Purple Style Labs

Purple Style Labs

By Geetanjali Kedia
about 14 days ago

IPO Size: Rs. 680 cr, entirely Fresh Issue

  • Rs. 371 cr for lease payments till Q3FY30
  • Rs. 139 cr for sales and marketing for next 3 years

Price band: Rs. 546-575 per share

M cap: Rs. 4,604 cr, implying 15% dilution

  • Only 10% allocation for retail, as company is loss making

IPO Date: Mon 31st Aug to Wed 2nd Sep 2026, Listing Mon 7th Sep 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

 

High Fashion Retailer

Purple Style Labs is a 8 year old company operating 14 stores (12 in India, 1 in London and 1 in New York), under brand ‘Pernia’s Pop Up’. Company earns nearly 80% of Rs. 558 cr revenue from India, 10% international and 10% from online website. Its online sales have been on a decline for the past 3 years, meaning that company is essentially a brick and motar retailer.  

 

Loss Making for past 4 years

Since it is a retail business, Ind-AS accounting makes EBITDA and imappropriate parameter for profitability, as rent becomes below the line item in depreciation and finance cost. Thus, PBT excluding exceptional items and other income is a more appropriate benchmark

Company uses GMV (Gross Merchantile Value) to report growth and change in average order value. But revenue in the books is the correct turnover parameter. On FY26 revenue of Rs. 558 cr, PBT before exceptional and other income was negative Rs. 177 cr or minus 32% margin, with a net loss after tax of Rs. 285 cr. Even excluding Ind-AS adjustment and exception item on ESOP cost of 118 cr, company’s loss before tax and exception item was Rs.3 cr. Thus, despite clocking high gross margins, business remains loss making. Moreover, gross margin was under pressure in FY26 – down to 38%, from 42% during FY23 to FY25. Even the inventory turnover ratio of 3.4x in FY26 is down from 4.2x in FY23.  

 

High Fund Requirement

Company has raised Rs. 400 cr in equity till date, majority of which was raised in the past 2 years to fund new store expansion. Yet, rent and marketing expenses are insufficient, and will be met via fresh issue proceeds.

Net worth, as of 31.3.26, is negative Rs. 52 cr, with gross debt of Rs. 371 cr.

 

Expensive Pricing

M cap of Rs. 4,604 cr implies a historic revenue multiple of 8x, which is very expensive for loss making operations and declining gross profit margin in FY26.

Promoter did Rs. 45 cr secondary sale at Rs. 500 per share in Aug last year, and now owns just 28% stake in the company. Post IPO, on a fully diluted basis, promoter holding will shrink to below 23%, which is very low and worrisome. Moreover, a 15% premium to last transaction price, a year ago, is unjustified, when losses have widened.