Metro Brands debuts on a weak footing, lists 13% below its issue price

The stock listed at Rs 436 on the BSE and Rs 437 on the NSE, a 13 per cent below its issue price of Rs 500 per share.

Rakesh Jhunjhunwala-backed Metro Brands has made a weak market debut, with its shares listed at Rs 436, a 13 per cent below its issue price of Rs 500 per share on the BSE. On the National Stock Exchange (NSE), the stock has opened at Rs 437 per share.

At 10:01 am, Metro Brands traded at Rs 445.50, 11 per cent lower versus the issue price on the BSE. The stock had hit a high of Rs 449 and a low of Rs 426 in intra-day trade so far on the BSE and NSE. A combined 3.7 million equity shares changed hands at the counter on both the exchanges.

The initial public offer (IPO) of branded footwear retailer Metro Brands was subscribed 3.6 times. The institutional investor portion was subscribed 8.5 times, the wealthy investor portion by 3.02 times, and retail investors by 1.13 times. The company plans to utilise the funds raised through the fresh issue for opening new stores under its Metro, Mochi, Walkway and Crocs brands.

Metro Brands is one of the largest Indian footwear speciality retailers. It has evolved in a one-stop shop for all footwear needs by retailing wide range of branded products for the entire family and for every occasion including casual and formal events.

The company 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 also offers accessories such as belts, bags, socks, masks, and wallets. And has retail foot care and shoe-care products at its stores through a joint venture, MV Shoe Care.

As of September 30, 2021, the company operated 598 stores across 136 cities, spread across 30 states and union territories in India. The company targets the economy, mid and premium segments in the footwear market.

Metro Brands recorded the highest Realization per Unit compared to the two leading players in India from Fiscal 2019 to Fiscal 2021 and in Fiscal 2020 it recorded the highest operating margins among the key players in India. Additionally, in Fiscal 2021, Metro Brands recorded the highest net profit margin of 8.1 per cent among footwear players having majorly retail business model for reaching customers.

The cumulative cost of the total number of stores opened by Metro Brands across regions may not be indicative of the market capitalization of the Company after the Offer as the basis are independent of each other. The current and continuing impact of the ongoing COVID-19 pandemic on the business and operations has been significant. The impact of the pandemic on MBL’s operations in the future, including its effect on the ability or desire of customers to visit its stores, is uncertain and may be significant and continue to have an adverse effect on its business prospects, strategies, business, operations, its future financial performance, and the price of the equity shares are key risks, HDFC Securities had said in IPO note.

Metro Brands has shown growth, profitability, and financial discipline in the past, but the sector is widely underrated. The company has an asset-light business model and derives most of its revenues from third parties. “We are seeing a change in IPO sentiment amid a slight decline in the market, and the last two debutants witnessed profit bookings post-listing, as well we are seeing a decline in the grey market price (GMP) for upcoming IPOs,” said Aayush Agrawal, Senior Analyst, Swastika Investmart ahead of Metro Brands IPO listing.