Khaadi Faces Tough Questions Ahead of PSX Listing

In practice, the Securities and Exchange Commission of Pakistan (SECP) has sought extra disclosures from Khaadi ahead of its proposed initial public offering (IPO), asking the business to clarify a number of aspects of its business, financial statements and share valuation, sources have informed ProPakistani.

Key points

• Another matter worries the difference between property valuation gains documented in the 2025 accounts and those recorded in 2024.
• Sources remarked Khaadi's audited accounts for December 2025 show a loss of around Rs.
• A separate concern relates to Khaadi's documented purchase of certain rights from its parent business for approximately Rs.
• The transaction additionally raises questions concerning the ownership and commercial structure of Khaadi's experiential stores.
• Investors need to understand why Khaadi is making a substantial upfront payment to acquire these rights and what financial benefits it expects in return.

Sources remarked Khaadi and SECP office-holders have discussed the listing. SECP sought more information regarding Khaadi International's franchise operations and experiential stores operating in different cities.

It has additionally demanded justifications for the face value of Khaadi's shares and asked the business to explain how it had arrived at the proposed valuation. Khaadi to List on PSX.

Notably, a number of financial and disclosure matters have additionally emerged from the company's draft prospectus and audited accounts.

Sources remarked Khaadi's audited accounts for December 2025 show a loss of around Rs. 1.5 billion. Gains from the revaluation of properties appear to have supported offset the impact of this loss.

More details regarding the property valuation exercise have to be provided as well, including the relevant valuation report and the assumptions employed to determine asset values.

Another matter worries the difference between property valuation gains documented in the 2025 accounts and those recorded in 2024. The latter reportedly indicated a fair-value gain of around Rs. 1 million, significantly below the amount reflected in the subsequent year's accounts.

For context, the firm needs to explain this difference and provide investors with a clear account of the valuation process.

Questions have additionally been raised concerning the valuation of Khaadi's intellectual property rights, the assumptions applied by its valuer, GT, and the basis for determining the share premium.

For context, the proposed expansion plan is another area where extra information may be required, particularly a detailed breakdown of the anticipated investment in each new outlet, projected revenue per store, or actual revenue generated by outlets opened during the first half of 2026.

These figures would support investors assess the company's expansion strategy and the anticipated returns from new stores.

Sources remarked the business should clearly explain how the IPO proceeds will be spent and what safeguards will apply if the sponsors seek to change their stated intends. This is particularly relevant given the sponsors' documented voting control and their ability to influence shareholder decisions.

Notably, the prospectus should additionally clarify what protections would be available to minority shareholders if the sponsors fail to meet their commitments or apply the proceeds for purposes different from those originally disclosed.

Meanwhile, a separate concern relates to Khaadi's documented purchase of certain rights from its parent business for approximately Rs. 8 billion.

Meanwhile, the draft prospectus doesn't provide sufficient details regarding the agreement or explain how the transaction rate was determined. While the audited accounts describe the transaction as having been negotiated between the parties, it refers to a valuation conducted by GT.

For context, the firm needs to clarify the apparent difference and disclose the valuation methodology, assumptions and respective roles of the parties and the independent valuer, sources went on.

Notably, the transaction additionally raises questions concerning the ownership and commercial structure of Khaadi's experiential stores. While a related business is described as dormant, the parent firm reportedly holds the relevant rights.

Investors need to understand why Khaadi is making a substantial upfront payment to acquire these rights and what financial benefits it expects in return. Solar Firm Becomes First to Join PSX Through Merger.

Alternative arrangements, including a joint venture or a structure under which the parent firm contributes the rights while Khaadi provides funding, could additionally be examined if commercially and legally feasible.

Without access to the underlying agreement, independent valuation and projected financial benefits, investors may find it tough to assess whether the IPO is in Khaadi's interests.

For context, the extra disclosures are notable for investors to evaluate the company's financial position, expansion intends, related-party transactions and the proposed apply of IPO proceeds before making investment decisions. Stay Connected with ProPakistani.

Obtain the latest business news, market insights, and economic updates wherever you prefer. Follow on Google Discover. Follow on Google News Join WhatsApp. See more ProPakistani stories in Google Search and Top Stories.

Taken together, the developments around khaadi Faces Tough Questions Ahead of PSX Listing point to a situation that is still moving, and the coming days should bring more clarity.