Patel Retail IPO — Should You Subscribe Or Avoid? Read Anand Rathi's Report For Key Details

The Maharashtra-based retail supermarket chain operating under the brand Patel’s R Mart — Patel Retail Ltd.'s Rs 242.76-crore IPO comprises of a fresh issue of 85 lakh shares, worth Rs 217.21 crore, and an offer-for-sale portion of 10 lakh shares, amounting to Rs 25.55 crore.

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Anand Rathi Report

The Maharashtra-based retail supermarket chain operating under the brand Patel’s R Mart — Patel Retail Ltd.'s initial public offering will open for subscription on Aug. 19 and the offer closes on Aug. 21. The company has fixed the price in the range of Rs 237-255 per equity share.

The Rs 242.76-crore IPO comprises of a fresh issue of 85 lakh shares, worth Rs 217.21 crore, and an offer-for-sale portion of 10 lakh shares, amounting to Rs 25.55 crore.

Investors can place bids starting from a minimum of 58 shares and in multiples thereafter.

Fedex Securities Pvt. Ltd. are the book-running lead managers for the public issue while Bigshare Services Pvt. Ltd.is the registrar to the offer.

Objects of the Issue:

1. Repayment/prepayment, in full or part of certain borrowings availed by the company.

2. Funding of working capital requirements of the company.

3. General corporate purposes.

Key Strengths:

• Deep knowledge and understanding of optimal product assortment and inventory management using IT systems.

• Steady footprint expansion using a distinct store acquisition strategy and ownership model.

Key Strategies:

• Further strengthen their market position by expanding their store network in existing clusters as well as new clusters.

• Enhancing sales volumes by continuing to prioritize customer satisfaction through optimal product assortment and offering value for money using EDLC/EDLP strategy.

• Further strengthening their procurement network and increasing their share of private labels.

• Continue to launch new products and enhance their customer base.

• Focus on increasing brand awareness.

• Expand their market presence to other states of India and increase their distribution reach.

Valuation & Outlook:

Patel Retail, headquartered in Ambernath, Maharashtra, is a value retail supermarket chain operating under the brand Patel’s R Mart, with 43 stores across Thane and Raigad and a retail space of about 1.79 lakh sq. ft. Incorporated in 2008, the company has expanded into non-retail operations, including food processing, packaging, exports, and trading, offering products under in-house brands such as Patel Fresh, Indian Chaska, Blue Nation, and Patel Essentials.

They aim to strengthen their retail presence in Maharashtra by deepening market penetration and expanding their store network. Their stores are spread across 17 cities and suburban areas in the Thane and Raigad districts of Maharashtra. Following a cluster-focused expansion strategy, they plan to strengthen their presence in the western suburbs of the MMR, including Mira Road, Bhayander, Virar, and Vasai, as well as expand into the municipal region of Pune, Maharashtra.

At the upper price band, the company is valued at a FY25 P/E of 33.6x, with a post-issue market capitalization of Rs 8,504 million. Each retail store offers over 10,000 SKUs, and the company’s strategy focuses on providing a wide product range at value-for-money prices with strong customer service, sustaining competitiveness through everyday low prices driven by efficient procurement, supply, and operations.

Based on these factors, the IPO appears fully priced, with a “Subscribe – Long-Term” recommendation.

Key Risk:

• All of the company’s retail stores are concentrated in the state of Maharashtra, particularly within the Thane and Raigad districts. In the Financial Years 2024-25, 2023-24 and 2022-23, their revenue from Retail sales accounted for Rs 36,886.9 Lakhs, Rs 28,972.2 Lakhs and Rs 26,655.7 Lakhs, representing 44.9%, 35.6% and 26.2% of their revenue from operations, respectively. Any adverse developments affecting their operations in such region, could have an adverse impact on their retail business, financial condition, results of operations and cash flow.

• As on May 31, 2025, they operate 43 stores, of which 8 stores have been in existence for more than 5 years and 15 stores have been in existence for more than 10 years. As the stores mature in operational tenure, they may witness saturation in revenue or a reduction in sales from such stores. For instance, their average store sales reduced from Rs 881.38 lakhs in Fiscal 2023 to Rs 878.26 lakhs in Fiscal 2025. A continued decline in same-store sales could adversely impact on their business and results of operations.

• They have witnessed a reduction in their revenue from operations in the past, from Rs 101,854.8 lakhs in Fiscal 2023 to Rs 82,069.3 lakhs in Fiscal 2025. There can be no assurance that they will not witness a reduction in their revenue from operations in the future.

• Their business is operating under various laws which require them to obtain approvals from the concerned statutory/regulatory authorities in the ordinary course of business. Some of their approvals are required to be transferred to the name of Patel Retail Limited from Patel Retail Private Limited, pursuant to the change of name of the Company. Their inability to obtain, maintain, or renew requisite statutory and regulatory permits and approvals for their business operations in a timely manner could materially and adversely affect their business, prospects, results of operations, and financial condition.

• They have a high debt equity ratio and may face certain funding risks. Their debt-to-equity ratio for the Fiscal 2025, Fiscal 2024 and Fiscal 2023 was 1.34, 1.97 and 2.54, respectively. Any further increase in borrowings may have a materially adverse effect on their business, financial condition and results of operations. Further, if they do not generate a sufficient amount of cash flow from operations, their liquidity and ability to service their indebtedness could be adversely affected.

• Their operations are dependent on the supply of large amounts of raw materials such as wheat, spices and peanuts. They do not have long-term agreements with suppliers regarding their raw materials, and any increase in the cost of, or a shortfall in the availability of, such raw materials could have an adverse effect on their business and results of operations. Seasonal variations could also result in fluctuations in their results of operations.

• They operate in a competitive market, and any increase in competition from organized and unorganized players may adversely affect their business and financial condition.

• The Company has reported negative cash flows from its operating activity, investing activity, and financing activity. Sustained negative cash flow could impact on their growth and business.

• Their inability to identify, obtain and retain certain intellectual property rights, or to protect or use them, could harm their business. Further, they may infringe upon the intellectual property rights of others, any misappropriation of which could adversely affect their business and reputation.

• A significant portion of their revenue is concentrated among a limited number of customers in the Non-Retail Business and international markets. The loss of any of their significant customers or failure to fulfil the requirements of their international customers may adversely affect their revenues, results of operations, and cash flows.

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