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
|
|
|
|
|