Buy Metro Brands; target of Rs 1460: Motilal Oswal

Motilal Oswal is bullish on Metro Brands has recommended buy rating on the stock with a target price of Rs 1460 in its research report dated August 12, 2024.

Broker Research

August 16, 2024 / 13:49 IST

BUY

26 Aug, 2025 12:21

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Motilal Oswal's research report on Metro Brands

Metro’s revenue declined 1% YoY (9% miss), due to weak same-store sales (SSS); however, store additions supported revenue. A higher contribution of INR3,000+ ASP products and own-brand products boosted gross margins. Controlled costs and higher gross margins restricted the decline in EBITDA/PAT to only 3%/2% (11% miss). In the near term, we believe that soft demand, delayed BIS implementation (which delayed FILA’s repositioning), and margin contraction could weigh on growth. However, in the long term, healthy store economics, steady store additions, and a growth opportunity in Fila/Foot Locker should drive a CAGR of 16%/19% in revenue/PAT over FY24-26. We reiterate our BUY rating on the stock.

Outlook

We value Fila/Foot Locker at a ~75% discount to the potential value, which creates an option value of INR190 (Exhibit 2), arriving at a valuation of INR1,460 per share.

For all recommendations report, click here