Patel Retail Limited

Patel Retail Limited delivered robust financial results for Q2 and H1 FY26. In Q2, total income grew 14.97% YoY to INR 225.43 crores, with EBITDA climbing 31.37% YoY to INR 19.55 crores, expanding the margin by 108 basis points to 8.67%. PAT surged 73.20% YoY to INR 10.14 crores, achieving a 4.50% margin. For H1 FY26, total income reached INR 408.63 crores (up 8.97% YoY), EBITDA grew 18.60% to INR 35.43 crores (8.67% margin), and PAT increased 42.52% to INR 17.06 crores (4.18% margin).

The company continues its retail footprint expansion, opening its 46th store in Kalyan, strengthening its presence in the Mumbai metropolitan region. Management plans to increase the store count to over 60 by FY27, opening 10-15 stores annually, focusing on western MMR suburbs and Pune. This cluster-based model, supported by a distribution center in Ambernath, ensures local market dominance, supply chain efficiency, and cost control, with new stores averaging 6000-7500 sq ft.

Patel Retail operates through two synergistic segments: retail and non-retail (processing, manufacturing, exports). The non-retail segment drives margin stability, with in-house brands like Patel Fresh and Indian Tesco currently contributing 17% of retail revenue, targeted to increase to over 35% in the medium term. The company has vertically integrated facilities in Maharashtra and Gujarat with a combined capacity of over 1.43 lakh metric tons per annum, supporting both private label and export businesses.

The Patel RMart mobile app is gaining traction, driving higher repeat purchases and enhancing omnichannel presence. The company is upgrading its app to transition from next-day delivery to same-day delivery, with plans to further reduce delivery times, leveraging its existing stores as a network and dark stores. This initiative aims to improve productivity, cost efficiency, and customer experience, with mobile online business currently contributing ~3.5% of retail sales.

The company secured new international export orders worth INR 22 crores in Q2, bringing the total export order book to INR 50 crores, spanning markets like the UK, Canada, Australia, and New Zealand. While exports currently contribute around 30% of total revenue, management noted a historical decline in FY23 due to government limitations on sugar exports (INR 350 crores in FY23), leading to a strategic shift from trade-based activities towards manufacturing and a balanced focus between domestic and export markets.

Patel Retail maintains a strong focus on capital efficiency, with new store investments averaging INR 1,500 per square foot for construction and INR 2,000 per square foot for inventory. The average store payback period is approximately two years, with an expected first-year income of INR 80 lakhs per month and a 5% EBITDA margin. The company aims to maintain an EBITDA margin of 7.5-8% and a PAT margin of 4-4.5% for FY26, targeting a total revenue of INR 1,000-1,040 crores for the fiscal year.