The Khaadi IPO faces tough questions from the Securities and Exchange Commission of Pakistan (SECP) before the fashion retailer can list on the Pakistan Stock Exchange (PSX). The regulator has sought additional disclosures on the company’s business, accounts and share valuation.
Sources told ProPakistani that Khaadi and SECP officials have discussed the listing. The regulator wants more information about Khaadi International’s franchise operations and its experiential stores in different cities.
The SECP has also asked the company to justify the face value of its shares and explain how it arrived at the proposed valuation. Several financial and disclosure issues have come out of the draft prospectus and the audited accounts.
Khaadi IPO accounts show Rs1.5bn loss
Khaadi’s audited accounts for December 2025 show a loss of around Rs1.5 billion, with gains from the revaluation of properties appearing to have offset part of it.
The SECP wants more detail on the property valuation exercise, including the valuation report and the assumptions behind the asset values. A second issue is the gap between the property valuation gains in the 2025 accounts and those in 2024, when the accounts reportedly showed a fair-value gain of only around Rs1 million, far below the following year’s figure.
The company must explain that difference and give investors a clear account of the valuation process.
Questions have also been raised about how Khaadi’s intellectual property rights were valued, the assumptions its valuer, GT, used, and the basis for setting the share premium. Investors need to know how the company priced its shares before they decide whether to buy in.
Expansion plans and use of proceeds under scrutiny
The proposed expansion plan is another area where the SECP wants more detail: a breakdown of the expected investment in each new outlet, the projected revenue per store, and the actual revenue from outlets opened in the first half of 2026. Those figures would help investors judge the expansion strategy and the returns new stores might bring.
The company must also explain clearly how it will spend the IPO proceeds, and what safeguards will apply if the sponsors seek to change the stated plans. That matters because the sponsors hold voting control and can shape shareholder decisions.
The prospectus must also spell out what protections minority shareholders will have if the sponsors fail to meet their commitments or use the proceeds for purposes other than those disclosed.
Rs8bn rights purchase from parent company
A separate concern is Khaadi’s reported purchase of certain rights from its parent company for around Rs8 billion. The draft prospectus does not give enough detail about the agreement or explain how the price was set.
It refers to a valuation carried out by GT, while the audited accounts describe the transaction as negotiated between the parties. The company needs to clarify that difference and disclose the valuation method, the assumptions used and the roles of the parties and the independent valuer.
The deal also raises questions about the ownership and commercial structure of the experiential stores: the parent company reportedly holds the relevant rights, while a related company is described as dormant. Investors need to understand why Khaadi is paying a large sum upfront to acquire these rights and what financial benefits it expects in return.
Alternative arrangements could also be examined, including a joint venture or a structure in which the parent company contributes the rights while Khaadi provides the funding, if that proves commercially and legally workable.
Why the SECP checks matter for investors
The additional disclosures matter because investors must be able to judge the company’s financial position, its expansion plans, its related-party deals and the proposed use of IPO proceeds before they put money in. Without the underlying agreement, an independent valuation and projected financial benefits, investors will find it hard to judge whether the IPO serves Khaadi’s interests.
The scrutiny fits a wider pattern of tougher checks on new listings. The SECP recently probed 30 banks and an IPO by SE Fruits, as reported in SECP probes 30 banks and SE Fruits IPO. Another recent listing, covered in Abhi IPO raises Rs2 billion, shows the market remains open to new issues that clear the regulator’s bar. The pace of new company registrations is tracked in SECP registers 5,003 new companies in October, while the business mood is reflected in Industrialists demand power sector audit.
Khaadi is one of Pakistan’s best-known fashion brands, and a listing would put a major consumer name on the PSX. For now, the company must answer the regulator’s questions before the IPO can move ahead.
Frequently asked questions
What has the SECP asked Khaadi to disclose?
The SECP has sought additional disclosures on Khaadi’s franchise operations, experiential stores, share face value, valuation basis, property revaluation, intellectual property rights, share premium, expansion plans and the use of IPO proceeds.
How much loss did Khaadi report in its 2025 accounts?
The audited accounts for December 2025 show a loss of around Rs1.5 billion. Property revaluation gains appear to have offset part of the loss. The SECP has asked for the valuation report and the assumptions behind it.
What is the Rs8 billion issue in the Khaadi IPO?
Khaadi reportedly bought certain rights from its parent company for around Rs8 billion. The draft prospectus lacks detail on the agreement and how the price was set, and the accounts describe the deal as negotiated between the parties.
Why do the IPO proceeds matter to investors?
Investors need to know how the money will be spent and what safeguards apply if the sponsors change the stated plans. The sponsors hold voting control, so minority shareholder protections are a key concern for the regulator.
When will Khaadi list on the PSX?
No date has been set. The listing can only move ahead once the SECP is satisfied with the additional disclosures and the draft prospectus answers its questions.
