Khaadi’s IPO: The brand you know, the numbers you should know

October 15, 2026 (MLN): In December 1998, textile designer Shamoon Sultan opened a 400-square-foot shop in Karachi's Zamzama, selling handwoven khaddar. The brand took its name from the fabric. Few would have guessed that the little handloom store would one day become one of Pakistan's most recognised names in fashion.

Twenty-eight years later, Khaadi is preparing to invite the public to own a piece of that story.

Its draft prospectus, placed on the Pakistan Stock Exchange website for public comment on October 8, describes a business that now runs 31 stores across 14 cities, including Pakistan's first "Experience Store" at Dolmen Mall Clifton, a Mirpur flagship it describes as South Asia's largest single-brand fashion store and a solar-powered "Green Hub" in Mardan.

In 2021 the International Finance Corporation agreed to invest up to US$25mn in the group, its first investment in fashion retail anywhere in the world.

The company plans to issue 500mn new shares, half to Pre-IPO investors and half to the public, at a floor price of Rs12.40 and up to Rs18.00. At the floor, that raises Rs6.2bn and values Khaadi at Rs31bn after the listing.

Mettis Global has gone through the 293-page draft, including the audited accounts. The brand story is compelling. The financial detail, as is often the case with a first draft, raises a number of questions that the final prospectus can usefully answer. Our initial impressions are set out below.

The offer at a glance

Source: Draft prospectus

Initial impressions

How Khaadi makes money

Khaadi Pakistan is, at its core, a retailer. Products are designed centrally at the parent, Weaves Corporation, sourced mainly from third-party stitching units and textile mills, and sold through 31 directly operated stores and an e-commerce platform that delivers to 218 cities. Stores generate about 91% of gross sales and online about 9%.

Ready-to-wear, which carries higher margins than unstitched fabric, has become the largest category, and the company releases new designs every week, twice a week in festive seasons.

For every Rs100 of net sales in CY25, about Rs64 went on the cost of the goods, Rs19 on running the stores (of which rent was about Rs7), Rs4 on head-office charges paid to Weaves, and close to Rs6 on financing costs, leaving roughly Rs7 as profit after tax.

The numbers so far

*Six-month transition period after the year-end changed from June to December. **Restated from Rs910mn after a change in accounting for investment property. Source: Draft prospectus, Section 6

The pattern is one of flat sales but much better profitability. Revenue has stayed between Rs24.6bn and Rs27bn a year since FY23, while annual profit after tax rose by about three-quarters between FY23 and CY25 as the product mix moved towards ready-to-wear and finance costs eased. Cash generation turned strongly positive in CY25, helped by longer credit from suppliers.

Where the IPO money goes

Figures at the floor price. Source: Draft prospectus, Sections 2.5 and 4

The eight-store programme costs Rs3.4bn in total, with Faisalabad alone at Rs738mn. Khaadi plans to convert its remaining old-format stores into Experience Stores by CY28 and to spend about Rs3.5bn a year on expansion from CY27, funded from internal cash.

Who is investing before the public

Fifteen investors have agreed to buy the 250mn Pre-IPO shares at the average of the floor and final price, capped at Rs15.20. HBL takes the largest slice, about Rs1.55bn at the floor, followed by Kamran Khan (Rs300mn), IGI Investments of the Packages Group (Rs250mn), DEL Projects of the Descon Group (Rs200mn) and Arif Habib (Rs178mn).

Five individuals have committed about Rs100mn each, alongside BRR group companies and the First Dawood Investment Bank staff provident fund. Their shares are locked for 90 days after listing; Weaves must hold its entire stake for at least 12 months.

What management expects

Source: Draft prospectus, Sections 6.18–6.22

The forecasts assume 10% same-store growth every year, export sales rising 15–20% a year, and revenue more than tripling by CY30 with only eight more stores. That would be a sharp step up from the past three years, and the final prospectus could help investors by showing how sensitive these numbers are to slower growth. The projections also show no dividend between CY27 and CY29, as cash is retained for expansion.

Mettis Global has shared its comments with PSX, requesting clearer disclosure on these points. They are offered in a constructive spirit. Draft prospectuses are routinely refined after public comments, and the final, approved document will also set the bidding and subscription dates.

For now, the story that began with a single handloom shop in Zamzama remains one of Pakistan's most remarkable retail journeys. The final prospectus will show investors how much of that journey they will be able to share.

Copyright Mettis Link News