Rating
SUSBCRIBE (Only Long-Term Investors)Issue Offer
Issue Opens on Dec 10, 2021Issue Close on Dec 14, 2021Total IPO size (cr) 1,367.51Fresh issue 295.00Offer For Sale (cr) 1072.51Price Band (INR) 485-500Market Lot 30Face Value (INR) 5Retail Allocation 35%Listing On NSE, BSE
Objects of the issue
⮚ For meeting Capex requirements.
⮚ For general corporate purposes.Issue Break-up (%)QIB Portion 50NIB Portion 15Retail Portion 35
Established in 1955, Metro Brands Limited is one of the largest Indian footwear speciality retailers. Customers' footwear demands are met by a diverse assortment of branded products of Company for men, women, unisex, and children, as well as for various events. The company targets the mid and premium segments in the footwear market which have a higher presence of organized players and growth in the overall footwear industry. Metro, Mochi, Walkway, Da Vinchi, and J. Fontini, as well as Crocs, Skechers, Clarks, Florsheim, and Fitflop, are among the company's well-known brands. The company follows the "company owned and company operated" (COCO) model of retailing through their own Multi Brand Outlets (MBOs) and Exclusive Brand Outlets (EBOs), to manage their stores.
⮚ The company’s total store count has grown from 504 in 116 cities as of March 31, 2019, to 586 stores across 134 cities as of March 31, 2021, and to 598 stores across 136 cities as of September 30, 2021, also Company had the third-highest number of exclusive retail outlets in India, in Fiscal 2021
⮚ The company also offers accessories such as belts, bags, socks, masks and wallets, at its stores. It also offers foot care and shoe care products at stores through its joint venture, M.V. Shoe Care Private Limited, making it a ‘one-stop-shop’ for all footwear and related accessories for customers.
⮚ In Fiscal 2021, In-Store Product Sales, Online Product Sales, and Omni-Channel Product Sales represented 91.93%, 6.15%, and 1.09%, of the Company’s revenue from operations, respectively.
⮚ The company’s retail operations are carried out through stores and distributors as well as through online channels. It primarily follows the ‚company owned and company operated‛ (COCO) model of retailing through its own Multi Brand Outlets (MBOs) and Exclusive Brand Outlets (EBOs), to better manage customer experience at stores.
Outlook & Valuation:
The company's revenue dropped by 33% in the
Shareholding (No. of Shares)
Pre Issue 265,607,426Post Issue 271,507,426
Indicative Timetable
Finalisation of Basis of Allotment 17-12-2021Refunds/Unblocking ASBA Fund 20-12-2021Credit of equity shares to DP A/c 21-12-2021Trading commences 22-12-2021
Year FY21 to Rs 878 cr from Rs 1311 cr in FY20 on the back of the Covid-19 pandemic. Similarly, profit also declined from Rs. 160.5 cr in the year FY20 to Rs. 64.61 cr in the FY21. The margin of the company was flat in FY19 and FY20 while it dropped since COVID. Metro Brands Limited has demonstrated its growth, profitability, and financial discipline in the past as one of India's leading pan-India footwear retailers. The sector is mostly under-rated and may see a re-rating. The majority of their revenue is from third parties and the company has an asset-light business model however we believe that the IPO is priced aggressively. The IPO is arriving at PE of 205x and P/BV of 16x while if we annualized the FY22 earnings PE works out to be 157x.
SME-IPO Note
METRO BRANDS LIMITED
KEY MANAGERIAL PERSONNEL
⮚ Rafique A. Malik is the Chairman of the Company’s Board. He has been associated with this Company as a director since January 19, 1977. He has over 50 years of experience in the field of footwear retail.
⮚ Farah Malik Bhanji is the Managing Director of the Company. She has been associated with the Company as a director since December 5, 2000. She has over 20 years of experience in the field of footwear retail.
⮚ Mohammed Iqbal Hasanally Dossani is the Whole-time Director of the Company. He holds a bachelor’s degree in commerce, Financial Accounting and Auditing.
⮚ Utpal Hemendra Sheth is the Non-Executive Director of the Company. He holds a bachelor’s degree in commerce. He was first appointed as an alternate director in the Company on March 14, 2007.
⮚ Manoj Kumar Maheshwari is the Independent Director of the Company. He has been associated with the Company as an Independent Director since July 24, 2009.
⮚ Aruna Bhagwan Advani is the Independent Director of the Company. She has been associated with the Company as an Independent Director since July 27, 2010.
⮚ Arvind Kumar Singhal is the Independent Director of the Company. He has been associated with the Company as an Independent Director since August 12, 2016.
⮚ Vikas Vijaykumar Khemani is the Independent Director of the Company. He has been associated with the Company as an Independent Director since March 12, 2019. He is an associate of the Institute of Chartered Accountants of India
⮚ Tina Srikanth Velamakanni is the Independent Director of the Company. He has been associated with the Company as an Independent Director since March 25, 2021.
COMPETITIVE STRENGTHS
⮚ One of India's largest footwear retailers brands.
⮚ Wide range of brands and products catering to all occasions across age groups and market segments
⮚ Efficient operating model through deep vendor engagements and TOC based supply chain.
⮚ Asset light business with an efficient operating model leading to sustained profitable growth
⮚ Presence across multiple formats and channel
⮚ Strong track record of growth and profitability and financial discipline
⮚ Strong promoter background and an experienced and entrepreneurial management team
KEY STRATEGIES
⮚ Expand the store network in existing and new Indian cities.
⮚ Increase the contribution of e-commerce and omnichannel sales as a proportion of the sales.
⮚ Expand the portfolio of accessories and grow other allied businesses
KEY CONCERNS
⮚ The ongoing COVID-19 epidemic has had a substantial impact on their business.
⮚ All of their stores and warehouses are leased spaces.
⮚ For the production of all the items they sell, they rely on third parties.
⮚ They may not be effective in maintaining and increasing brand visibility.
⮚ The selling of third party brands accounts for a major amount of their revenues.
For additional information & risk factors please refer to the Red Herring Prospectus
IPO NoteMETRO BRANDS LIMITEDCOMPARISON WITH LISTED INDUSTRY PEERS (AS OF 31ST MARCH 2021)Name of the Company EPS (Basic) NAV P/E Total Income (Mn) RoNW (%)Metro Brands Limited 2.43 31.17 205 8,785.38 8.24Peer GroupBata India Limited (6.95) 136.79 - 18,025.65 (5.08)Relaxo Footwears Limited 11.74 63.29 118 23,819.20 18.54FINANCIALS (RESTATED CONSOLIDATED)Particulars (Rs. In Millions) FY 2021 FY 2020 FY 2019Equity Share Capital 1,327.67 1,327.67 1,327.67Other Equity 6,948.03 6,745.22 5,170.99Net Worth 8,275.70 8,072.89 6,498.66Total Borrowings 14.06 115.23 98.56Revenue from Operations 8,000.57 12,851.62 12,170.65EBITDA 1709.3 3535.1 3373.3Profit Before Tax 845.05 2,184.17 2,281.28Net Profit for the year 646.19 1,605.75 1,527.30
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