Rekha Jhunjhunwala-Backed Footwear Stock Hits New 52-Week High; Huge Run-Way For Growth Ahead

Rekha Jhunjhunwala, wife of the late market mogul Rakesh Jhunjhunwala, is among the largest public shareholders in footwear company, Metro Brands (MBL). In fact, MBL is her second most valued stock in the portfolio after Tata Group-backed Titan. Metro Brands shares during the trading session of October 3rd have touched a new 52-week high before ending with over 12% upside on BSE.

On BSE, the stock ended at Rs 1266.90 apiece, up by Rs 139.05 or 12.33% with a market cap of Rs 34,426.11 crore on Tuesday. During the trading hours, the stock even hit a new 52-week high of Rs 1,298.

Last week, Prabhudas Lillader analysts recommended accumulating Metro Brands share price.

The analyst's note said, "We are initiating coverage on Metro Brands (MBL) with 'Accumulate' rating and DCF based TP of Rs1231 (48.7x FY26E)."

On Tuesday, Metro Brands shares have already crossed Prabhudas Lilladher's target price.

As per the shareholding pattern, Rekha holds 26,102,394 equity shares or a 9.6% stake in Metro Brands. Her shareholding is currently valued at Rs 3,303 crore in the company.

Metro Brands has created a pure retailing model in footwear with 766 stores across segments, price points and geographies with brands like Metro, Mochi, Walkaway, Crocs and Fitflop.

PL's analysts believe there is a huge runway for growth given 1) presence in just 174 cities (Bata/ Tanishq 388/257) 2) rising online salience (8% of sales, 32% CAGR) 3) focus on the mid premium segment (15ppt higher sales share of products with MRP>3000 since2020) and 4) new brands licenses/acquisitions (Crocs, FILA, Fitflop, Birkenstock, Cheemo)."

MBL has acquired a FILA license for India and plans to scale this up like it has done with Crocs in the past. Adding analysts said, "Post re-launch FILA will add another dimension to company's growth prospects, although it
will drag the performance in FY24 (Rs278 million loss in 4Q23/1Q24)."

They further said, "We expect 355 net store additions including FILA over FY23-26E and 6% sales CAGR per store post-FY24 (1.1% only). We estimate a Sales/EBIDTA/PAT CAGR of 20.1/19.3/18.7% for FY23-26E. Though FY24 will remain depressed with 7.3% PAT growth, yet we expect 24.8% CAGR over FY24-26. MBL trades at 60.1x/48.7x FY25/26 EPS which is at a premium to other footwear players given growth visibility and past track record. Initiate with 'Accumulate' rating."

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.