Jhunjhunwala stock: Metro Brands shares trading near record high; more upside likely?

Shares of footwear major Metro Brands Ltd are trading near their record high. Rekha Jhunjhunwala, wife of the late investor Rakesh Jhunjhunwala, is a shareholder in the company and held a 14.4 per cent stake at the end of June 2023 quarter. Metro Brands stock ended 3.77% higher at Rs 1,127.85 on BSE in the previous trading session. It also hit an all-time high of Rs 1147.80 on Friday.  

Total 6607 shares of the firm changed hands amounting to a turnover of Rs 73.87  crore on BSE. Market cap of the firm rose to Rs 30,647 crore on BSE. The stock hit its 52-week low of Rs 737 on January 31 2023. It has zoomed 30 per cent this year and risen 26 per cent in a year.  

In terms of technicals, the relative strength index (RSI) of Metro Brands stock stands at 62.1, signaling it's trading neither in the overbought zone nor in the oversold zone. Metro Brands shares are trading higher than the 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages. 

HDFC Securities has assigned a sell call to the Metro Brands stock, citing overstreched valuation. The brokerage has a target of Rs 840 on the stock.  

“Metro Brands certainly is among the more disciplined footwear retailers with an in-sync product-market fit. However, normalising key performance indicators (KPIs) are likely to put pressure on margins over FY23-26 (building a 220bps decline in EBITDAM to 22.1%; FY26RoE/RoCE baked in 21/23%).Hence, at 59x Sep-25 P/E (for a 15% EPS CAGR story over FY23-26), the valuation seems oversized,” said the brokerage. 

On the other hand, brokerage Prabhudas Lilladher has initiated coverage on the footwear stock with an accumulate rating. It has assigned a target price of Rs 1231 to the stock.  

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“We estimate Sales/EBIDTA/PAT CAGR of  20.1/19.3/18.7%  for  FY23-26E.  Though  FY24 will remain  depressed  with 7.3%  PAT  growth,  yet  we  expect  24.8%  CAGR  over FY24-26. Metro Brands trades at 60.1x/48.7xFY25/26  EPS  which  is  at  a  premium  to  other  footwear  players given growth visibility and past track record.  Initiate with 'Accumulate' rating,” said the brokerage.  

In the June quarter of the current fiscal, Metro Brands logged a consolidated net profit after tax of Rs 93.5 crore, falling 11.6 percent from Rs 105.78 crore in the corresponding quarter of last year. The Q1 earnings show was impacted by weak operating margins. 

However, revenue climbed 14.6% to Rs 582.52 crore against Rs 507.95 crore in the year-ago quarter. 

The E-commerce segment, which contributes to 8% of the company’s total revenue, logged a year-on-year revenue growth of 63%.  

Metro Brands Limited is a footwear and accessories specialty retailer. The company sells a range of branded products for men, women, unisex and kids, and for every occasion including casual and formal events. 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions. 

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