Summary
Patel Retail Limited - Q3 FY26 Earnings Call Summary Monday, February 09, 2026 12:00 PM
Event Participants
Executives 3 Dhanji Patel (Chairman and Managing Director), Rahul Patel (Chief Executive Officer), Hitesh Sawlani (Chief Financial Officer)
Analysts 4 Abhinav Shetty (Auckland Capital), Bhavya Seth (Apex Finance), Priyansh Miri (Family Office), Sakshi Shinde (Shah Consultancy), Vinod Shah (VS Ventures)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income (Q3) | ₹311.12 crores | +35.51% YoY; Driven by strong retail performance and integrated manufacturing model. |
| Total Income (9M) | ₹719.75 crores | +19.05% YoY; Reflects steady trajectory despite past volatility in sugar trading. |
| EBITDA (Q3) | ₹24.91 crores | +63.59% YoY; Strong operational leverage and higher private label contribution. |
| EBITDA Margin (Q3) | 8.01% | +137 bps YoY; Improvement due to strict cost discipline and in-house processing. |
| PAT (Q3) | ₹12.00 crores | +95.89% YoY; Significant bottom-line expansion from improved margins. |
| EPS (Q3) | ₹3.59 | +44.18% YoY; Reflects dilution/capital changes post-IPO while growing earnings. |
| SSSG | 8% | Blended Same Store Sales Growth across all retail categories. |
| Inventory | ₹210 crores | Maintained at consistent levels relative to company size and seasonal procurement. |
Geographic & Segment Commentary
- Retail (Patel’s R Mart): Operates 49 stores across Thane and Raigad districts (2.10 lakh sq. ft.). The segment follows a hub-and-spoke model with a central warehouse within 60km of all stores to ensure 2-3 hour restocking efficiency.
- Manufacturing & Private Labels: Focused on spices (Indian Chaska), staples (Patel Fresh), and home care (Blue Nation). Private label contribution stands at 17%, with a strategic goal to reach 22% by FY28 to capture higher gross margins.
- Exports: Diversified across UK (20%), Canada (15%), US (11%), and Middle East. Focus has shifted from volatile Middle Eastern markets to quality-conscious Western markets (US/UK/Canada) which offer consistent demand and higher margins despite longer transit times.
Company-Specific & Strategic Commentary
- Private Label Expansion: Launched “Indian Chaska” which generated ₹8 crores in revenue in its first year; management expects 15-20% month-on-month growth for this brand.
- Backward Integration: Operates three manufacturing units (one in Mumbai, two in Kutch) with in-house labs (HPLC/curcumin testing) to ensure quality consistency and reduce rejection costs.
- Store Expansion: Plans to add 10-15 stores annually, targeting 60-65 stores by the end of FY27, specifically entering the Navi Mumbai suburbs.
- Omnichannel & Loyalty: Introduced “15+1” loyalty scheme (one month free shopping after 15 months) and WhatsApp-based ordering to counter quick commerce competition.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Private Label Share | 22% by FY28 | Increasing from 17% via new SKUs in snacks, peanut butter, and seasonings. |
| Store Count | 60-65 stores by FY27 | Focus on “right-site” selection in Mumbai suburbs to avoid store closures. |
| Manufacturing Capex | Minimal for 3 years | Current capacity is sufficient for existing product lines; only minor modifications needed for new categories. |
| Export Strategy | Expansion into value-added products | Moving from basic spices to ready-to-eat and specialized international seasonings. |
Risks & Constraints
| Risk | Context |
|---|---|
| Working Capital Cycle | Days increased from ~60 to ~100 due to higher export transit times (45-60 days) to Western markets vs. Middle East. |
| Commodity Volatility | Spices and staples are subject to crop cycles; management mitigates this through pre-harvest field research and seasonal bulk procurement. |
| Quick Commerce Competition | High-density urban competition from blinkit/Zepto; company is countering via home delivery and evaluating “store-as-a-dark-store” partnerships. |
| Geographic Concentration | Current footprint is heavily concentrated in Thane/Raigad; expansion into Tier-1 Navi Mumbai faces higher fixed-cost hurdles. |
Q&A Highlights
Private Label Growth
- Question: How realistic is the 22% private label target? (Vinod Shah)
- Answer: Growth will be driven by “Indian Chaska” and new SKUs like peanut butter and snacks. Focus is on quality consistency via in-house HPLC labs for spices (Rahul Patel).
Manufacturing Utilization
- Question: What is the current capacity utilization? (Priyansh Miri)
- Answer: Peaks at 80-85% during season (Feb-July) and drops to ~45% off-season. We are adding year-round products like peanut butter and noodles to balance utilization (Rahul Patel).
Export Logistics & Working Capital
- Question: Why have capital cycle days jumped to 100? (Priyansh Miri)
- Answer: Shift in export mix toward US, UK, and Canada involves 45-60 day transit times. We prioritize these markets for their quality-driven nature and higher margins (Rahul Patel).
Competition & Strategy
- Question: How do you differentiate from DMart? (Sakshi Shinde)
- Answer: We are neighborhood-focused with different pack sizes and food quality standards tailored to a 4km radius (Rahul Patel).
- Question: Are you considering the Dark Store model? (Bhavya Seth)
- Answer: We are in talks with key quick commerce players to use our existing stores as dark stores to create multiple revenue streams from a single location (Rahul Patel).
Key Takeaway
Patel Retail Limited delivered a strong Q3 FY26, characterized by a 35.5% YoY revenue jump to ₹311.12 crores and a near-doubling of PAT to ₹12 crores. The company is successfully transitioning from a pure-play grocery retailer to an integrated FMCG player, with private labels now contributing 17% of sales at higher margins. Strategically, management is shifting its export focus toward high-margin Western markets (UK/US/Canada) and expanding its domestic retail footprint at a measured pace of 10-15 stores per year. By leveraging its hub-and-spoke distribution and in-house manufacturing for spices and staples, the company has improved EBITDA margins by 137 bps to 8.01%. While working capital cycles have lengthened due to export logistics, the focus on value-added manufacturing (snacks, peanut butter) and a cluster-based retail expansion in the Mumbai Metropolitan Region positions the company for sustained growth. Management remains committed to the FY27 target of 60-65 stores while maintaining a conservative “no-store-closure” policy.
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