Purple Style Labs: Financial Insights and IPO Details

Purple Style Labs, the parent company of the luxury fashion site Pernia’s Pop-Up Shop, has submitted a Draft Red Herring Prospectus (DRHP) to SEBI, aiming to gather Rs 660 crore through an Initial Public Offering (IPO). In its financial overview, the company has reported a significant increase in losses, primarily due to Rs 123 crore attributed to expenses related to employee stock options (ESOP).

Financial Performance Overview

According to the restated consolidated financial statements outlined in the DRHP, Purple Style Labs saw its operating revenue decrease by 2.8%, falling to Rs 490 crore in FY25 from Rs 504 crore in FY24. The revenue mainly originates from product sales on its omni-channel platform, PPUS, alongside services such as logistics and styling.

Revenue Breakdown

The revenue from product sales slightly declined to Rs 483 crore in FY25. This reduction was a deliberate choice aimed at phasing out lower-value items, resulting in a 42% uplift in average order value (AOV) to Rs 56,106. Conversely, revenue from services witnessed a dramatic 58% drop to Rs 65 crore in FY25 as the company scaled back its consulting, styling, IT, and other related services.

Gross Merchandise Value Growth

PPUS reported a 26% increase in gross merchandise value (GMV), reaching Rs 588.3 crore in FY25 compared to Rs 466 crore in FY24. Geographically, India stood out as the most significant market for PPUS, with a GMV of Rs 421 crore. This was followed by the US at Rs 97 crore, the UK at Rs 37 crore, and other global markets contributing Rs 33 crore. While both India and the UK showed modest growth, GMV from the US and other regions experienced a decline.

Cost Analysis

On the expenditure side, the cost of materials remained the largest component, representing nearly 51% of total costs. This expense decreased by 4.5%, dropping to Rs 284 crore in FY25 from Rs 297.5 crore in FY24. Employee benefits costs saw a rise of 12% to Rs 66 crore. Additionally, finance charges increased by 29% to Rs 53 crore, and depreciation costs surged by 43% to reach Rs 55 crore. Remarkably, sales and marketing expenditure decreased by 39% to Rs 33 crore in FY25. Overall, total expenses for Purple Style Labs accounted for Rs 560 crore in FY25 compared to Rs 558 crore in FY24.

Losses and Financial Ratios

As the company’s revenue declined, the reported loss escalated fourfold to Rs 188.5 crore in FY25 from Rs 48 crore in FY24. It is significant to note that the loss includes Rs 123 crore classified as an exceptional item from ESOP expenses. Without this, the loss for FY25 would have been Rs 65.5 crore, reflecting a year-on-year increase of 36%.

Performance Metrics

Purple Style Labs’ return on capital employed (ROCE) and EBITDA Margin stood at -50.75% and -16.30%, respectively. At a unit level, the company needed to invest Rs 1.14 to generate every rupee of revenue in FY25, a slight rise from Rs 1.10 in FY24. Currently, the company possesses assets worth Rs 256 crore, which includes cash and bank balances of Rs 10 crore and inventory valued at Rs 160 crore.

Ownership Structure

According to the DRHP, founder Abhishek Agarwal possesses a 27.1% stake in Purple Style Labs, while other investors like Volrado Venture Partners hold 2.9%, Abhinav Agarwal holds 0.25%, and Singularity Growth Opportunities Fund owns 1.93%.