Metro Brands debuts on December 22, will market sentiment hit listing price?

Metro Brands | The company will make its debut on the bourses on December 22. The final issue price is Rs 500 per share.

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26 Aug, 2025 12:21

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Mumbai-based footwear retailer Metro Brands will make its debut on the bourses on December 22, making it the 60th listing in 2021. Experts largely feel the listing will be impacted by the current market sentiment, spooked by fears of fresh Covid restrictions amid rising Omicron cases, as well as higher valuations.

The public issue of the company saw lower-than-expected subscription demand as the offer was subscribed 3.64 times between December 10 and 14. Qualified institutional buyers showed the most interest among investors, as their reserved portion was subscribed 8.49 times. Non-institutional investors had put in bids for 3.02 times the allotted quota, while the retail portion was subscribed 1.13 times.

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Metro Brands has mobilised Rs 1,367.5 crore through its public issue of 2.73 crore equity shares at Rs 500 per share. The offer comprised of a fresh issue of Rs 295 crore, and an offer for sale of Rs 1,072.5 crore by the promoters.

"Considering lower-than-expected subscription demand for its initial public offering (IPO), we expect a flat listing in a best-case scenario. We believe the reason for the low subscription and premium would be investors' concerns over aggressive pricing (on annualised FY22 earnings, the asking price is at a P/E of above 150x) and the volatile market scenario," said Prashanth Tapse, Vice President (Research) at Mehta Equities.

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Swapnil Shah, Head of Research at BP Wealth, added that Metro Brand's issue being subscribed 3.64 times on the final day has not gathered much attention in spite of the association with ace investor Rakesh Jhunjhunwala. "Considering tepid demand from investors, high valuations, and a volatile market, listing gains might be affected. At the upper price band, the stock is valued at a Price/Sales of 16.9x based on FY21 sales, which we believe is fully priced."

Equity markets had a free fall in the previous two sessions and in total, benchmark indices have corrected more than 5 percent since the start of the previous week amid the hawkish stance of the Federal Reserve and rising Omicron cases globally.

Grey market premium

Metro Brands shares traded at a discount of Rs 10 in the grey market, resulting in a trading share price of Rs 490 against the issue price of Rs 500 per share, per IPO Central. The grey market is an unofficial platform, where trading begins with the price band announcement till the listing of shares.

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"We are seeing a change in IPO sentiment amid a slight decline in the market, and the last two debutants witnessed profit bookings post-listing. We are also  seeing a decline in the grey market premium for upcoming IPOs. We may see a discount listing for Metro Brands given that its grey market premium trades at a discount of 10-15 percent currently," said Aayush Agrawal, Senior Analyst at Swastika Investmart.

Earnings

"Metro Brands has shown growth, profitability, and financial discipline in the past, but the sector is widely underrated. The company has an asset-light business model and derives most of its revenues from third parties," said Aayush Agrawal.

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The earnings performance of the company was hit by the coronavirus crisis in FY21 as profit fell quite sharply to Rs 64.62 crore during the year, compared to Rs 160.57 crore in the previous year. Revenue during the year, at Rs 800.05 crore, declined from Rs 1,285.16 crore in FY20.

Profit for the six-month period ended September 2021 stood at Rs 43.07 crore against a loss of Rs 43.11 crore in the corresponding period last fiscal. Revenue increased significantly to Rs 456 crore from Rs 176.54 crore in the same period.

Metro Brands operates 598 stores across 136 cities spread across 30 States and union territories in India, selling retail footwear under several brands: Metro, Mochi, Walkway, Da Vinchi and J. Fontini. It also offers third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop.

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"Metro Brands is one of the largest footwear retailers, with around 3-4 percent market share in the organised market space. It has reported a strong financial performance with robust cash-flow generation. The company has been consistently paying dividend since FY2000," said Rajnath Yadav, Research Analyst at Choice Broking, adding that given the prevailing negative sentiment in the equity market, Choice Broking is not anticipating any respectable listing gains from the issue.

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