bulk sugar exports, following export restrictions imposed by the Government of India. The decline highlights the inherent risks associated with dependence on regulated and policy-sensitive business segments.

Operations are sensitive to fluctuations in the prices of key raw materials such as wheat, spices, and peanuts, which can affect margins. In FY25, revenue from food product sales accounted for 73.04% of total revenue.

Negative cash flows from operating activities have been reported in the past, suggesting potential strain on operational liquidity.

Exposed to fluctuations in foreign exchange rates and global uncertainties, as 33.33% of revenue was derived from export sales in FY25.

Requires substantial capital investment and working capital to sustain growth, with potential challenges in securing funding on favorable terms.

In FY25, capacity utilization was low across several facilities, with Facility 2 operating at only 10.49%, Facility 3 Unit I at 13.54%, Unit II at 15.66%, Unit IV at 14.05%, and Unit V at just 4.42%. Such underutilization highlights inefficiencies and potential fixed-cost burdens.

Several applications for new trademarks and copyrights have been filed, with objections raised on seven copyright applications. Failure to secure these registrations could adversely affect business.

There are outstanding legal proceedings, including criminal cases, involving its directors and promoters. An adverse outcome in any of these proceedings could negatively affect the business.

Valuation

Net sales increased marginally by 1% to Rs 820.69 crore in FY25 compared to FY24, primarily due to a decline in revenue from bulk sugar export trading following export restrictions imposed by the Government of India. The OPM improved 53 bps to 6.96%, leading to 9% increase in OP to Rs 57.13 crore. OI increased 50% to Rs 5.3 crore. Interest cost rose 8% to Rs 16.38 crore. Depreciation cost went up 17% to Rs 11.73 crore. PBT surged 12% to Rs 34.33 crore. Tax expenses were Rs 9.05 crore as compared with Rs 8.08 crore. Net profit increased 12% to Rs 25.28 crore.

The FY25 EPS on post-issue equity works out to Rs 7.57. At the upper price band of Rs 255, P/E is 34.

Total outstanding borrowings amounted to Rs 165.07 crore as on May 31, 2025. As much as 36% of the debt will be repaid from the issue proceeds, bringing down interest costs substantially and boosting profit. The FY2025 EPS works out to Rs 9.06 if 36% of its interest cost is removed, keeping all other items, including tax rate, same. The re-worked P/E at the upper price band moderates to 28.

Listed peers such as Vishal Mega Mart traded at TTM P/E of 99, Avenue Supermarts trades at TTM P/E of 105, and Osia Hyper Retail at TTM P/E of 8 as on 14 August 2025. The OPM and ROE stood at 6.96% and 19.02% respectively, in FY2025. These were 14.28% and 9.85% for Vishal Mega Mart, 7.56% and 12.63% for Avenue Supermarts, and 5.05% and 4.84% for Osia Hyper Retail, respectively.

Patel Retail: Issue highlights

For Fresh Issue Offer size (in Rs crore)

- On lower price band

201.88

- On upper price band

217.21

Offer size (in no of shares )

85,18,000

For Offer for Sale Offer size (in Rs crore)

- On lower price band

23.75

- On upper price band

25.55

Offer size (in no of shares )

10,02,000

Price band (Rs)

237-255

Minimum Bid Lot (in no. of shares )

58

Post issue capital (Rs crore)

33.4

Post-issue promoter & Group shareholding (%)

70

Issue open date

19-08-2025

Issue closed date

21-08-2025

Listing

BSE, NSE

Rating

38/100

Patel Retail: Restated Financials

2303 (12)

2403 (12)

2503 (12)

Sales

1,018.55

814.19

820.69

OPM (%)

4.12%

6.43%

6.96%

OP

41.98

52.31

57.13

Other inc.

1.26

3.52

5.30

PBIDT

43.24

55.84

62.43

Interest

11.13

15.19

16.38

PBDT

32.10

40.65

46.05

Dep.

9.86

10.04

11.73

PBT

22.24

30.61

34.33

Share of Profit/(Loss) from Associates/JV

-

-

-

PBT before EO

22.24

30.61

34.33

Exceptional items

-

-

-

PBT after EO

22.24

30.61

34.33

Taxation

5.87

8.08

9.05

PAT

16.38

22.53

25.28

Minority Interest

-

-

-

Net Profit

16.38

22.53

25.28

EPS (Rs)*

4.90

6.75

7.57

* EPS is annualized on post issue equity capital of Rs 33.4 crore of face value of Rs 10 each

# EPS is not annualised due to seasonality of business

EO: Extraordinary items. EPS is calculated after excluding EO and relevant tax

Figures in Rs crore

Source: Capitaline Corporate Database