YES Securities initiates coverage on Metro Brands, Campus Activewear, Bata India

They recommend adding Metro Brands with a target price of Rs 1385 per share, Campus Activewear with a target price of Rs 338 per share, and rate Bata India as neutral with a target price of Rs 1574 per share.

YES Securities has commenced coverage on footwear companies, Metro Brands Ltd, Campus Activewear Ltd, and Bata India Ltd. They recommend Metro Brands with a target price of Rs 1385 per share, Campus Activewear with a target price of Rs 338 per share, and rate Bata India as neutral with a target price of Rs 1574 per share.

The brokerage highlighted Metro Brands's extensive product and brand portfolio, expanded distribution network, asset-light business model, and upcoming offerings in the S&A segment. Valuing the company at a P/E multiple of 70x based on FY26E EPS, YES Securities noted Metro Brands' robust operating margins of approximately 27-30% over the past six years, despite challenges in FY21 due to the pandemic.

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Metro Brands aims to sustain margins of around 30% from FY25E to FY26E, driven by growth in premium products and efficient store operations. YES Securities forecasts strong growth prospects for Metro Brands, anticipating an 18% revenue increase and 19% EBITDA growth from FY24 to FY26E.

YES has initiated coverage on Campus Activewear. The recommendation is based on Campus Activewear's dominant position in the S&A footwear market, extensive vertical integration in manufacturing, anticipated volume-driven growth, a robust distribution network encompassing online and offline channels, and favourable market trends towards casualization.

The brokerage forecasts robust growth for Campus, expecting revenue, EBITDA, and PAT to grow by 15%, 24%, and 39%, respectively, from FY24 to FY26E. With the stock trading at a P/E of 63x/51x on FY25E/FY26E EPS, YES Securities values Campus at a P/E of 60x on FY26E EPS.

Conversely, Bata India Ltd. receives a NEUTRAL rating from YES Securities. Factors influencing this rating include the ongoing trend of premiumization in the footwear industry, Bata's strategic expansion of its retail footprint, favourable shifts towards sneakers and casual wear, a growing digital footprint, and continuous initiatives and campaigns to enhance market position.

Looking ahead, Bata aims to open 100-150 stores annually, prioritize premium products contributing 40% to revenue, and expand brands like Nine West and Floatz. Revenue is forecasted to grow by 8% over FY24-FY26E, driven by ASP growth and expanded premium product contributions. Volume growth is expected to reach its peak of 50 million pairs by FY26E, with margins likely improving to 23.6% by FY26E due to higher realizations from premium products.

YES Securities projects revenue, EBITDA, and PAT growth of 8%, 11%, and 24%, respectively, over FY24-FY26E. Valuing Bata at a P/E of 50x on FY26E EPS of Rs31.5.

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