Sell Metro Brands, target price Rs 925: HDFC Securities

HDFC Securities has a Sell call on Metro Brands Ltd. with a target price of Rs 925. The current market price of Metro Brands Ltd. is Rs 1211.5. Metro Brands, incorporated in 1977, is a Large Cap company with a market cap of Rs 32931.32 crore, operating in the Leather sector.

Metro Brands’ key products/revenue segments include Footwear and Other Operating Revenue for the year ending 31-Mar-2024.

Financials
For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 665.83 crore, down -8.32 % from last quarter Total Income of Rs 726.29 crore and up 9.63 % from last year same quarter Total Income of Rs 607.33 crore. The company has reported net profit after tax of Rs 94.91 crore in latest quarter. The company’s top management includes Mr.Rafique A Malik, Mr.Srikanth Velamakanni, Mr.Vikas Vijaykumar Khemani, Mr.Arvind Kumar Singhal, Ms.Aruna Bhagwan Advani, Mr.Manoj Kumar Maheshwari, Mr.Utpal Hemendra Sheth, Mr.Mohammed Iqbal Hasanally Dossani, Ms.Farah Malik Bhanji, Mr.Mithun Padam Sacheti, Mr.Rafique A Malik, Mr.Srikanth Velamakanni, Mr.Vikas Vijaykumar Khemani, Mr.Arvind Kumar Singhal, Ms.Aruna Bhagwan Advani, Mr.Manoj Kumar Maheshwari, Mr.Utpal Hemendra Sheth, Mr.Mohammed Iqbal Hasanally Dossani, Ms.Farah Malik Bhanji, Mr.Rafique A Malik, Mr.Mithun Padam Sacheti, Mr.Srikanth Velamakanni, Mr.Vikas Vijaykumar Khemani, Mr.Arvind Kumar Singhal, Ms.Aruna Bhagwan Advani, Mr.Manoj Kumar Maheshwari, Mr.Utpal Hemendra Sheth, Mr.Mohammed Iqbal Hasanally Dossani, Ms.Farah Malik Bhanji, Mr.Mithun Padam Sacheti, Mr.Rafique A Malik, Mr.Srikanth Velamakanni, Mr.Vikas Vijaykumar Khemani, Mr.Arvind Kumar Singhal, Ms.Aruna Bhagwan Advani, Mr.Manoj Kumar Maheshwari, Mr.Utpal Hemendra Sheth, Mr.Mohammed Iqbal Hasanally Dossani, Ms.Farah Malik Bhanji, Mr.Mithun Padam Sacheti. Company has Deloitte Haskins & Sells as its auditors. As on 31-03-2025, the company has a total of 27 crore shares outstanding.

Investment Rationale
After a challenging H1FY25, signs of demand recovery are visible. MBL’s topline grew 10.3% YoY to Rs 6.43 billion (in-line). However, sales density continued to normalize downward in Q4 (at ~Rs 19.4k vs ~ Rs 20.8k/sq. ft. in Q4FY24). The e-commerce business saw robust growth (up 45% YoY; contributing 11% to revenue). GM expanded 107bps YoY to 57.5% (HSIE: 56.2%). EBITDAM expanded 347bps YoY to 30.7% (HDFC Securities Estimate: 27.8%), driven by better cost optimization, reduction in FILA losses, and restructuring of FILA’s royalty agreement with FILA Global. FILA’s expansion is planned from H2FY26. HDFC Securities has cut the FY26/27 estimates by 6/4%, respectively, to account for lower other income. Their SELL rating stands with a DCF-based target price of Rs 925/share, implying 46x FY27E P/E. Promoter/FII Holdings
Promoters held 71.88 per cent stake in the company as of 31-Mar-2025, while FIIs owned 3.46 per cent, DIIs 7.36 per cent.