Jay Ambe Supermarkets

• Jay Ambe Supermarkets is coming out with an initial public offering (IPO) of 23,64,800 equity shares in a price band of Rs 74-78 per equity share.
• The issue will open on September 10, 2025 and will close on September 12, 2025.
• The shares will be listed on SME Platform of BSE.
• The face value of the share is Rs 10 and is priced 7.40 times of its face value on the lower side and 7.80 times on the higher side.
• Book running lead manager to the issue is Beeline Capital Advisors.
• Compliance Officer for the issue is Renuka Trikha.

Profile of the company

City Square Mart is a brand owned by the company Jay Ambe Supermarkets. Its journey began in August 2018 with the establishment of its first store in Kudasan, Gandhinagar. The company is engaged in the business of trading of FMCG material, grocery, Home Textile, Home Decor, Cloths, or Apparels, Toys, Gift Articles, Footwear and other house hold items, via supermarkets. The company is carrying on its business through retail marts via franchise model as well. A franchise is a type of license that grants a franchisee access to a franchisor's proprietary business knowledge, processes, and trademarks, thus allowing the franchisee to sell a product or service under the franchisor's business name. In exchange for acquiring a franchise, the franchisee usually pays the franchisor an initial start-up fee and annual licensing fees. The relationship between the franchisor and franchisee is governed by the franchise agreement.

There are essentially three different types of business models: i) Company Owned Company Operated - COCO; ii) Franchise Owned Company Operated FOCO; and iii) Franchise Owned Franchise Operated - FOFO. The FOCO franchise model, short for Franchise-Owned, Company-Operated, is a unique approach to franchising where the franchisee owns the business, but the franchisor handles the day-to-day operations. This model combines the investment benefits of franchise ownership with the operational expertise of the franchisor. In FOCO model, Company receives percentage of sales which is based on per sqft sales as a franchisee revenue from Franchisor per month.

The FOFO (Franchise Owned Franchise Operated) model allows a franchise investor to own and operate a store under a brand's name for a non-refundable franchise fee for a specified duration. The brand sets the prices and merchandise, while the franchisee bears all operational costs. In return, the franchisee must also pay a royalty amount, which is a percentage of the store's revenue, to the brand. The company’s business model dwells on lease rental model, as it focuses to secure retail spaces which ensures high visibility and easy accessibility to customers.

Proceed is being used for:

• Purchase of existing store of the company located at Nana Chiloda, Ahmedabad (Acquisition of Identified Store)
• Purchase of fit-outs for 3 new stores
• Meeting working capital requirements
• General corporate purposes

Industry Overview

The Indian retail industry is a key driver of the Indian economy, and its contribution is significant in terms of value and its share in country’s total workforce. It contributed around 10% to the country’s total GDP and employs around 8% of the total workforce. The sector is growing at a brisk pace fuelled by the rapid urbanization, a growing middle class, steady increase in national wages and disposable incomes, and expanding consumer spending. The Indian retail sector is experiencing a significant transformation owing to a range of shifting socio-economic factors, increasing digital and new age technology influence along with a rapidly transforming consumer landscape. Over the year, India has evolved as a thriving consumer-driven economy, making it the 4th largest retail market globally after US, China, and Japan and has thus become one of the most attractive markets for global retailer to expand their footprints in India.

E-commerce industry has exhibited significant transformation in terms of scope of products/service delivered over the just a click of button. Indian e-Commerce industry has steadily grown riding on a booming internet subscriber base and smartphone users complimented by better connectivity and availability of cheap data services apart from the country’s favourable demographics. Access to large population base particularly having young aspirational population age between 15-34 years, income growth, rising urbanization and increasing in working women segment, are few of the favourable demographic factors that have propelled the e-commerce industry growth in India.

The growing demand from tier 2 and tier 3 cities is a significant driver of the increased popularity and demand for organized retail shops and supermarkets in India. Tier 2 and tier 3 cities are experiencing rapid urbanization, economic growth, and infrastructure improvements, leading to changes in consumer behaviour and preferences. One key factor contributing to the demand from these cities is the rising middle-class population with increasing disposable incomes. As incomes rise in tier 2 and tier 3 cities, consumers have more purchasing power and a growing appetite for FMCG products convenience, and a modern shopping experience. Organized retail outlets are well-positioned to meet these evolving consumer needs by offering a wide range of branded products, superior quality, and convenient services under one roof. Moreover, the expansion of organized retail chains into tier 2 and tier 3 cities has bridged the gap between urban and rural shopping experiences. Consumers in these cities now have access to a diverse range of products, including FMCG goods, electronics, apparel, and household items, which were previously limited to larger cities or urban areas. This accessibility and availability of products contribute significantly to the growing demand for organized retail in tier 2 and tier 3 cities.

Pros and strengths

Strong vendor relationships: Expanding on the company's strong vendor relationships, these partnerships go beyond mere business transactions. By fostering long-term alliances with over 1700 direct manufacturers and suppliers spread across India, the company creates a robust supply chain. These strategic partnerships are built on mutual trust and cooperation, allowing the company to secure access to high-quality products. This reliable supply chain ensures that the company can consistently meet customer demands without compromising on the quality of the products offered. Furthermore, the extensive network of vendors provides the company with leverage to negotiate better prices, which in turn helps maintain competitive pricing for customers.

Wide range of products: The company takes pride in offering an extensive range of products that cater to a wide variety of customer needs and preferences. This comprehensive product portfolio includes Fast-Moving Consumer Goods (FMCG), toys, artificial jewellery, crockery, apparel, household items, and more. By stocking such a diverse array of products, the company can attract a broad and varied customer base, ensuring that shoppers can find products of their daily needs under one roof. This helps it to build brand recognition and customer loyalty. One of the key benefits of having such a wide range of products is the ability to meet the needs of different customer segments. For example, families can purchase groceries and household items, while fashion-conscious shoppers can explore the latest trends in apparel and artificial jewellery. This versatility helps the company appeal to a diverse audience, increasing foot traffic and customer retention.

Customer friendly refund policy: A customer-friendly refund policy is a powerful tool in building and maintaining trust between the company and its customers. When customers know that they have the option to return or exchange products easily, their hesitation during purchases is significantly reduced. This peace of mind encourages them to make purchases with confidence, knowing that they are not taking a risk if the product does not meet their expectations. One of the key benefits of a customer-friendly refund policy is the enhancement of customer satisfaction. When customers have a positive experience with returns or exchanges, they are more likely to view the company favourably. This positive perception extends beyond the return process itself, as customers who feel valued and respected are more likely to return for future purchases and recommend the company to others. 

Risks and concerns

Geographical constrain: All the company’s existing stores are located and its entire revenue from operation is concentrated in the state of Gujarat as its entire revenue is generated from the Gujarat i.e. Rs 4,735.28 lakh, Rs 3,338.68 lakh and Rs 3,268.96 lakh, constituting whole of the total revenue from operations the financial year ended March 31, 2025, 2024 and 2023, respectively. However, it plans to expand into new geographies and may be exposed to significant liability and could lose some or all of its investment in such regions, as a result of which its business, financial condition and results of operations could be adversely affected.

Significant working capital requirements: The company’s business requires a significant amount of working capital as there is considerable time lag between purchase and realisation from sale of the products. Thus, it is required to maintain sufficient stock at its stores. Consequently, there could be situations where the total funds available to it may not be sufficient to fulfil its commitments, and hence it may be required to incur additional indebtedness or utilize internal accruals to meet its working capital requirements. The working capital requirements may increase if there is a requirement to pay higher price for stock or to pay excessive advances for procurement of stock. Some of these factors may result in an increase in its short-term borrowings. There can be no assurance that it will continue to be successful in arranging adequate working capital for its existing or expanded operations on acceptable terms or at all, which may adversely impact its business and prospects.

Business is subject to seasonal and cyclical volatility: The company offers products at its stores that its consumers require and its success is dependent on its ability to meet its consumers’ requirements. The retail consumer spending is heavily dependent on the economy and, to a large extent, on various occasions such as festivals, seasonal changes, weddings, etc. It typically experiences seasonal fluctuations in the sale of products across its three product categories, with higher sales volumes associated with the festive sale period in the third quarter of each Financial Year, which encompasses holiday events such as Durga Puja, Diwali, annual sales events, other national and regional festivals etc. Any year also has phases of lean sales. It has historically experienced seasonal fluctuation in its sales, with higher sales volumes associated with the festive period. As a result, its revenue and profits may vary during different quarters of the financial year and certain periods may not be indicative of its financial position for a full financial year or future quarters or periods and may be below market expectations.

Outlook

Jay Ambe Supermarkets is engaged in the business of trading of FMCG material, grocery, Home Textile, Home Decor, Cloths, or Apparels, Toys, Gift Articles, Footwear and other house hold items, via supermarkets. The company has wide range of products. It also has customer friendly refund policy. On the concern side, all of its stores are presently located in Gujarat. However, the company plans to expand into new geographies and may be exposed to significant liability and could lose some or all of its investment in such regions, as a result of which its business, financial condition and results of operations could be adversely affected. 

The company is coming out with a maiden IPO of 23,64,800 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 74-78 per equity share. The aggregate size of the offer is around Rs 17.50 crore to Rs 18.45 crore based on lower and upper price band respectively. On performance front, the company has reported 41.83% rise in Revenue from operations at Rs 4,735.28 lakh in FY25 as compared to Rs 3,338.68 lakh in FY24. Moreover, the company’s net profit surged 77.78% to Rs 275.37 lakh in FY25 as compared to Rs 154.89 lakh in FY24.

At present, the company is covering Gujarat state. It aims to expand its operations and widen its distribution network by entering new cities and towns and strengthening its presence in existing cities and towns. Further, it intends to enhance its position in the retail supermarket business by increasing its market penetration and expanding its store network in other prime locations of Gujarat in tier-2 and tier-3 cities such as Anand, Jamnagar, Palanpur, Junagadh, Mansa, Bhavnagar, Gandhidham, Bhuj, Anjar, Bhachau, Nadiad, Valsad, Navsari, Godhra, Lunawada etc. As part of its sales strategy, it continues to evaluate potential sales growth drivers and regularly identify specific states and regions in India to focus on its sales efforts and increase its sales volumes. The key factor affecting the expansion of its stores is the selection of suitable locations. Prior to expanding to new geographies or launching new products, it researches and examines the market and demographic characteristics of the region to determine the demand for its products in that market.