Buy Metro Brands; target of Rs 1400: Motilal Oswal

Motilal Oswal's research report on Metro Brands

Metro Brands (MBL) delivered in-line 11% YoY revenue growth in 2Q, driven by an improvement in in-store sales (+10% YoY vs. 4% YoY in 1Q), acceleration in store additions, and robust 39% YoY online growth. MBL’s store additions ramped up with ~38 net store additions in 2Q (significant pick-up from ~20 net store additions over the past 10 quarters), driven by a scale-up of the value format Walkway and addition in recent tie-ups, such as Foot Locker and New Era. EBITDA grew 10% YoY (3% miss), as ~20bp gross margin expansion was offset by higher expenses from store openings and elevated A&P spends (up ~100bp YoY).

Outlook

We roll forward our valuation base to Dec’27 (from Sep’27) and assign a 70x P/E multiple. We reiterate our BUY rating on MBL with a revised TP of INR1,400 (earlier INR1,435). Consistent double-digit growth and ramp-up of newer formats, such as FILA, Foot Locker, and Clarks, remain the key re-rating triggers for the stock.