METRO BRANDS IPO

IPO Details:

Price Band: 485-500

Cutoff Price: 500

About Company:

Metro is one of the largest Indian footwear speciality retailers, and are among the aspirational Indian brands in the footwear category. Metro Brand opened their first store under the Metro brand in Mumbai in 1955, and have since evolved into a one-stop shop for all footwear needs, by retailing a wide range of branded products for the entire family including men, women, unisex and kids, and for every occasion including casual and formal events. As of September 30, 2021, company operated 598 Stores (as defined below) across 136 cities spread across 30 states and union territories in India. Metro target the economy, mid and premium segments in the footwear market, which together are expected to grow at a higher rate compared to the total footwear industry between Fiscal 2020 and 2025. These segments have a higher presence of organised players and their growth in the overall footwear industry is expected to accelerate growth of the organized segment in the footwear industry. Company had the third highest number of exclusive retail outlets in India, in Fiscal 2021.

Competitive Strengths:

1. One of India’s largest pan India footwear retailers with a brand appeal among aspirational consumer segments in the fast-growing footwear retail industry.

2. Wide range of brands and products catering to all occasions across age groups and market segments resulting in strong customer loyalty.

3. Efficient operating model through deep vendor engagements and TOC based supply chain.

4. Asset light business with an efficient operating model leading to sustained profitable growth.

5. Presence across multiple formats and channel.

6. Platform of choice for third party brands looking to expand in India.

7. Strong promoter background and an experienced and entrepreneurial management team with a proven track record and a high degree of employee ownership.

8. Strong track record of growth and profitability and financial discipline

Strategies:

1. Expand store network in existing and new Indian cities.

2. Leverage multi-channel platform to pursue new business opportunities.

3. Increase contribution of e-commerce and omni-channel sales as a proportion of sales.

4. Expand a portfolio of accessories and grow other allied businesses

5. Evaluate accretive inorganic growth opportunities

6. Introduce and expand portfolio of environmentally sustainable footwear

Financial Performance:

Revenue of the profit is decreasing may be due to the pandemic. Because of this company's bottom line is also decreasing. With EPS of 2.4, the company's Price to Earning (P/E) is 208.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Offer for Sale

2. Fresh Issue for operational expenditure

Competitors Comparison:

comparing it with the competitors, Metro Brands to be slightly overvalued on the basis of P/B ratio and undervalued on the basis of P/E. Company profits is also declining, and this trend was seen in major players like Bata and Relaxo.

Grey Market Premium:

Our view: GMP of the IPO is not that good. I will not subscribe to this IPO.

Disclaimer: Views are shared for an educational purpose. Please consult your financial advisor or planner before taking any action based on the views or facts shared on this blog.

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