Khaadi set to become first pure-play fashion retailer on PSX with record IPO

Khaadi Pakistan Ltd., one of the country’s leading fashion retailers, plans to raise up to Rs8.3 billion through a combination of pre-IPO placement and an initial public offering to expand its retail footprint and convert its outlets into larger “Experience Stores,” according to a report by Mettis. The listing would be the largest IPO by a private company in Pakistan’s history, Bloomberg reported, citing a company statement.

Share structure and pricing

Khaadi, a subsidiary of Weaves Corporation Ltd., has already placed 250 million shares with blue-chip investors through a pre-IPO placement at Rs12.40 to Rs15.20 per share, raising between Rs3.1bn and Rs3.8bn, Mettis reported. The company plans to offer another 250 million shares through the IPO itself, at Rs12.40 to Rs18 per share, potentially raising a further Rs3.1bn to Rs4.5bn, bringing combined proceeds to between Rs6.2bn and Rs8.3bn, or roughly $22 million to $30 million. Arif Habib Ltd. is serving as lead manager and book runner on the transaction, according to both reports. Bookbuilding is expected in November, Mettis reported, and at the maximum price, the offering would surpass Chinese tyre venture Service Long March’s share sale earlier this year as the country’s largest by a private company, Bloomberg reported.

Funds to finance “Experience Store” conversion

IPO proceeds will primarily finance capital expenditure for Khaadi’s “Experience Store” format, which the company said is aimed at improving customer experience while broadening its product range, according to Mettis. Khaadi currently operates 31 stores in Pakistan, and as of the first half of 2026, 18 had already been converted to the new format, with the remaining 13 in process, Mettis reported. The company plans annual capital expenditure of around Rs3.5bn from 2027 onwards, financed through IPO proceeds and internally generated cash, and has shifted its broader strategy from a “go-wide” model focused on rapid geographic expansion toward a “go-deep” approach centred on fewer, larger and more productive stores, according to the report.

Profit targets and margins

Khaadi reported profit after tax of Rs1.6bn in the first half of 2026, compared with Rs1.7bn for all of 2025 and Rs1.4bn in 2024, and is targeting PAT of more than Rs3.1bn for 2026 and Rs4.8bn for 2027 — growth of over 90% and 50% respectively, Mettis reported. Based on its 2026 earnings estimate, the company said its shares are being offered at a post-money price-to-earnings multiple of around 10x, falling to an estimated 6.5x for 2027. Gross profit rose to Rs6.3bn in the first half of 2026, with gross margin improving to 37%, up from 36% in 2025 and 34% in 2024, while operating profit stood at Rs2.6bn, Mettis reported.

Part of a record year for Pakistani IPOs

The sale comes as Pakistan logs a record year for IPOs, with 13 deals raising a combined Rs24.9bn so far, according to data compiled by Bloomberg, as a 2024–2025 stock rally and surging retail investor participation draw companies back to the equity market.

From a 400-square-foot store to a national retailer

Founded by Shamoon Sultan in 1998, Khaadi began operations from a 400-square-foot store in Karachi’s Zamzama area, according to Mettis, initially focusing on menswear before entering womenswear in 2002 and launching its luxury line, Khaadi Khaas, in 2008. The company now operates across 14 cities in Pakistan, with its e-commerce platform serving customers in more than 200 cities, and runs South Asia’s largest Khaadi store, spanning around 45,000 square feet, Mettis reported. Through separate subsidiaries, Weaves Corporation also operates Khaadi outlets in the UAE, the UK and the US, giving the brand an international footprint, according to both reports. International Finance Corp., a member of the World Bank Group, invested $25 million in Khaadi in 2022 for a minority equity stake, IFC’s first investment globally in the fashion retail sector, according to the company, as cited by Mettis.