India’s aspiration for healthier lifestyles is driving demand for sports and athleisure products and the sports footwear category is among the prime beneficiaries of this.
Metro Brands, the largest footwear company by market-cap, has forayed into this highly competitive category with the addition of premium brands like Fila and Foot Locker.
Let’s look at factors that work in its favour.
It offers footwear at varied price points. But, its growing focus on product premiumisation has been boosting its average selling price, which is the highest in the industry.
It is the fastest-growing among peers and most favoured for global tie-ups. It has the largest third-party portfolio, which includes global brands like Crocs, Skechers, etc.
Despite its high average selling price compared to peers, 40% of its revenue comes from tier-2 and 3 cities combined given its strong distribution network and market penetration.
It has an impressive track record of successfully partnering with and scaling various national and international brands since its inception in 1955.
Given its vast retailing experience and other positives, it won’t be difficult for the company to compete with existing sports footwear giants like Puma, Adidas, etc.
The company’s valuations are pricey as it trades at a hefty P/E ratio of 96 times. Its asset turnover has deteriorated from 1.4 times in FY19 to 0.8, as of 9MFY24 (TTM basis).