Metro Brands IPO details | Value Research Metro Brands IPO review: Let’s see how this footwear retail company has performed post-listing. Read our analysis of Metro Brands’ stock performance since listing and more.
IPO Analysis

IPO update: Metro Brands

Find out how this footwear retailer has fared post listing

Metro Brands came out with its IPO about four months ago, and you can find our detailed analysis of the issue. In this update, we will look at the company's market performance and business performance post issue.

Our analysis of the IPO
We gave a score of 20 out of 28 to this footwear retailer. Metro Brands is one of the largest footwear retailers in India. The company offers a wide range of brands for the entire family and for every occasion. As of December 2021, the company operated 629 stores across four formats (Metro shoes, Mochi, Crocs and Walkway). It sells products under its in-house brands (such as Metro, Mochi, Walkway, Da Vinchi), as well as certain third-party brands, such as Crocs, Skechers, Clarks, Florsheim and Fitflop.

Our rating for Metro Brands was based on the following factors:

  • Out of the 11 business metrics, the company did well on eight.
  • It scored six out of six on management-quality-related metrics.
  • The company cleared six of eight financial metrics.
  • It didn't clear any valuation-related metrics.

Stock performance since listing
Metro Brands saw a good response to its IPO, which was oversubscribed about 4 times. The qualified institutional buyers (QIB) portion was oversubscribed 8.5 times, while the non-institutional investors' portion was oversubscribed 3 times and the retail portion 1.1 times.

The company had a bad debut on the stock exchanges, with the shares listing at a discount of 12.8 per cent to its issue price, opening at Rs 436 and ending the day at Rs 494. Post listing, the stock has gyrated up and down. After hitting its lowest price of Rs 426 on the listing day, the stock reached a high of Rs 673 on January 18, 2022. As of April 6, 2022, the stock closed at Rs 600, which is 20 per cent higher than its issue price of Rs 500.

Business performance
In Q3 FY22, the company's revenue increased by 59 per cent to Rs 484 crore and its EBITDA increased by 83 per cent YoY to Rs 168 crore. The profit after tax increased by 53.2 per cent YoY to Rs 102 crore. The rise in profit after tax was not commensurate with the increase in EBITDA due to a fall in other income (of about 29 per cent) and a more than 3 times increase in tax expense.

During the quarter, the company opened 39 new stores. This is the highest ever new store openings in a quarter for the company. Metro Brands witnessed a robust YoY growth of 114 per cent in online sales. For the 9M FY22 period, online sales contributed about 9.2 per cent to sales, compared to 7.3 per cent in the year-ago period.

What to do now?
The company is pivoting from an 'offline' retailer to an 'omnichannel' retailer. Its asset-light model, a wide range of brands and focus on the mid and premium segment augur well for its future growth. Moreover, its strategy of partnering with international third-party brands is another positive.

Metro Brands plans to open about 260 new stores under various formats by FY25. It also wants to expand its e-commerce business and leverage its omnichannel platform to expand its portfolio through partnerships and inorganic opportunities. With the industry being highly underpenetrated, there is ample room for growth. Since its listing in December, the company has traded at a P/E between 173-250 times. It currently trades at a P/E of about 239 times. This is significantly higher than the median P/E of its competitors of 30. Keep this one on your watch list.

Disclaimer: This analysis is not meant to serve as a recommendation. Do your research before investing in the company. If you are interested in our stock recommendations, please visit Value Research Stock Advisor.

Also read: Metro Brands IPO: Information analysis

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