Metro Brands IPO: Should you subscribe as issue opens today, GMP, key details

10 Dec , 2021 By : Kanchan Joshi

Ace investor Rakesh Jhunjhunwala-backed footwear retailer Metro Brands Ltd will roll out its initial public offering (IPO) today and the three-day issue will close on December 14. The price band has been fixed at Rs485-500 per share. Metro Brands on Thursday said it has raised a little over Rs410 crore from anchor investors ahead of IPO.

The initial share sale comprises fresh issuance of equity shares worth Rs295 crore and an offer for sale of 2.14 crore equity shares by promoters and other shareholders. At the upper end of the price band, the public issue is expected to fetch Rs1,367.5 crore.

According to market observers, Metro Brands shares are commanding a premium (GMP) of Rs40 in the grey market. The company's shares are expected to list on exchanges on December 22, 2021.

“We believe Metro’s aggressive plans on store addition and product portfolio expansion would cater to growing demand in branded footwear and pave the way for sustainable earnings growth and improved operational parameters in future. We recommend SUBSCRIBE," said IDBI Capital.

Assigning Subscribe for long-term, those at choice broking said that the company is one of the largest footwear retailers with around 3-4% market share in the organized market space. It has reported strong financial performance with robust cash flow generation. The company is consistently paying dividends since FY2000.

At present, Metro Brands has 598 stores in 136 cities spread across India. Of these, 211 stores were opened in the last three years. Metro Brands had the 3rd highest number of exclusive retail outlets in India, in fiscal 2021.

The company will use proceeds of the fresh issue towards expenditure for opening new stores under the Metro, Mochi, Walkway and Crocs brands and for general corporate purposes.

“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 Angel One.