Metro Brands Limited is one of the largest Indian footwear speciality retailers, and is among the aspirational Indian brands in the footwear category. They opened the first store under the Metro brand in Mumbai in 1955, and have since evolved into a 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 March 31, 2021, the Company operated 586 stores across 134 cities spread across 29 states and union territories in India. They target the economy, mid and premium segments in the footwear market. Company retails footwear under its own brands of Metro, Mochi, Walkway, Da Vinci and J. Fontini, as well as certain third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop, which complement its in-house brands. They also offer accessories such as belts, bags, socks, masks and wallets, at the stores. They also retail footcare and shoe-care products at the stores through the joint venture, M. V. Shoe Care Private Limited, making them a 'one-stop-shop' for all footwear and related accessories to the customers. 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. They have a pan-India presence through the store network in prominent high streets, malls and airports, spread across 29 states and union territories in India as of March 31, 2021 and have opened 113 new MBOs (including seven through franchises) and 98 new EBOs in the last three Fiscals. They are also in the process of strengthening the retail presence through franchisees for the Walkway brand. As of March 31, 2019, 2020 and 2021, the Company operated stores with a total Retail Business Area of 643,442 sq. ft., 694,955 sq. ft., and 720,994 sq. ft., respectively. Company's retail operations are carried out through the stores and distributors as well as through online channels. They primarily follow 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 the stores. They operate Metro, Mochi and Walkway branded MBOs and Crocs branded EBOs. The Company and its Subsidiary Metmill also operate shop-in-shops ('SIS') in major departmental stores across India. In addition to the physical Stores, they provide an omni-channel experience to customers through the websites, various online marketplaces, as well as, social media platforms. 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 (on a standalone basis) while in the six months ended September 30, 2021, In-Store Product Sales, Online Product Sales, and Omni-Channel Product Sales represented 87.17%, 8.90%, and 3.03%, of the Company’s revenue from operations, respectively (on a standalone basis). MBL sources all its products through outsourcing arrangements without its own manufacturing facility, resulting in an asset light model. The asset light model 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. In the last three Fiscals and six months ended September 30, 2021, they dealt with over 250 vendors for the products. As per financial performance, Metro Brands Transact Technology Limited has posted total income/net profits of Rs 1,236.89 Cr / Rs 151.90 Cr (FY19), Rs 1,311 Cr / Rs 161.22 Cr (FY20), Rs 878.54 Cr / Rs 66.46 Cr (FY21) and Rs 489.27 Cr / Rs 43.81 Cr (H1 FY22). So company has posted good growth over last couple of years, but after the start of pandemic sales and profit declined as per common trend in market, and still sales are not at pre-pandemic level. Company has posted an average EPS of Rs. 4.19 and average RoNW of 14.38% for last 3 fiscals. Issue is priced at a P/BV of 15.80 as per NAV of 31.64 on 30.09.21. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 210 and if we annualise H1 FY22, then on fully diluted equity post issue P/E is 157.58 which looks aggressively priced when compared with peers. As per RHP, Comparison between listed peers are shown in above table. On BRLM's front, five lead managers are associated with this IPO, and have handled around 86 IPOs in last three fiscals. From last 10 IPOs, two is opened below issue price and remaining are opened above issue on the day of listing. As of now, six are trading below issue price and other are trading above issue price. ( As on 30.11.21) As per financials, Metro Brands has shown growth, RoNW 8.24% and P/E is respectively 210 and 158 as per FY21 and annualised FY22 earnings. When compared with peers, BHARAT is very densely populated country and average income of people is increasing, so we may see good growth in sales of branded footwear and being one of the leading player MBL may outperform market growth. Performance of BRLM is average. So we give NEUTRAL rating to this IPO.
✍️ Post a Comment