Hold Metro Brands; target of Rs 1135: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Metro Brands with a target price of Rs 1135 in its research report dated August 08, 2025.

Broker Research

August 12, 2025 / 12:43 IST

Hold

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Metro Brands

We cut FY26/FY27 EPS estimates by 1.9%/4.5% driven by 1) Higher store additions in a subdued demand environment, to likely increase overheads in the near term. We estimate margin contraction of 64bps/14bps in FY26/FY27 and 2) Weak store economics, driven by lower throughput/store amidst continued muted consumer sentiment. However, we believe operating parameters may improve in medium term only, led by 1) Stable store-level economics, aided by expansion into Tier-2 and Tier-3 cities. 2) Normalization of BIS-related issues in near term and 3) Peaked-out losses in FILA, with an expected break even by FY27 and scale-up in Foot Locker from 2H26.

Outlook

We estimate 11.3% EPS CAGR over FY25-FY27, which gives us DCF based target price of Rs1135 (Rs1195 earlier). The stock currently trades at 68xFY27 EPS which limits near term upside in the stock. We retain HOLD.

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