Rsb Retail India Limited IPO

01At a glance

What the company does: multi-format retail across premium, mid-premium and value segments: multi-brand outlets for men, women and children, exclusive ethnic-wear outlets and hypermarkets; its apparel covers ethnic, casual and formal wear (DRHP p.26). Formats include R.S. Brothers, South India Shopping Mall and Kanchipuram Narayani Silks (DRHP p.165, DRHP p.335).

Who pays it: shoppers in its stores; Telangana provided 61.95% of FY25 revenue and Andhra Pradesh 38.00% (DRHP p.335). It issued 10.56 million bills in FY25 at an average of ₹2,551 (DRHP p.126).

Why it is raising money: ₹2,750.00 million to repay loans, ₹1,181.81 million to open new "RS Brothers" and "South India Shopping Mall" stores, and the rest for general purposes (DRHP p.27).

How fast it has grown: revenue from ₹21,267 million in FY23 to ₹24,580 million in FY24 and ₹26,939 million in FY25 (DRHP p.28).

The one thing to understand: growth from new stores while existing stores slow. Store count rose from 41 to 73 in two years, but same-store sales growth fell from 29.19% in FY23 to −4.38% in FY25 and revenue per square foot from ₹19,585 to ₹14,524 (DRHP p.126).

02The business, in plain words

A regional retailer rents large stores in cities and towns, buys apparel, sarees and household goods from suppliers, and sells them to shoppers, earning a gross margin that must cover rent, staff and store costs.

A family in Andhra Pradesh shops for a wedding → it visits a South India Shopping Mall store → it buys sarees and ethnic wear → it pays at the counter, and the store earns the margin over the supplier's price.

Earnings equation: Profit ≈ square feet × sales per sq. ft. × gross margin − rent, staff and store costs − interest. Gross margin was 37.59% and EBITDA margin 13.88% in FY25 (DRHP p.126).

03Where the money comes from

Source: DRHP p.126.

04The growth record

Source: DRHP p.28, DRHP p.126, DRHP p.353. The company also repaid ₹1,052.66 million of lease liabilities and paid finance costs of ₹938.03 million in FY25 (DRHP p.83).

05What the growth is made of

New stores. Total store area rose from 1.09 million sq. ft. in FY23 to 1.85 million sq. ft. in FY25, while revenue rose 27% over the two years (our arithmetic, DRHP p.126). Gross margin rose from 32.55% to 37.59% (DRHP p.126).

06Earnings quality

Operating cash flow of ₹5,342.81 million over FY23 to FY25 is well above profit of ₹2,339.16 million; depreciation and amortisation was ₹1,445.73 million in FY25 (our arithmetic, DRHP p.28, DRHP p.83, DRHP p.353). Lease liabilities were ₹7,377.94 million at March 2025 (our arithmetic, DRHP p.296). Inventory turnover fell from 3.72 to 3.09 times (DRHP p.126). Other income was ₹243.91 million in FY25 against profit before tax of ₹1,504.92 million, or 16.2% of it (our arithmetic, DRHP p.82).

07The balance sheet

Source: DRHP p.28, DRHP p.126.

Return on capital employed was 28.95% in FY25, and net working capital was 28 days (DRHP p.126). Net debt was ₹3,101.54 million at March 2025, 0.8 times FY25 EBITDA (our arithmetic, DRHP p.323, DRHP p.126). Contingent liabilities at March 2025 were ₹192.58 million, all tax claims not acknowledged as debt (DRHP p.30).

08What the money is for

Source: DRHP p.27.

09Who is selling

Source: DRHP p.26, DRHP p.27. The last three rows are our arithmetic. The shares offered are 10.53% of the company's equity (our arithmetic).

The fresh issue is of up to ₹5,000.00 million and the offer for sale of up to 29,878,946 shares (DRHP p.26). The promoters offer: Potti Venkateswarlu, Seerna Rajamouli, Potti Venkata Sai Abhinay and Seerna Suresh up to 2,689,105 shares each, Tiruveedhula Prasada Rao up to 2,390,316, and Tiruveedhula Rakesh and Tiruveedhula Keshav Gupta up to 1,792,737 each (DRHP p.26).

The promoter group offers: Potti Venkata Sujatha up to 597,579 shares, Maturu Venkata Lakshmi Sindhu and Potti Venkata Lakshmi Spandana up to 1,493,947 each, Seerna Suvarna up to 811,000 and Gourishetty Lalitha up to 2,774,473 (DRHP p.26). Potti Malathi Lakshmi Kumari, also of the promoter group, offers up to 5,975,790 shares (DRHP p.27).

10Promoters

The promoters are Potti Venkateswarlu, Seerna Rajamouli, Tiruveedhula Prasada Rao, Potti Venkata Sai Abhinay, Seerna Suresh, Tiruveedhula Rakesh and Tiruveedhula Keshav Gupta, who hold 56.00%; family members in the promoter group hold the rest (DRHP p.26, DRHP p.27). Tax proceedings involving ₹29.81 million are pending against the promoters (DRHP p.29). Directors' remuneration paid to the promoters was ₹174.00 million in FY23 and ₹72.80 million in FY25 (our arithmetic, DRHP p.315).

11Who already owns it

Source: DRHP p.27. All shares are held by the promoters and promoter group (DRHP p.27).

12What changed just before the IPO

• Store openings: 32 stores added in two years (DRHP p.126).
• Same-store sales: negative in FY25 (DRHP p.126).
• Karnataka: first store opened in Bengaluru in FY24 (DRHP p.335).
• Share split: the face value was split from ₹10 to ₹2 a share in March 2025 (DRHP p.38).
• Bonus issue: 6 shares for every 1 held, on March 4, 2025 (DRHP p.37).
• Auditor: RCV & Co's tenure as statutory auditor expired on September 30, 2024, and Laxminiwas & Co was appointed the same day (DRHP p.85).
• Public company: the company converted to a public limited company, with a fresh certificate of incorporation dated October 22, 2024 (DRHP p.3).

13Capacity and expansion

Capacity is store space: 1,854,850 sq. ft. at March 2025 (DRHP p.126). The proceeds fund more stores under two formats (DRHP p.27).

14Market size and industry structure

The Technopak report cited in the offer document projects India's retail market at ₹92,597 billion and apparel and accessories at ₹6,903 billion in FY2025, and says Andhra Pradesh and Telangana were 31.6% of south India's apparel market in FY2024 (DRHP p.26, DRHP p.165). Those figures are Technopak's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• Regional scale: 73 stores and several established formats (DRHP p.26).
• Rising gross margin: from 32.55% to 37.59% (DRHP p.126).

Against that: dependence on two states, falling productivity per store, heavy lease commitments and debt (DRHP p.126, DRHP p.335).

16Peers the company named

Source: DRHP p.125. The table also lists Shoppers Stop, Aditya Birla Fashion and Retail and Trent; the peers' P/E ranges from 29.22 to 527.53, average 139.46 (DRHP p.124, DRHP p.125).

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Two states. Nearly all revenue from Telangana and Andhra Pradesh (DRHP p.335).
• Same stores. Sales fell 4.38% in FY25 (DRHP p.126).
• Leases. ₹7.4 billion of lease liabilities (DRHP p.296).
• Debt. Debt to equity of 2.35 (DRHP p.126).
• New stores. Growth depends on openings (DRHP p.126).

18Litigation and regulatory matters

Source: DRHP p.29.

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

In the sections read for this study, the document does not give:

• Why same-store sales turned negative, in the pages read.
• Where the new stores will open, in the pages read.
• How much rent the stores pay to related parties, if any, in the pages read.
• What the ₹192.58 million of tax claims concern, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why did same-store sales fall in FY25, and has it continued?
2. Why is revenue per square foot falling as the store count grows?
3. How will new stores be chosen to avoid cannibalising existing ones?
4. Are any stores leased from promoters or their relatives?
5. Why are 13 of the 15 family shareholders selling now?

1Sources and cited facts

This study was read from 1 document the company filed. The 68 figures it cites are listed under the document each came from, with the page and the sentence as printed.