Hold Metro Brands; target of Rs 1195: Prabhudas Lilladher

hold

Prabhudas Lilladher's research report on Metro Brands

We cut FY26/FY27 EPS estimates by 0.7/3.5%, factoring in lower other income due to Rs4bn one time dividend paid in 3Q25. Operating parameters are showing an improvement led by 1) better demand conditions, supported by a higher number of wedding days in 1H26. 2) Stable store-level economics, aided by expansion into Tier-2 and Tier-3 cities. 3) BIS-related issues are expected to fully normalize over the next 9–12 months and 4) peaked out losses in FILA and expected scale up in Foot Locker and FILA from 2H26. Metro Brands Ltd (MBL)’s growth plans remain on track led by 1) Entry into newer cities with 208 stores over next 2 years. 2) A healthy online/omnichannel contribution of ~11% to total sales (23% sales growth) 3) 400bps increase in the share of products priced above ₹3,000 to ~54% of total sales. While MBL will focus on scaling up brands like FitFlop, New Era, major delta is likely to emerge from success of FILA and Footlocker.

Outlook

We estimate 14% EPS CAGR over FY25-FY27, which gives us DCF based target price of Rs1195 (Rs1162 earlier). The stock currently trades at 71.8xFY27 EPS which limits near term upside in the stock. We retain HOLD and expect back ended returns.

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Metro Brands - 27052025 - prabhu