Please refer to important disclosures at the end of this report
1
Metro Brands Limited (MBL
) was incorporated on January 19, 1977. Metro
Brands is one of the largest Indian footwear speciality retailers, and is among
the aspirational Indian brands in the footwear category. Metro Brands retail
footwear under their own brands of Metro, Mochi, Walk
way, Da Vinchi and J.
Fontini, as well as certain third-
party brands such as Crocs, Skechers, Clarks,
Florsheim, and Fitflop, which complement their in-
house brands. As of
September 30, 2021, Metro Brands operated 598 Stores across 136 cities
spread across 30 states and union territories in India.
Metro Brands had the 3rd
highest number of exclusive retail outlets in India, in Fiscal 2021. They also offer
accessories such as belts, bags, socks, masks and wallets, at their stores.
Positives: (a) One of India'
s largest pan India footwear retailers with a brand
appeal among aspirational consumer segments (b)
Wide range of brands and
products catering to all occasions across age groups and market (c)
Asset light
business with an efficient operating model leading
to sustained profitable growth
(d) Experienced Board and senior management team.
Investment concerns: (a) Increase in competition (b)
Slowdown in the economy
could impact the overall revenue of the company.
Outlook & Valuation: In terms of valuations, the post-
issue TTM P/E works out to
91x (at the upper end of the issue price band), which is high considering MBL’s
historical top-line & bottom-line CAGR of ~9% and ~6% respectively over FY18
-
20. Further, 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 NEUTRA
L rating
on the issue.
Key Financials
Y/E March (` cr) FY2019 FY2020 FY2021 1H
FY21
1HFY22
Net Sales
1,217
1,285
800
111
456
% chg
13.2
5.6
(37.7)
-
310.8
Net Profit
147.8
156.7
68.2
(39)
42
% chg
6.3
570.7
360.5
-
-
OPM (%)
27.6
27.5
21.6
(6.6)
24.4
EPS (`)
5.6
5.9
2.6
-
-
P/E (x)
89.8
84.7
194.7
-
P/BV (x)
20.4
16.5
16.0
-
RoE (%)
23.3
19.8
7.9
-
RoCE (%)
22.6
17.1
3.6
-
EV/Sales (x)
11.1
10.5
16.7
-
EV/EBITDA (x)
40.1
38.2
77.4
-
Angel Research; Note: Valuation ratios based on post-issue shares and at `500 per share.
Neutral
Issue Open: Dec 10, 2021
Issue Close: Dec 14, 2021
Offer for Sale:
2.1cr share
QIBs 50%
Non-Institutional 15%
Retail 35%
Promoters 74.3%
Public 25.7%
Fresh issue:
`295cr
Issue Details
Face Value:
`5
Present Eq. Paid up Capital:
`132.8cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital:
`135.8
cr
Issue size (amount):
`1367.5cr
Price Band:
`485
-500
Lot Size: 30 shares
Post-issue mkt.cap:
`13,177
*– 13,575cr**
Promoter holding Pre-Issue: 84.0%
Promoter holding Post-Issue: 74.3%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Amarjeet S Maurya
amarjeet.maurya@angelbroking.com
Metro Brands Ltd
IPO Note |F
ootwear
December 09, 2021
Metro Brands Ltd|
IPO Note
December 09, 2021
2
Company background
Metro Brands Limited (“Metro Brands”) was incorporated on January 19, 1977.
Metro Brands is one of the largest Indian footwear speciality retailers, and is among
the aspirational Indian brands in the footwear category. They opened their first store
under the Metro brand in Mumbai in 1955, and have since evolved into a one-stop
shop for all footwear needs.
Metro Brands retail footwear under their own brands of Metro, Mochi, Walkway, Da
Vinchi and J. Fontini, as well as certain third-party brands such as Crocs, Skechers,
Clarks, Florsheim, and Fitflop, which complement their in-house brands. As of
September 30, 2021, Metro Brands operated 598 Stores across 136 cities spread
across 30 states and union territories in India.Metro Brands had the 3rd highest
number of exclusive retail outlets in India, in Fiscal 2021.
They also offer accessories such as belts, bags, socks, masks and wallets, at their
stores. They also retail footcare and shoe-care products at their stores through their
joint venture, M.V. Shoe Care Pvt Ltd.
Metro primarily follows the “company owned and company operated” (“COCO”)
model of retailing through their own Multi Brand Outlets (“MBOs”) and Exclusive
Brand Outlets (“EBOs”). They operate Metro, Mochi and Walkway branded MBOs
and Crocs™ branded EBOs. They also operate shop-inshops (“SIS”) in major
departmental stores across India.
Issue details
MBL
is raising
₹
1367.5
cr through fresh issue (
`
29
5
cr) and Promoter & investors
are selling equity share 2.1cr through offer for sale in the price band of ₹485
-
500.
Exhibit 1: Pre and post IPO shareholding pattern
No of shares (Pre-issue) % (Post-issue)
%
Promoter
223,080,120
84.0%
201,638,120
74.3%
Public
42,527,306
16.0%
69,869,306
25.7%
Total
265,607,426
100.0%
271,507,426
100.0%
Source: Source: RHP, Note: Calculated on upper price band
Objectives of the Offer
Expenditure for opening new stores of the company, under the
“Metro”, “Mochi”, “Walkway” and “Crocs” brands - ₹225.4cr
General corporate purposes
Metro Brands Ltd|
IPO Note
December 09, 2021
3
Exhibit 2: Consolidated Profit & Loss Statement
Y/E March (` cr)
FY2019
FY2020
FY2021
Net Sales
1,217
1,285
800
% chg
5.6
(37.7)
Total Expenditure
881
932
627
Raw Material
549
571
360
Personnel
112
127
103
Others Expenses
220
235
164
EBITDA
336
353
173
% chg
4.9
(51.1)
(% of Net Sales)
27.6
27.5
21.6
Depreciation& Amortisation
94
121
122
EBIT
243
232
51
% chg
(4.3)
(78.1)
(% of Net Sales)
19.9
18.1
6.4
Interest & other Charges
34
40
45
Other Income
20
26
78
(% of PBT)
8.7
11.9
92.9
Recurring PBT
228
218
85
% chg
(4.3)
(61.3)
Tax
77
59
19
(% of PBT)
33.7
26.9
22.8
PAT before Minority Interest
151
160
65
Minority Interest (after tax)
5
4
(4)
Share in profit of Associates
2
1
(1)
PAT after Minority Interest & P/L Asso.Co.
148
157
68
Basic EPS (`)
5.6
5.9
2.6
% chg
6.0
(56.5)
Source: Company, Angel Research
Metro Brands Ltd|
IPO Note
December 09, 2021
4
Consolidated Balance Sheet
Y/E March (` cr) FY2019 FY2020 FY2021
SOURCES OF FUNDS
Equity Share Capital
133
133
133
Reserves& Surplus
517
675
695
Shareholders Funds
650
807
828
Minority Interest
20
23
20
Total Loans
424
549
567
Deferred Tax Liability
-
6
5
Total Liabilities
1,094
1,386
1,419
APPLICATION OF FUNDS
Net Block
593
708
724
Capital Work-in-Progress
4
13
5
Investments
210
348
400
Current Assets
500
536
515
Inventories
365
376
290
Sundry Debtors
52
70
51
Cash
12
11
88
Loans & Advances
34
34
37
Other Assets
38
44
49
Current liabilities
228
238
245
Net Current Assets
273
298
270
Deferred Tax Asset
14
19
21
Total Assets
1,094
1,386
1,419
Source: Company, Angel Research
Metro Brands Ltd|
IPO Note
December 09, 2021
5
Exhibit 3: Consolidated Cash Flow Statement
Y/E March (Rs cr) FY2019 FY2020 FY2021
Profit before tax
228
218
85
Depreciation
94
121
122
Change in Working Capital
(63)
(24)
109
Interest / Dividend (Net)
31
36
38
Direct taxes paid
(80)
(61)
(20)
Others
(13)
(16)
(68)
Cash Flow from Operations
196
273
265
(Inc.)/ Dec. in Fixed Assets
(58)
(44)
(25)
(Inc.)/ Dec. in Investments (9)
(119)
(98)
Cash Flow from Investing
(67)
(163)
(122)
Issue of Equity
1
0
0
Inc./(Dec.) in loans
(87)
(111)
(77)
Dividend Paid (Incl. Tax)
(45)
0
(50)
Interest / Dividend (Net) (1) (1) (1)
Cash Flow from Financing
(132)
(112)
(127)
Inc./(Dec.) in Cash (4) (1)
16
Opening Cash balances
15
12
11
Closing Cash balances
12
10
26
Source: Company, Angel Research
Metro Brands Ltd|
IPO Note
December 09, 2021
6
Key Ratios
Y/E March FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
89.8
84.7
194.7
P/CEPS
54.2
47.4
71.0
P/BV
20.4
16.5
16.0
EV/Sales
11.1
10.5
16.7
EV/EBITDA
40.1
38.2
77.4
EV / Total Assets
12.3
9.7
9.4
Per Share Data (`)
EPS (Basic)
5.6
5.9
2.6
EPS (fully diluted)
5.6
5.9
2.6
Cash EPS
9.2
10.6
7.0
Book Value
24.5
30.4
31.2
Returns (%)
ROCE
22.6
17.1
3.6
Angel ROIC (Pre-tax)
28.5
23.3
5.6
ROE
23.3
19.8
7.9
Turnover ratios (x)
Asset Turnover (Net Block)
2.1
1.8
1.1
Inventory / Sales (days)
109
107
132
Receivables (days)
16
20
23
Payables (days)
58
57
93
Working capital cycle (ex-cash) (days)
67
70
62
Source: Company, Angel Research
Metro Brands Ltd|
IPO Note
December 09, 2021
7
Research Team Tel: 022
-
40003600 E
-
mail: research@angelbroking.com Website: www.angelone.in
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