Buy Metro Brands; target of Rs 1525: Motilal Oswal

Motilal Oswal is bullish on Metro Brands has recommended buy rating on the stock with a target price of Rs 1525 in its research report dated January 18, 2025.

Broker Research

January 21, 2025 / 15:13 IST

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Metro Brands

Metro Brands (MBL) reported in-line 3Q results, with revenue growth recovering to ~11% YoY (vs. 5% YoY in 2Q), driven by a 43% YoY growth in E-commerce sales. In-store sales grew ~8% YoY (vs. 5% YoY in 2Q), led by ~9% YoY area additions. Gross profit grew 8% YoY (in-line) as margin contracted ~125bp YoY due to higher e-commerce sales and the residual impact of the FILA inventory liquidation (~50bp impact). EBITDA was up ~13% YoY (in-line), as better cost controls offsets tad weaker gross margin, while adjusted PAT grew 22% YoY (in-line). Despite weaker store additions in 9MFY25, management maintained its guidance of opening 225 stores over FY25-26, with 140-145 store additions targeted for FY26. We lower our FY26-27E EBITDA by a marginal 1-2% on account of slightly weaker productivity assumptions (primarily due to a change in the format mix).

Outlook

We value MBL at 70x Mar’27 P/E to arrive at a valuation of INR1,550 per share. We have not factored in any significant contributions from FILA and Foot Locker in our estimates till FY27, and a faster ramp-up could provide a further upside potential. We reiterate our BUY rating on MBL.

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