Metro Brands IPO Good or Bad? Check GMP, Allotment, Dates & Review

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Metro Brands Limited IPO Introduction

Metro Brands are one of the largest Indian footwear specialty retailers and are among the aspirational Indian brands in the footwear category. Mumbai-based Metro Brands Limited is coming up with an IPO fresh issue of equity shares aggregating up to ₹250 crores and an offer for sale of 2.19 crore equity shares by the selling shareholders.

Rakesh Jhunjhunwala backed Metro Brands Limited has a wide range of brands and products catering to all occasions across age groups and market segments, as a result, has a good customer loyalty.

Metro Brands IPO risk factors

1. The effect of the Covid-19 pandemic has led to a decrease in the revenue as well as stores closure of the company.

2. The company will not get benefit from offer for sale IPO proceeds, however, the OFS will benefit selling shareholders

3. Apart from their own brand they also sell products of third party brands, so a decrease in the demand for these brands may affect company financials

4. There are pending litigations on the Company which may have a material impact on the company.

5. Company’s business is subject to seasonability, therefore Lower revenues in the festive period of any Fiscal may adversely affect it

6. Company margins have declined in FY21 and for 6 months ending Sep-21. The margins for FY19, FY20, FY21, and 6 months ending Sep-21 are at 12.35%, 12.25%, 7.36%, and 8.8%.

Metro Brands Limited competitive strengths

1. Metro Brands are one of the largest Indian footwear specialty retailers and are among the aspirational Indian brands in the footwear category.

2. Company has a pan India retail network, located in 136 cities spread across 30 states and union territories in India

3. They have a wide range of brands and products catering to all occasions across age groups and market segments, as a result, has a good customer loyalty

4. Company has long-standing relations with their vendors

5. Company has a good online market presence through their websites, as a result in brand awareness

6. Metro Brands has highly experienced promoters in the footwear industry

7. Rakesh Jhunjhunwala is an investor since 2007 and owns a 14.73% stake in the company

8. Company has increased its retail stores from 504 to 598 up to 30th Sep 2021

What are the product offerings of Metro Brands Limited?

The company deals in the below-mentioned footwear brands, however, some brands are third-party brands.

  1. Metro
  2. Mochi
  3. Walkway
  4. Crocs
  5. Fitflop

How are the financials of Metro Brands Limited IPO?

  1. Company has shown increasing revnues, however in FY-21 revenue is affected due to Covid-19
  2. The profitability of the company is also increasing, however in FY-21 profit is affected due to Covid-19
Financial Year EndedRevenue (₹ Crores)Profit/Loss for the period (₹ Crores)EPS (₹)
March 20191236.89152.735.75
March 20201311.06160.576.058
March 2021878.5364.612.43
METRO BRANDS IPO FINANCIALS

Promoters of Metro Brands Limited

Rafique A. Malik, Farah Malik Bhanji, Alisha Rafique Malik, Rafique Malik Family Trust, And Aziza Malik Family Trust are the promoters of the company

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Objects Of Metro Brands Limited IPO net proceeds

Metro Brands IPO Size is Rs 1,367.51 Crores, also the proceeds consist of OFS and Fresh issue

1) Offer for Sale (OFS) Rs 1,072.51 Crores:  Under OFS, selling shareholders would sell their shares however, the company would not get any money from this IPO proceeds.

2) Fresh issue of Rs 295 Crores:  Fresh issue would be done towards the following purposes:

i) Expenditure for opening new stores of the company, under the “Metro”, “Mochi”, “Walkway” and “Crocs” brands; and General corporate purposes

Metro Brands IPO (Metro Brands Limited IPO) open & close date

IPO open date is: 10th Dec 2021

IPO close date is: 14th Dec 2021

Metro Brands IPO allotment, refund & listing date

Allotment date: 17th Dec 2021

Refund date: 20th Dec 2021

Listing date: 22nd Dec 2021

Metro Brands IPO allotment status

The website of the registrar is linkintime.co.in

Metro Brands IPO GMP

The grey market price as of 14th Dec 2021 is Rs 34 ( 6.80% premium )

Metro Brand IPO price band, RHP & details

IPO date10 Dec 2021 – 14 Dec 2021
Listing date22 Dec 2021
Price range485 – 500
Minimum order quantity30
(D)RHPView
PRICE BAND OF METRO BRANDS IPO

Metro Brands IPO valuation (Overpriced or not?)

Calculating with its upper price band of Rs 500

Now, the EPS (earning per share) for FY21 is 2.48 so the P.E ratio (price to earnings ratio) comes at 500/2.42=205.76x

If we consider the last 3 years weighted average EPS of Rs 4.19 and the upper price band of Rs 500, P/E works out to be 120x.

So, the company is asking P.E between 120x to 205.76x

There are listed peers like Bata India and Relaxo footwear, However Bata India is a loss-making company and Relaxo Footwear is trading at a P.E of 119X

So, the IPO price of Metro Brands is overpriced.

Metro Brands IPO good or bad? (review)

Metro Brands are one of the largest Indian footwear specialty retailers and are among the aspirational Indian brands in the footwear category. Also, the company has a pan India market capture in the footwear market. The company is also showing consistent profits and good revenues, however, the company’s financials were highly affected by Covid-19. Although it has a reputed brand and growing margins. Looking at all these factors one can go for long-term investment, although it is overpriced but it is also true that good companies are always at high prices.

Rating: 4 out of 5.

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