Ratnadeep Retail IPO Gets SEBI Nod: Profits Are Back, but Why Are Older Stores Struggling?

As of March 2026, Ratnadeep Retail had 190 stores, annual sales of more than ₹2,200 crore and something investors like to see before an IPO: a return to profit. Yet its IPO papers reveal a surprising problem. Sales at comparable, established stores have declined for two years in a row.

The Hyderabad-based grocery retailer has received SEBI's go-ahead to move ahead with its proposed IPO, including a fresh issue of up to ₹400 crore. Much of that money will fund more stores. So the question is not simply how big Ratnadeep can become, but whether opening more outlets can create lasting growth when its established supermarket format is under pressure.

Ratnadeep Retail IPO: What Has SEBI Approved?

SEBI issued its observations on Ratnadeep's draft IPO papers on October 27, 2026. That lets the company move to the next stages of its public issue; it does not mean SEBI has endorsed the shares as an investment.

The proposed offer has two parts. Up to ₹400 crore will be raised through new shares, with the money going to Ratnadeep. Separately, promoters plan to sell up to 1.486 crore existing shares through an offer for sale, whose proceeds go to those shareholders rather than the business.

Of the fresh issue, around ₹260 crore is earmarked for new Ratnadeep and National Mart stores, while ₹40 crore is intended for debt repayment. The remaining net proceeds are meant for general corporate purposes. A possible pre-IPO placement of up to ₹80 crore could reduce the fresh-issue amount.

The IPO's opening date, price band, lot size and final valuation had not been announced yet. That makes this the right time to examine the business, rather than judge whether the shares are cheap or expensive.

Why Are Ratnadeep's Existing Stores Selling Less if Revenue Is Rising?

Ratnadeep's FY26 revenue grew 11.84% to ₹2,223 crore. That is the encouraging headline. But its same-store sales fell 4.56%, following a 4.13% drop in FY25.

Think of a supermarket with ten outlets. It opens three more and reports higher overall sales. But the original outlets, taken together, may still be selling less than last year. That is why retailers track same-store sales: they show how stores operating for a comparable period are performing without new openings hiding the trend. Ratnadeep uses stores that have operated for at least 24 months.

The more interesting discovery is that its two formats are moving in opposite directions.

Source: Ratnadeep Retail draft abridged prospectus, FY25–FY26 revenue by format and same-store sales KPIs. Revenue rounded. Same-store measures apply to qualifying established stores.

The Ratnadeep format, which includes neighbourhood supermarkets and premium stores, saw revenue decline. Meanwhile, National Mart, which targets value-conscious shoppers with groceries, household products and affordable fashion, grew revenue by nearly 69%. It increased its store count from 14 to 17.

In FY26, National Mart generated roughly ₹32 of every ₹100 in company revenue, up from about ₹21 a year earlier. Its growth is real, including positive sales growth at comparable stores, but it is also coming from a much smaller store base. Meanwhile, the company's main Ratnadeep format had 173 stores at the end of FY26, and its comparable-store sales were down 7.92%.

There is one more twist: Ratnadeep's average bill value rose from ₹448 to ₹482 in FY26, even as overall same-store sales declined. These figures measure different things, so they do not prove that customer visits fell. But they show why investors should look beyond total sales or the average shopping bill to understand what is happening inside existing outlets.

How Did Ratnadeep Turn a Loss Into a Profit?

Despite that pressure, Ratnadeep's profit recovery is substantial. The business went from a ₹26.69 crore loss in FY25 to a ₹36.70 crore profit in FY26. It also generated more cash from operations.

Source: Ratnadeep Retail draft abridged prospectus, restated financial information and KPIs. Figures rounded.

The higher EBITDA margin means the company earned more from its day-to-day retail operations before interest, tax, depreciation and amortisation. CRISIL Ratings also points to inventory management and staffing-related efficiency measures behind the improvement. Better operating cash flow matters because expansion requires real cash, not just accounting profits.

But grocery retail leaves little room for error. Ratnadeep's FY26 net profit margin was just 1.65%. For every ₹100 in sales, it retained only about ₹1.65 as net profit. That means higher store costs or heavier discounts could eat into its earnings quickly, even if revenue continues growing.

The positive is that FY26 operating cash flow rose to roughly ₹107 crore. The unanswered question is whether the company can keep generating cash and profits while spending heavily on expansion.

Can ₹260 Crore of New Stores Fix the Growth Problem?

That is the biggest decision behind the IPO. Ratnadeep plans to invest around ₹260 crore in store expansion over FY28–FY30, rather than all at once. More stores can bring in more customers, particularly if National Mart's value-focused model keeps working.

Yet a new store is not automatically a successful store. It needs stock, people, space and time to build regular footfall. If established supermarkets keep losing sales, Ratnadeep could end up with a larger network without a proportionate increase in profitability.

Competition makes the challenge more complicated. Ratnadeep faces other supermarket chains as well as quick-commerce apps such as Blinkit, Zepto and Swiggy Instamart. CRISIL Ratings has highlighted these pressures, although the disclosures do not establish that quick commerce alone caused the decline in same-store sales.

The company's reach is also concentrated: 90.78% of FY26 revenue came from Telangana. That regional strength offers familiarity with local shoppers, but it also means competitive pressure in one market can have an outsized effect on the business. Ratnadeep's borrowings were approximately ₹168.83 crore at the end of FY26; the planned ₹40 crore repayment could reduce some debt, but does not remove the execution risk of opening new outlets.

Our Take: What Would Make the Ratnadeep Retail IPO More Convincing?

The profit recovery is encouraging, but the company's next test is store productivity. Ratnadeep has shown it can improve margins and cash flow. National Mart has also emerged as a promising growth engine. Neither development, however, makes the decline at comparable Ratnadeep supermarkets irrelevant.

When the final IPO documents and price band arrive, investors should put three things side by side: same-store sales, profit and cash generation, and the price being asked for the shares.

If comparable-store sales stabilise while National Mart grows without weakening margins, the expansion story becomes more credible. If new-store spending rises but existing stores keep losing momentum, higher total revenue may be less impressive than it looks.

And valuation could change the conclusion entirely. A business can be improving and still be priced too aggressively. The final issue price will need to be assessed against Ratnadeep's earnings, its regional concentration and listed retail companies such as Avenue Supermarts (DMart) and Vishal Mega Mart, with care taken over differences in business models.

For now, the number worth remembering is -7.92%: the FY26 same-store sales decline in Ratnadeep's main supermarket format. The IPO proceeds can help build more shops, but the real sign of a stronger retail business will be whether its existing shops can regain sales momentum.

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