Metro Brands IPO: Looking at Rs 13,500 crore valuation at listing

Mumbai-based footwear company Metro Brands is planning to raise upto Rs 1,367 crore through its upcoming initial public offering (IPO) at a valuation of close to Rs 13,575 crore. The company that markets footwear under brands like Crocs, Mochi, Walkway and Metro, wants to fund its retail expansion from the IPO proceeds, top officials said.

It has proposed a price band of Rs 485 to Rs 500 per equity share having face value of Rs 5. The firm's management has estimated the valuation, post-IPO, at the upper price band.

According to Nissan Joseph, chief executive at Metro, the management plans to add close to 260 company-owned and operated stores. In the last three years, since end-FY2018, it has grown retail presence by 43 per cent - from 419 stores in end-FY2018 to 598 now.

Currently, the firm’s promoters hold 84.02 per cent of the shares, while investor Rakesh Jhunjhunwala owns 14.7 per cent in the company, followed by some 1 per cent shares that are held by its employees. Post-IPO, holdings of Jhunjhunwala is set to come down, though the ace investor is not selling any of his shares during the listing. According to Kaushal Parekh, chief financial officer at Metro Brands, close to 10 per cent of the firm’s shares will be offered to the public, which will include fresh issues and promoter held shares. The promoter group will continue to hold some 75 per cent of the company’s shares after listing, he said.

Founded just after the country’s independence, Metro Brands opened its first store in Mumbai in 1955, the company has doubled its store count since FY2015. While its net sales have nearly doubled since FY2014 - from Rs 636 crore to Rs 1,209 crore in FY2020. Last year, its business suffered due to stringent lockdowns and other COVID related disruptions. In FY2021, it raked in Rs 788 crore in sales, while its margins shrank. Its earnings before interest, tax, depreciation and amortisation (EBITDA) fell to 17.12 per cent in FY21 from 21.41 per cent in FY18. Net profit margin stood at 9.44 per cent - lowest in a decade.

According to Parekh, Metro has managed to recover some of the lost ground since the lockdowns and its sales in the first half of FY22 grew 150 per cent year-on-year to Rs 456 crore. Footfall at its outlets have also recovered back to pre-COVID levels. “In fact, sales during the July-September quarter was higher than pre-COVID level”, said Joseph.

Apart from focusing on expansion of physical presence, the firm is investing in its online distribution channels as well. According to the company management, share of the e-commerce channels have grown to 12 per cent of its sales from just one per cent in early-2020. Since, it continues to witness higher growth in e-commerce and the channel is less penetrated when it comes to footwear category, Joseph expects the share of online channels in its revenue to grow further.

Also Read: Star Health Insurance IPO share allotment today: Here's how to check status

Also Read: Jhunjhunwala-backed Metro Brands IPO opens on Dec 10: Price band, lot size & other details