Goldman Sachs in its research report dated March 21 said that sports and athleisure (S&A) penetration is the most significant structural trend
in Indian footwear due to the rising adoption of an active lifestyle, growing sports culture, and acceptance of casual clothing at workplaces.
It expects India's branded S&A footwear category value to grow at 13% CAGR over FY25E-45E. Branded footwear penetration in India has been rising driven by a combination of rising income levels, brand consciousness, and improving availability of branded footwear. Meanwhile, the market for unbranded or small brands has fallen to 75% from 85% in the past decade.
The brokerage firm initiated coverage on Indian footwear companies Metro Brands Ltd with "Buy" and Bata India Ltd with a "Neutral" call, upbeat on their growth prospects.
Goldman Sachs set the target price for Metro Brands at Rs 1,450, indicating a potential upside of 29 percent from the stock's closing price of Rs 1,125 on March 21. For Bata India, the target price of Rs 1,470 suggests a 7 percent increase.
Over the past six months, Metro Brands has seen a modest gain of over 3 percent, while Bata India has experienced a decline of 16 percent. The benchmark Nifty 50 gained 12 percent during the period.
The monthly performance chart shows that Bata India has been giving negative returns from three months.
Also Read | Why Metro Brands stock jumped 50% while Bata, Relaxo, Campus languished?
Global trends suggest that as the footwear market grows, 40-60% market
share gets consolidated with top 15 brands. Goldman Sachs said India's branded footwear industry is underpenetrated, with ample room for growth. The brokerage identified sports and athleisure as a significant multi-decade, double-digit growth opportunity.
Metro Brands could leverage the opportunity in sports and athleisure with Fila, said Goldman Sachs.
According to the brokerage, organised multi-brand retailers are best positioned to capture the rising brand penetration.
In terms of performance within the Indian footwear sector, Khadim India Ltd's stock has gained over 83 percent in the past year, while Mirza International Ltd's has declined by over 82 percent during the period.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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