ICICI Securities bullish on newly listed Rakesh Jhunjhunwala portfolio stock after strongest quarter

Metro Brands’ right mix of brands provide growth runway (of store addition). Its focus on financial discipline along with balance sheet strength provides confidence on the execution, said domestic brokerage and research firm ICICI Securities, adding that the company has an optimized mix of in-house brands and third-party brands in MBOs to drive customer footfalls, improve sales density and gross margins. 

“Besides, a platform of choice for international brands aids confidence on new avenues (of growth),” the note stated. The brokerage house has maintained its buy rating on Metro Brands shares with a DCF-based target price of 850. The Rakesh Jhunjhunwala portfolio stock has rallied more than 60% in last seven month i.e., since its listing in December last year.

“Commentary of robust demand outlook along with some upside risk to the (earlier guided) margin range makes Metro Brands stand out from the pack. 1Q performance was good with 26% QoQ growth in revenues and highest-ever gross and EBITDA margins of 59.7% and 36%, respectively (expected to normalise though). It added 20 (net) stores in the quarter (EoP stores: 644),” the note highlighted.

Multi-brand footwear retail chain Metro Brands Ltd on Friday reported a consolidated net profit after tax of 105.7 crore for the quarter ended June. The company had posted a net loss after tax of 12 crore during the January-March quarter last year.

Its total revenue from operations was up over two-fold to 508 crore during the quarter under review as against a low base of the pandemic-impacted corresponding quarter. It stood at 131 crore in the first quarter of FY21.

“Q1 FY23 has been an excellent start to our new fiscal year as we set new records in Revenue, EBITDA and PAT. We have seen the business continue the momentum that we saw as early as Q3 of FY 22, has stayed through Q4 and now has resulted in our strongest quarter in our history of Metro Brands,” said Metro Brands chief executive officer (CEO) Nissan Joseph.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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