PACRA Maintains the Entity Ratings of Service Retail (Pvt.) Limited

Service Retail Private Limited (SRPL), a wholly owned subsidiary of Service Industries Limited (SIL), operates a nationwide network of Servis Shoe outlets across Pakistan, offering footwear for men, women, and kids, along with accessories, bags, and apparel. SRPL continues to uphold the Servis Group’s legacy of serving local customers and benefits from brand equity and a wide retail network. The assigned ratings take comfort from the Company’s longstanding presence in the footwear industry, supported by continued product diversification and brand repositioning initiatives. Pakistan’s footwear sector remains fragmented, with the unorganized segment, largely comprising craft manufacturers and cobblers, continuing to hold a dominant share alongside organized players, including Servis, Stylo, Bata, Ndure, and Borjan. As per the Trade Development Authority of Pakistan’s (TDAP) report, annual demand is estimated at ~600 million pairs. The industry is inherently cyclical, with demand closely linked to consumer discretionary spending, while persistent inflation (CPI: ~10.3% in September 2026) and shifting fashion trends add pressure on pricing and product adaptation. During 6MCY26, SRPL recorded topline growth of ~5.6% YoY, with revenues of PKR 7,581mln (6MCY25: PKR 7,179mln), driven mainly by volumes. The Company operated 286 outlets as of end-6MCY26 (CY25: 283 outlets), with a concentrated presence in Punjab province. Profitability improved across operating levels, with gross, operating, and net margins of ~51.2%, ~17.6%, and ~7.5% in 6MCY26 (6MCY25: ~49.9%, ~15.0%, ~5.6%) respectively. Financial risk profile is demonstrated by adequate working capital management and strong coverages. Capital structure remains leveraged, comprising entirely short-term borrowings utilized to fund working capital requirements. Assigned ratings incorporate the business acumen of sponsors complemented by sound governance practices, oversight from experienced professionals in key positions, and a comprehensive internal control framework. Looking ahead, management’s focus on diversifying the product portfolio alongside brand repositioning to broaden market reach and maintain consumer relevance, and continued solarization of the retail network, is expected to support revenue diversification and operating cost efficiency over the medium to long term.
The ratings remain contingent on the Company’s ability to sustain sales productivity per outlet and preserve margins amid competitive and inflationary pressures, given its high revenue concentration in footwear. Prudent working capital management, continued cost efficiencies, and maintaining a conservative leverage profile will remain critical.

About the Entity
Service Retail (Private) Limited (‘SRPL’ or ‘the Company’) was incorporated in Pakistan on December 21st, 2023 as a private limited company. It is primarily engaged in the sale, trading, retail, wholesale and marketing, import of footwear, bags, apparel and accessories in Pakistan. The Company is a wholly-owned subsidiary of Service Industries Limited (SIL). The board of SRPL comprises five members, including Mr. Arif Saeed (Chairman), Mr. Kashif Aziz Khwaja (CEO), Mr. Omar Saeed (Non-Executive Director), Mr. Saif Javed (Non-Executive Director), and Mr. Hassan Javed (Non-Executive Director).