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Metro Brands IPO Opens: Check If You Should Subscribe

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While it is not a good idea to invest in each and every IPO that opens for public subscription if you can financially afford it, nevertheless we shall still delve on the key points in respect of the new IPO- Metro Brands- that kicks off today for public subscription.

 

Issue details:

Issue details:

Offer period: 10 December 2021- 14th December, 2021

Issue size: Rs. 1368 crore

Price band- Rs. 485-500

Investment amount: Rs. 14,550-Rs. 1,95,000

Lot size-1-13

Lot quantity- 30 shares

Listing date: December 22

Fresh equity issuance will be for Rs, 295 crore, while the rest will be an OFS of 21,450,100 shares of Rs. 5 totalling up to Rs. 1073 crore. Notably the OFS does not include shares held by Rakesh Jhunjhunwala in the firm.

Retail portion quota: 35% of the offer reserved for the category

Through the private placement, the company mopped up a financial sum of Rs. 3.3 crore after allotment of 0.73 lakh shares at a price of Rs. 450 per share.

Post the issue, promoter holding in the firm shall go down from the current 83.99 percent to 74.27 percent, while public holding will be increased to 25.73 percent.

About the company:
 

About the company:

Incorporated in the year 1955, Metro Brands is amongst the five leading specialty footwear retailers in the country. The company through its product range caters to the footwear needs of the entire family men, women and kids. Within its portfolio, other than its in-house brands including Metro, Mochi, Da Vinchi, Walkway and J. Fontini, the company also extends third party branded offerings such as Skechers, Crocs, Clarks, Florsheim, and Fitflop. Other than the footwear, the company also retails accessories, besides footcare and Shoe-care products in a JV with M.V. Shoe Care Private Limited.

Since 2007, Rakesh Jhunjhunwala-the ace investor in the world of stock markets has been an investor in the firm.

Issue Objective:

From the issue proceeds, Rs. 2.25 crore shall be put to finance new stores of the company.

Financials:

Financials:

Amid the covid outbreak the company has suffered losses with its revenue seeing a decline in the Fy21. EBITDA as well as PAT margin saw a decline to 21.36 and 8.08 percent, respectively in Fy 21 from 27.72 and 12.55 percent in Fy 19.

ParticularsFor the year/period ended (₹ in Millions)
30-Sep-2131-Mar-2131-Mar-2031-Mar-19
Total Assets17,396.0616,593.4016,174.2313,215.06
Total Revenue4,892.688,785.3813,110.6812,368.95
Profit After Tax430.74646.191,605.751,527.31
Brokerages’ and experts take on the Metro Brands IPO

Brokerages’ and experts take on the Metro Brands IPO

Choice Broking Accords 'subscribe for long term' rating to Metro Brands issue:

Now with the footwear products transitioning to a lifestyle buy, the segment is estimated to be worth Rs. 1 trillion as of Fy 2020. Crisil Research however views the growth momentum to pick up for the industry and the segment shall scale to an estimated Rs. 1.4 trillion by Fy 2025, registering a CAGR growth of 21% between Fy 2021-2025.

Capital Broking on the issue said, "At a higher price band of Rs 500, MBL is demanding a P/E multiple of 89.2x (to its average earnings of Rs 5.6 per share over FY19-20), which is at premium to peer average of 71.7x,".

Further the brokerage goes on to add that the company faces risks of any fresh pandemic wave, economic disruption that may impact consumer spending, increasing competition etc.

The brokerage accords the issue 'subscribe for long term' rating as it believes that 'MBL has reported strong financial performance with robust cash flow generation and is consistently paying dividend since FY2000".

ICICI Direct Assigns 'Unrated' Rating to the Issue:

"Metro Brands is among the aspirational Indian brand in footwear category which majorly caters to economic to premium category of footwear. It's a play on consumers moving up the price pyramid from mass segment to economy, mid and premium priced segments. At the upper end of the price band, it is valued at 10.6x, 17.0x Mcap/Sales for FY20, FY21, respectively", said the brokerage in its report.

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