A new main board Initial Public Offering (IPO) from Patel Retail is set to open on August 19th. This article delves into the company’s business model, IPO dates, price band, financial health, valuation, and Grey Market Premium (GMP) to provide a complete overview for potential investors. Applying for this main board IPO typically requires an investment of approximately ₹15,000.
Key IPO Details
The Patel Retail IPO will be a main board issue, allowing for application amounts as low as ₹15,000. It is crucial for potential investors to examine the company’s financial health, which includes its business model, IPO dates, price band, and how its valuation stands based on the current Grey Market Premium.
Financial Performance Analysis
Reviewing a company’s financial health is paramount. Here’s a look at Patel Retail’s performance across FY23, FY24, and FY25, with all data presented for 12-month periods:
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Assets:
- FY23: ₹303 Crore
- FY24: ₹333 Crore
- FY25: ₹382 Crore The company’s assets show a staggered, rather than exponential, growth over these years.
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Total Income (Revenue):
- FY23: ₹1019 Crore
- FY24: ₹817-818 Crore
- FY25: ₹826 Crore Revenue saw a decline from FY23 to FY24, followed by a slight increase of approximately 1% from FY24 to FY25. The absence of exponential growth and the initial drop in revenue is a point of concern.
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Profit After Tax (PAT):
- FY23: ₹16 Crore
- FY24: ₹22.5 Crore (approximately)
- FY25: ₹25 Crore (approximately) Despite a dip in revenue in FY24, the company’s profit has shown continuous improvement across the three fiscal years.
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EBITDA:
- FY23: ₹43 Crore
- FY24: ₹56 Crore
- FY25: ₹62 Crore EBITDA has consistently improved over the reported periods.
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Net Worth:
- FY23: ₹72 Crore
- FY24: ₹95 Crore
- FY25: ₹124 Crore The company’s net worth has also shown consistent growth.
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Borrowing (Debt):
- FY23: ₹181 Crore
- FY24: ₹185-186 Crore
- FY25: ₹180 Crore Borrowings have remained consolidated around the ₹180 Crore mark, showing no significant increase but still representing a substantial debt.
Fundamental Ratios
An analysis of key fundamental ratios provides deeper insight into the company’s financial standing:
- Return on Equity (RoE): 19%
- Return on Capital Employed (RoCE): 14%
- Debt-to-Equity Ratio: 1.34 (This figure is above 1 and indicates a strong need for improvement.)
- Return on Net Worth: 19%
- Profit After Tax Margin: 3.08%
- EBITDA Margin: 27.61%
- Price to Book Value: 4.72
Valuation Insights
- Price-to-Earnings (P/E) Ratio: The company’s pre-IPO P/E is 25, which is projected to become 33 post-IPO.
- Peer Comparison: The average P/E of comparable companies is quite similar to Patel Retail’s P/E.
- Valuation Scope: The current valuation appears to leave little scope for significant pre-listing gains, suggesting that the IPO might not offer substantial immediate upside in the grey market.
Utilization of IPO Proceeds
The funds raised from the IPO will be utilized as follows:
- Repayment/Prepayment of Borrowings: ₹59 Crore will be allocated for this purpose. This is expected to reduce the company’s debt from ₹180 Crore to approximately ₹121 Crore, thereby improving the Debt-to-Equity ratio. However, the company will still carry a considerable amount of debt.
- Working Capital Requirements: ₹115 Crore will be used to fund working capital needs.
Patel Retail IPO Dates & Price Band
- IPO Open Date: August 19th
- IPO Close Date: August 21st
- Face Value: ₹10 per equity share
- Price Band: ₹255 (Upper price band)
- Minimum Lot Size: 58 equity shares for a single application.
- Employee Discount: An employee discount of ₹20 per share is available.
IPO Issue Details & Distribution
- Total Issue Size: ₹242 Crore
- Fresh Issue Component: ₹216 Crore
- Offer for Sale (OFS) Component: Approximately ₹25 Crore (Promoters and existing shareholders will dilute their stake through OFS.)
- IPO Type: Book-building issue
- Listing Exchanges: BSE and NSE
The issue distribution is structured as follows:
- Qualified Institutional Buyers (QIBs): 30% (including Anchor Investors)
- Retail Investors: 45%
- Small High Net Worth Individuals (HNIs): 25%
Investors are advised to review the anchor investor list and QIB subscription figures before making application decisions.
Important Dates
- IPO Opening Date: August 19th
- IPO Closing Date: August 21st
- Allotment Date: August 22nd
- Refund Initiation Date: August 25th
- Demat Account Credit Date: August 25th
- Listing Date: August 26th (on both BSE and NSE)
Application Amount Requirements
- Retail Category (1 Lot): ₹14,790
- Small HNI Category: Approximately ₹2,760 (This figure appears unusually low for an HNI application, possibly indicating a specific sub-category or a different basis of calculation, as stated in the transcript)
- Big HNI Category: Approximately ₹15,720 (Similar to Small HNI, this figure also seems unusually low for a Big HNI application, as stated in the transcript)
Promoter Holding
Post-IPO, the promoter holding is expected to decrease from 98% to 70%.
Grey Market Premium (GMP) Update
As of the current update, Patel Retail IPO’s Grey Market Premium (GMP) is ₹34.
- Given the upper price band of ₹255, the expected listing price would be ₹289 (₹255 + ₹34).
- This suggests an approximate listing gain of 13%. The IPO is anticipated to offer around ₹172 in listing gains.
Conclusion
While Patel Retail has demonstrated improvements in profit, EBITDA, and net worth, the fluctuating revenue, the high debt-to-equity ratio (1.34), and a valuation that offers limited pre-listing upside are potential red flags. Investors should carefully consider the company’s balance sheet, prevailing market conditions, and the Grey Market Premium before approaching this IPO. Updates regarding the IPO’s subscription status and GMP will continue to be provided.
