Hold Metro Brands; target of Rs 1208 Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Metro Brands with a target price of Rs 1208 in its research report dated October 24, 2024.

Broker Research

October 28, 2024 / 12:14 IST

Hold

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bselive
nselive

Volume

Todays L/H

Prabhudas Lilladher's research report on Metro Brands

We cut our FY25/26/27 EPS estimates by 3.1/4.6/5.1% given 1) below estimate revenue/earnings led by tepid demand 2) drag in margins amid selling fila inventory at extreme discounts 3) lower revenue guidance for FY25 from 12- 15% to 10-15% and 4) BIS issues affecting high-end international brand imports. However, MBL operating parameters are on track with 1) addition of 3 new cities in 2Q (2 in Q1) 2) increase in online/ Omni channel salience to ~11.4% of sales and 3) increase in share of >3000 MRP sales by 3ppt YoY to ~53% of sales. Long- term growth strategy is in place led by 1) geographical and store expansion (225 stores in 2 years) 2) brands licenses/acquisitions (Crocs, Fitflop, Birkenstock, New Era) 3) re-launch and scale up in FILA/ footlocker from FY25/26. We believe that valuations at 62.7xFY27 do not leave any upside in near term.

Outlook

We retain Hold, with back ended returns expectations in the current volatile demand scenario.

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