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Metro Brands Limited (MBL) was incorporated on January 19, 1977. Metro Brands is one of the largest Indian footwear speciality retailers, and is among the aspirational Indian brands in the footwear category. Metro Brands retail footwear under their own brands of Metro, Mochi, Walkway, Da Vinchi and J. Fontini, as well as certain third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop, which complement their in-house brands. As of September 30, 2021, Metro Brands operated 598 Stores across 136 cities spread across 30 states and union territories in India. Metro Brands had the 3rd highest number of exclusive retail outlets in India, in Fiscal 2021. They also offer accessories such as belts, bags, socks, masks and wallets, at their stores.

Positives: (a) One of India's largest pan India footwear retailers with a brand appeal among aspirational consumer segments (b) Wide range of brands and products catering to all occasions across age groups and market (c) Asset light business with an efficient operating model leading to sustained profitable growth (d) Experienced Board and senior management team.

Investment concerns: (a) Increase in competition (b) Slowdown in the economy could impact the overall revenue of the company.

Outlook & Valuation: In terms of valuations, the post-issue TTM P/E works out to 91x (at the upper end of the issue price band), which is high considering MBL’s historical top-line & bottom-line CAGR of ~9% and ~6% respectively over FY18- 20. Further, the company’s historical net profit growth is low compared to its peers Relaxo Footwears. However, MBL has Asset light business, strong brands and wide range of products but we believe that these positives are captured in the valuations commanded by the company. Thus, we have a NEUTRAL rating on the issue.

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