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Metro Brands – Leading footwear retailing company

Updated: Sep 21, 2023

Company Name – Metro Brands Limited (Metro Brands)

Current Share Price – INR 1,076 (August 7, 2023)

Market Cap – INR 29,236 cr


1. What is interesting about the stock?

Footwear has been an important aspect of Indian culture for thousands of years. The people of India have used various types of footwear for protection, comfort, and cultural expression, reflecting the country's rich and diverse history.

Although the exact timeline is uncertain, archaeological evidence suggests that footwear was utilized in ancient India. Examples of early footwear in India include clay figurines depicting people wearing sandals or shoes, discovered during excavations of sites like Mohenjo-Daro and Harappa, which were part of the Indus Valley Civilization, one of the world's oldest urban civilizations.

Ancient Indian texts, including Buddhist and Jain literature, provide references to footwear and describe different types of footwear worn by both monks and laypeople.

Indian market is predominantly unorganized with few organized players like Bata, Metro Brands, Khadim, etc.

Metro Brands Limited is a renowned Indian footwear retailer that offers a diverse range of branded products for men, women, kids, and unisex for various occasions. Since its inception in 1955, MBL has evolved into a one-stop shop for all footwear needs. As of June 30, 2023, Metro Brands operated 766 stores across 182 cities in India, catering to the economy, mid, and premium segments in the footwear market. These segments are expected to grow faster than the overall footwear industry. Company’s exclusive retail outlets make it the third-largest retailer in India. Metro Brands has consistently recorded the highest realization per unit and operating margins among its competitors from FY19-23, with a net profit margin of ~15% in Fy23.

Company retails footwear under its brands like Metro, Mochi, Walkway, Da Vinchi, and J. Fontini, and third-party brands like Crocs, Skechers, Clarks, Florsheim, and Fitflop, as well as accessories like belts, bags, socks, masks, and wallets. Metro Brands also retails footcare and shoe-care products through a joint venture, M.V. Shoe Care Private Limited, making it a one-stop shop for all footwear and related accessories. Company’s retail operations take place through its physical stores, distributors, and online channels. Metro Brands provides an omnichannel experience to its customers through its websites, various online marketplaces, and social media platforms. Its brands are listed and sold across various leading marketplaces, catering to both B2C and B2B operations.

Company Strengths

  • Metro Brands is a well-known and reputable brand in the Indian footwear market, associated with quality and variety.

  • Their diverse range of footwear options caters to different age groups, preferences, and occasions, allowing them to target a broad customer base.

  • The brand has a significant retail presence throughout India with stores in various cities, making it accessible to customers across different regions.

  • Metro Brands offers a comprehensive range of footwear styles, including formal shoes, casual shoes, sports shoes, sandals, and more, appealing to different fashion tastes and practical needs.

  • The brand has a reputation for quality craftsmanship and attention to detail, contributing to customer loyalty and positive word-of-mouth.

  • They have also established relationships with suppliers and manufacturers, ensuring a consistent supply of footwear products.

  • The Company has expanded its reach through e-commerce platforms, providing customers the convenience of browsing and purchasing footwear online.

  • The Company employs professionals with expertise in various aspects of the footwear industry, including design, retail, marketing, and operations, enhancing their ability to provide quality products and services.

2. Key Historical Financials

  • Company revenue and profit have been growing 15% and 21% on a CAGR basis respectively in the last 5 years

  • Revenue increased 58% in FY23 after showing strong growth in FY22 – recovering from fall in FY21 due to COVID-19

  • EBITDA margin increased to 31-32% due to operating leverage

  • Revenue growth has slowed down in Q1FY24 and net profit has fallen on a YoY basis

  • Cash flow conversion (CFO/EBITDA) was poor at 56% in FY23. Company maintains around 270 days of inventory

  • ROE and ROCE were at 26% and 25%

3. What is my view on company valuation?

Metro Brands made its debut on the NSE and BSE on December 22, 2021, via a successful IPO at INR 500 per share. The shares opened at a ~13% discount over the IPO price. IPO was subscribed ~4x. The current share is ~100% higher than the IPO price.

The Company trades at P/E (TTM) multiple of 84x vs Relaxo Footwear at 134x, Bata India at 70x, and Campus Activewear at 75x. The industry is expected to grow at ~20% for the next few years so the valuation is not justified.

On an overall basis, Company looks quite exciting but with a fair price close to 25% of the current value.

4. What are the risks to the investment analysis?

Risks to the analysis are:

  • Hyper competitive industry – Indians are price-sensitive customers

  • Same-store-sales growth was negative in Q1FY24


About the Author

I have over 18 years of experience in venture capital, private equity, and investment banking across various sectors in India and the Middle East. I was last working with Majid Al Futtaim Holding (MAF), a leading conglomerate in the Middle East, to look after investments, M&A, and venture capital. I have prior experience in India with Tata Capital (Private Equity), Merrill Lynch (Investment Banking or IB), and Ambit Corporate Finance (IB). I bring the long-term ownership mindset to the analysis.

I graduated from the MBA program of the Indian Institute of Management Lucknow (2005) after completing the Bachelor of Technology program at the Indian Institute of Technology, Kharagpur (2002).

I am an Insignificant Investor in the public market and co-founder of SocInvest.


I have no stock, option, or similar derivative position in any of the companies mentioned in the last 30 days, and shall not initiate any such positions within the next 5 days. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from SocInvest). I have no business relationship with any company whose stock is mentioned in this article.

I am not a SEBI registered advisor. This article is purely for educational purposes and is not to be construed as investment advice. Please consult your financial advisor before acting on it.

I have used publicly available information while writing this article.


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