Metro brands IPO, should you buy sell or hold metro brands share

 What should Investors do in Metro brands, MBL stock?

Metro brands ltd, MBL is one of the famous brand name in Indian especially in the Footwear retail segment. It is one of the largest Indian footwear specialty company  in the retail segment. Few of the famous brand names like Metro, Mochi, , Clarks, Florsheim, and Fitflop , Walkway, Da Vinchi, and J. Fontini. Company also into certain third party brands such as Crocs, Skechers. Metro Brands Company was established in 1955. Since IPO of Metro brands IPO had came into the Indian stock market, many traders had shown good interest in it. But Now Question arise into the mind of every investors/traders that whether Metro brands stock hold or sell after IPO listing? There will be many investors/traders in to the stock market those had not received allotment of shares in its IPO, now there will be question into their mind that whether they should buy “metro brands” stock after IPO listing? Before coming to any conclusion, we have to understand the business model & some positive points as well as negative points about the company.

Question:

What are the Positive points about Metro brands company?

Answer:

1) Metro brands cater footwear’s for all age groups of people like men, women, unisex and kids.

2) Company has strong presence in India with retail outlets of 598 in 136 cities of 30 states & union territories of India. In FY21 Company had highest exclusive retail stores in India.

3) Company has main focus on economy, mid and premium segments in the footwear retail market & company is expecting to grow footwear more in FY20 to FY25.

4) Company has very unique business model called “COCO” i.e Company owned & Company Operated with the help of multi brand outlets & exclusive brands outlets. In this way company have seen able to manage good customer experience. For example, MBOs branded as Metro, Mochi and Walkway & EBOs branded as Crocs.

5) In the major departmental stores   across of India, Company subsidiary Metmill also operates shop-in-shops.

6) Join venture with M.V. Shoe Care Private Limited is also giving competitive edge in retail footwear segment of foot care and shoe-care products at different stores. It helps the customer to do shopping less than one stop-shop for all footwear & related accessories like belt, polish, purse etc.

7) Company is profit making since many years, if we will calculate EBITDA margin of FY19 then it was nearly 28% which was almost similar in FY 20 27.5% in FY 21 EBIDTA was nearly 21.3% on consolidated basis.

8) Since 2007, Market big bull Rakesh jhunjhunwala  is holding  stake in the company  as a investor.

Question:

What are the negatives about Metro Brands Company?

Answer:

1) As per our calculations & Knowledge, Company valuations are very high at the IPO price band of 480rs to 500rs per share.

2) Company is operating into the competitive business. There are other brands like Bata, Liberty shoes etc also giving competition to its brands.  But Metro brands has bit better edge from its competitor

Financial performance of Metro Brands Company:

On Consolidated basis in FY19, Net profit was 151cr against total turnover of nearly 1237cr. In FY 20, Net profit of the company was nearly 160cr cr against the total turnover of 1312cr nearly. In FY21, net profit of the company was approximately 59cr against 879cr turnover. As per company published data first half of FY22 ended September Company had reported net profit 43cr against total turnover of 489.2cr. Company has also reported average earning per share of 4.2rs per share. Also Company had distributed dividend before IPO & Shareholders may expect dividend after  IPO listing too.

Listed peers of Metro brands in Indian stock market:

As per company management, there are two main listed peers in Indian stock market Bata & Relaxo. If we will calculate P/E ratio of both then currently it is nearly 107. We do not think that there is a direct comparison of Metro brands with other listed players.

Question:

Should you hold or sell Metro brands stock after IPO listing?

Answer:

If you had received allotment of Metro brands shares in its IPO, Then It is better to book profit if you get any chance. Otherwise, Valuations of Metro brands looks very expensive. As per our calculation, If Investors will get any chance to buy 10% to 15% discount from the IPO price of 485rs to 500rs then you may start accumulate this stock in small number of sets.  

Question:

Should you buy Metro Brands stock after IPO listing?

Answer:

Long term Investors can start accumulate Metro brand stock after some profit booking in the stock. There is nothing wrong with the company. Company have been reporting profit from last few years & brand of the company is also targeting all type of customers. If you are long term Investors & received shares allotment in Metro brand IPO, then you can hold it for 1 to 2 years point of view. New investors may start buying in MBL stock at lower levels if comes.  

   Recommendation on MBL Stock:

Long term investors can hold Metro brand stock, MBL for long term target of 600 rs+ but at current levels valuations are not supporting Therefore, Buy on DIP. If you had received shares in Metro Brands IPO, then you may hold for long term point of view but if get chance to take exit on higher levels then do not miss that opportunity.  If you are long term Investor then there is nothing bad with the company & you can hold it.