Buy Metro Brands; target of Rs 1500: Emkay Global Financial

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26 Aug, 2025 12:21

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Metro’s formats are a one-stop-shop for footwear across a wide range of price-points (ASP: Rs700-12,000); also, it is gradually evolving into a giant in the S&A market (FILA/Foot Locker). Metro remains a platform of choice for third-party brands looking to enter India, and offers a multi-decade opportunity of double-digit growth, enabled by lower penetration of existing formats, ramp-up of new formats, and future portfolio additions. Our extensive analysis around global benchmarking suggests Metro has potential to achieve 4x topline in the coming decade, with ~1,500 store additions across formats (2.5x). Its demand-driven agile supply-chain ensures best-in-class mix of fresh sales and shortest store paybacks of 2-3Y. It deserves superlative valuation on the back of best possible growth longevity/strong FCF generation. Delay in ramp-up of FILA/Foot Locker is a potential downside.

We initiate coverage on Metro with BUY and DCF based TP of Rs1,500 (implied target multiple of 70x Dec-26 EPS). Metro is the epitome of financial discipline, given long-term mid-teen revenue CAGR and consistent rewards to shareholders (~30% dividend payout).

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