Metro Brands extends rally on strong outlook; zooms 69% in 2 months

Shares of Metro Brands hit a new high of Rs 948.85, surging 6 per cent on the BSE in Tuesday’s intra-day trade, on strong business outlook. The stock surpassed its previous high of Rs 935, touched on September 23, 2022.

Metro Brands, on September 21, had said that the volume of shares traded was purely based on market conditions and the Company is not responsible for any increase or fall in volume or any changes in stock market conditions. “There are no matters/events which are pending for disclosure to the Stock Exchanges that may have a bearing on the price/volume behaviour in the Company’s scrip,” Metro Brands had said on clarification on increase in volume of shares of the Company across the exchanges.

In the past seven trading days, the stock of the footwear company has outperformed the market by gaining 22 per cent, as against 2 per cent fall in the S&P BSE Sensex. Further, in the past two months, the stock price of Metro Brands zoomed 69 per cent on the back of strong earnings in June quarter (Q1FY23).

The stock of the footwear company has zoomed 101 per cent from its listing day low of Rs 426.10, hit on December 22, 2021. Currently, it is trading 90 per cent higher against its issue price of Rs 500 per share.

Metro Brands is one of the largest Indian footwear speciality retailers. It retails footwear under its own brands Metro, Mochi, Walkway, Da Vinchi and J. Fontini, and certain third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop.

The Company has continued to show strong growth, both in terms of volumes and value, across all its formats and tiers despite the challenging global operating environment.

In Q1FY23, Metro Brands reported a consolidated net profit of Rs 105.78 crore as against a net loss of Rs 12.13 crore in the quarter ended June 2021 (Q1FY22). Total revenue from operation rose 288 per cent year-on-year to Rs 517 crore from Rs 131 crore in the year-ago quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin stood at 36.1 per cent in Q1FY23 as compared to 11 per cent in Q1FY22.

The company registered highest-ever sales with strong sales performance across all its formats, regions / tiers & cities, product categories / gender & price points. The improved gross margin has been due to negligible contribution of discounted sales and improvement in overall sales mix in Q1FY23. In coming quarters, overall gross margins to normalize back to around ~ 55-56 per cent levels (average seen over last few years), Metro Brands said.

“Going forward, the growth momentum is expected to pick up and the footwear sector is estimated to reach Rs 1.4 trillion by FY 2024-25, growing at a CAGR of around 21 per cent between FY 2021 and FY 2025. Given the outlook, there are a significant growth drivers for the retail and footwear industry in the foreseeable future: income growth, urbanisation, rise of nuclear families, customers’ attitudinal shift, ease of making payments, expansion by organised players, entry of foreign players and increasing demand for online shopping,” Metro Brands said in FY22 annual report.