Metro Brands said that CARE Ratings has reaffirmed its rating on the long-term facilities of the company at 'CARE AA' with 'stable' outlook.
The credit rating agency has also reaffirmed the companys short-term rating at CARE A1+.
CARE Ratings said that the ratings assigned to Metro Brands (MBL) bank facilities are driven by the extensive experience of its promoters and the company's longstanding presence in the footwear industry.
MBL continues to benefit from its well-established market position and a broad distribution network across India, contributing to consistent operational performance and a robust financial risk profile marked by ample liquidity and low overall gearing.
The company's operating performance notably improved in FY23 and 9MFY24, driven by heightened demand across all segments. MBL's Total Operating Income (TOI) surged by 58.44% year-on-year, primarily propelled by aggressive store expansion initiatives, resulting in substantial sales growth.
Leveraging omni-channel strategies via Exclusive Brand Outlets (EBOs), Multi-Brand Outlets (MBOs), and e-commerce platforms, MBL operates efficiently with an asset-light structure, fostering sustained profitability. MBL expanded its brand portfolio through the acquisition of Cravatex Brands Limited in FY23, incorporating renowned brands like Fila, and Proline, which are expected to contribute to incremental growth in the future.
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The company has partnered with Footlocker, an American retailer, to access premium brands globally in the sports and athleisure space.
Despite these strengths, MBL faces challenges stemming from the fiercely competitive and fragmented industry landscape, dominated by unorganized players, alongside aggressive expansion by emerging brands and reliance on unorganized vendors/third parties for manufacturing.
The company's ability to adapt to evolving industry dynamics, effectively scale up operations, uphold healthy margins, and maintain a resilient financial risk profile will be crucial determinants influencing its ratings.
Metro Brands operates as a footwear and accessories retailer in India, boasting a nationwide presence with 840 stores across 174 cities in 31 states and union territories as of December 31, 2023. MBL offers a diverse range of footwear and accessories, including formal and casual shoes, sandals, slippers, boots, sneakers, and ethnic footwear, alongside accessories like belts, wallets, socks, and shoe care products.
The scrip had declined 0.52% to end at Rs 1075.45 on the BSE yesterday.
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