Can Purple Style Labs IPO deliver long-term growth for high-risk investors?

Purple Style Labs, a multi-brand luxury fashion platform, intends to raise ₹680 crore via a fresh issue to address lease liabilities for experience centers, offices, and marketing expenditures. This will bring the promoter group's stake down to 22.7% from 26.3%.

Approximately 30% of their revenue originates from repeat customers. The company's exposure to international trade policies and trade tariffs is notable, as around 16% of revenue comes from the US and UK.

The company, established in 2015, offers a curated selection of luxury fashion products in women's wear, men's wear, jewelry, accessories, and kids' wear, with a focus on wedding and occasion wear. It collaborates with 1,109 active designer brands, with the top 10 contributing 30% to revenue.

Purple Style Labs operates 14 experience centers, 12 of which are in India, one in London, and one in New York. A significant portion of its revenue, around 78%, is derived from women's wear, followed by men's wear at 18%, and the remainder from jewelry, accessories, and kids' wear.

Despite a 5.2% year-over-year increase in revenue from operations to ₹557.8 crore, operating profit before interest, tax, depreciation, and amortization (EBITDA) dropped by 2% to ₹30.4 crore between FY24 and FY26. The EBITDA margin fell to 5.4% in FY26 from 6.3% in FY24. Net loss expanded to ₹285.4 crore in FY26 from ₹47.7 crore in FY24.

Operating cash flow deficit widened to ₹34.9 crore in FY26 from ₹31.3 crore in FY24. This increase is primarily due to the company's strategic focus on large-format experience centers, which resulted in higher security deposit payments, accumulated GST input credit, and elevated inventory levels. Net debt surged to ₹355.8 crore from ₹113.1 crore over FY24-26.