Emkay Research initiates coverage on Metro Brands with ‘buy’ rating; ups targets Rs 1,500/share

Metro has achieved a revenue CAGR of approximately 15 percent and is well-positioned to surpass this growth rate in the coming years

Brokerage firm Emkay Research has initiated coverage on Metro Brands, assigning a ‘Buy’ rating and raising the target price by 18 percent to Rs 1,500 per share. The brokerage highlights Metro’s exceptional financial discipline, reflected in a long-term mid-teen revenue CAGR and consistent shareholder rewards of approximately 30 percent dividend payout.

Metro’s multi-format stores cater to a wide spectrum of footwear needs, offering products priced between Rs 700 and Rs 12,000. The company is progressively expanding its footprint in the Sports and Athleisure (S&A) segment through exclusive partnerships with global brands like FILA and Foot Locker. Emkay said these alliances are expected to drive growth, with plans to open over 1,000 FILA and 200 Foot Locker stores, boosting growth by 250 basis points and supporting mid-teen topline expansion over the next decade.

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Metro’s agile, demand-driven supply chain ensures a best-in-class mix of fresh sales, with 90 to 95 percent of stock being new, and delivers superior store paybacks within 2–3 years. The company’s strong operational efficiency is supported by a motivated workforce, with 30 percent of payouts linked to sales performance, and a loyalty program that drives consistent growth, including 3–4 percent same-store sales growth.

Emkay’s analysis suggests that Metro has the potential to quadruple its topline in the next decade, with plans to add approximately 1,500 stores across formats—a 2.5x expansion. The Sports and Athleisure market in India, growing at a compound annual growth rate of 20 percent (FY18–23), far outpaces the casual, fashion, and formal footwear categories (7–8 percent). This presents a multi-decade growth opportunity for Metro, which benefits from India’s under-penetrated footwear market and its own scalable business model, it added.

Ekmay added that over the past decade, Metro has achieved a revenue CAGR of approximately 15 percent and is well-positioned to surpass this growth rate in the coming years. With an EBITDA margin of 21–22 percent and a cash flow to EBITDA ratio of approximately 60 percent, the company’s strong financial discipline enables growth through internal accruals while consistently rewarding shareholders. Emkay’s research underscores Metro’s ability to maintain best-in-class growth longevity and strong free cash flow generation, warranting a premium valuation. However, the brokerage notes that potential delays in scaling up FILA and Foot Locker stores could pose downside risks.

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