Hold Metro Brands; target of Rs 1276: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Metro Brands with a target price of Rs 1276 in its research report dated October 17, 2025.

Broker Research

October 21, 2025 / 10:56 IST

Hold

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Metro Brands

We cut FY27/FY28 EPS estimates by 4.3/4.9% driven by 1) Higher store additions in across new and existing formats resulting in increased overheads and 2) elevated A&P spends to nurture new brands. We believe operating parameters to improve with a lag led by 1) expected expansion in Tier-2 and Tier-3 cities with Metro, Mochi and Walkway. 2) Normalization of BIS-related issues by end of FY26 resulting in faster store expansion in Footlocker and FILA and 3) launch of Clarks EBO’s in FY27. MBL's growth plans remain on track, supported by 1) Entry into new cities. 2) Healthy online/omni-channel contribution, accounting for ~14.2% of total sales (39% YoY sales growth). 3) 100bps increase in share of products priced above ₹3,000 now making up ~54% of total sales. 4) Accelerated store openings in Walkway format (10 in 2Q26) aimed at capturing the value-conscious consumer (Tier-2 cities) and positioning MBL as a comprehensive footwear destination. We believe the benefits of GST 2.0, along with tailwinds from the upcoming wedding season, will accelerate growth in 2H26. we see the key growth delta emerging from Clarks, FILA and Foot Locker as MBL launches new EBO’s and complements its product range.

Outlook

We estimate 16.6% EPS CAGR over FY25-FY28 and assign a DCF based target price of Rs 1276 (Rs1302 earlier). We expect back ended returns given rich valuations of 58.6xFY28 EPS. Retain Hold.

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