Metro Brands IPO: India’s leading footware company, Metro Brands Limited, opened its maiden initial public offering on Friday, December 10. The issue is set to close on December 14, Tuesday — five days after its opening, since the bidding will be closed for two days in between on account of the weekend. Metro Brands, backed by ace investor Rakesh Jhunjhunwala, was booked 0.20 times of its total issue size on Day 1 of its bidding as of 2 pm. The Mumbai based footwear retailer, Metro Brands Ltd. (MBL) is looking to raise Rs 1,370 crore through its maiden public offer at the upper end of the price band.
If you want to invest in the Metro Brands IPO, here are the key things that you should know
Metro Brands IPO Price, Issue Size
The price band of the Metro Brands IPO has been fixed at Rs 485 to Rs 500 per equity share with a face value of Rs 5 each. The company seeks to raise Rs 1,367.5 crore though the IPO. The offer consists of fresh issue and an offer for sale, through which the company will raise Rs 225 crore from the fresh issue part and Rs 1,072.5 crore though the OFS. Promoters and shareholders will shed off 21,450,100 equity shares during the offer for sale of the IPO.
The lot size of the offer is 30, which means that investors can buy 30 shares in one lot and in multiples of 30 thereof.
Objectives of Issue
Metro Brands plans to use the proceeds from the fresh issue for opening new stores of the company, under the “Metro”, “Mochi”, “Walkway” and “Crocs” brands (“New Stores”) and for general corporate purposes. Metro Brands Limited will not receive any proceeds from the OFS part.
Metro Brands IPO Key Strengths
Metro Brands Limited is of the largest pan-India footwear retailers with a brand appeal among aspirational consumer segments in the fast-growing footwear
retail industry. It sells brands like Metro, Mochi, Walkway, Da Vinchi and J Fontini, Crocs, Skechers and Clarks. The dide range of brands and products caters to all occasions across age groups and market segments resulting in strong customer loyalty. The company has an efficient operating model through deep vendor engagements and TOC based supply chain.
Metro Brands IPO Valuation, Should You Subscribe?
Choice Broking: Giving a ‘Subscribe for Long Term Rating’, it said, “MBL is among the top-5 footwear brands in India and is ranked fourth in the domestic footwear market (in terms of sales in FY21). Among the major footwear retailer, it has the highest net profit margin in FY21 and top performer in terms of operating margin during FY15-21. The company is among the aspirational Indian brands in the footwear category (i.e. catering to mid and premium segments) and thus have higher retail ASP than average market.
Angel One: “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 per cent and 6 per cent 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,” said the brokerage house in a note.
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