Emkay Global Financial' research report on Metro Brands
The change in TP is led by near-equal contribution from upward revision of estimates and earnings rollover. Given the GST reduction and improving outlook on value-format Walkway, we build in better LTL trends and higher expansion across formats. We also factor in margin gains, helped by operating leverage on Metro’s recent tech/team investments and the margin turnaround in FILA (150-250bps impact in FY24/FY25). The recent Metro Crossover (all-day shoes) launch is a perfect match for evolving consumer preferences; new format ‘Shoe Depot’ should also help cater to the discount-seeking consumer better. Metro’s healthy balance sheet (~40% cash) makes it a go-to-partner for incoming global brands, and further portfolio augmentation remains a potential upside.
Outlook
We reiterate BUY on Metro, while revising up our TP by ~14% to Rs1,475 (60x Sep-27E pre-IndAS EPS).
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