Dates: 10th Dec’ 2021 to 14th Dec’ 2021
Price Band: Rs.485 to Rs.500 per share
Minimum Lot: 30 shares
Minimum Application Amount: Rs.14,550- Rs.15,000
Total Issue Size: Up to Rs. 1,335 - Rs.1,368 crore(Rs.295 cr is Fresh Issue and rest of the issue is fresh issue)
Objects of the offer
The footwear retailer is planning to open new stores of the company under its own brands like ‘Metro’, ‘Mochi’ and ‘Walkway’ and it also plans to open new stores for its popular overseas partner ‘Crocs’. However over 75% of the issue is offer for sale as most of the promoters are offloading some of their holdings.
Corporate Profile & Business overview
Metro Brands Limited (Metro Brands) is a 44 year old Indian Footwear specialty retailer with its own aspirational brands like Metro, Mochi, Walkway,Da-Vinchi as well as popular third-party brands such as Crocs, Skechers, Clarks, Fitflop etc. It has become 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, Metro Brands operated 598 Stores across 136 cities spread across 30 states and union territories in India. The company operated a total Retail Business Area of 734,217 sq. ft., through its Stores as of September 30, 2021. Their operations are well-spread across metro cities, tier I, II and III cities and towns, and across all four zones of India. It also recorded the highest Average Selling Price (Rs.1328 as of FY21) from Fiscal 2019 to Fiscal 2021 among key players. Metro Brands targets 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. Metro primarily follows the “company owned and company operated” (“COCO”) model of retailing through their own Multi Brand Outlets (“MBOs”) and Exclusive Brand Outlets (“EBOs”), to better manage customer experience at their stores. They operate Metro, Mochi and Walkway branded MBOs and Crocs branded EBOs.
Metro Brands is among the few footwear retailers in India to source all their products through outsourcing arrangements without their own manufacturing facility, resulting in an asset light model. It is based on third-party manufacturing by long-standing vendor relationships, and supported by active brand portfolio management, optimum store size and layout, and long-term lease arrangements. Under most of their arrangements for third-party brands, they are required to pay for products only once these products are sold by them; and under certain arrangements, they are also entitled to return ageing inventory to the brand owner, thereby limiting their inventory risk.
Particulars (Amt in Crs)
Revenue from operations
Revenue Growth (%)
EBITDA Margin (%)
PAT Margin (%)
Metro Brands financials reflect strength during the pre-covid period and based on its results in H1FY21, the company seems to be getting back to pre-covid levels. Despite the pandemic hitting the footwear retail market hard, the company’s financials remained resilient as it was successful in maintaining its profitability. The company has clocked revenue growth of 15% in H1FY21 on a YoY basis. With the receding impact of COVID-19 Metro Brand is poised to get back to pre-COVID levels.
Dependency on third-party vendors: Metro Brands was engaged with over 250 vendors in FY21 for manufacturing of their branded products and as of FY21 top 50 vendors contributed 75% of its total in-house manufacturing. Any disruption or downturn in its vendors operations may impact Metro Brand’s revenues significantly.
Impact of COVID-19: Any further impact of COVID-19 or the new variant ‘omicron’ can lead to temporary or permanent closure of its stores which may further lead to significant dent in its revenues and profits.
High Competition: Metro Brands operate in a highly competitive footwear retail market where unorganized sector dominates with over 50% of the market. Any further increase in the unorganized space may lead to significant decline in its market share across its product categories.
Avg Selling price per unit
As of FY2021, Metro Brands recorded highest operating and net profit margins among its peers, such as Bata India Ltd, Liberty Shoes Ltd and Relaxo Footwear Ltd. In addition, they had the highest net margins from Fiscal 2015 to Fiscal 2020 among the key players. Metro Brands also clocked highest Average Selling Price Per unit of Rs. 1328 as of FY21 as compared to Rs. 534 of Bata India.
Metro Brands is one India’s highly successful footwear retail company which is operating since over 44 years now. The company has been maintaining healthy financials and its bottom line remained resilient even through the pandemic. This was mainly due to its well-diversified product categories and presence across Pan-India. However, the company’s issue seems to be expensively priced. Considering FY21 & FY20 EPS, Metro Brand’s P/E comes in at 200x at the upper band of the issue price which is higher than the industry average PE of 111x. Even its P/S is substantially higher than its peers. Considering that we have other footwear majors available at cheaper valuations to play this sector, we recommend investors to ‘AVOID’ this IPO. However, considering the company’s superior return ratios and margins and that the company has huge untapped headroom to grow, investors can keep this company on their radar and may enter at a better price post listing.