Physical Address
Bengaluru, Karnataka
Table of Contents
Metro Brands is the most valuable listed footwear company. The market cap of the company is ₹34,000 crore. It is footwear retailer which also has a few of its own brands. The company has started making its mark in the recent years. Metro Brands has increased its presence by aggressively opening new stores. Even though the major contribution to sales comes from offline stores, the company is now focusing on online channels as well.
About Metro Brands
The first Metro Brands store was started in 1955 and the company was incorporated in 1977. The promoter and promoter group hold about 74.16% of the outstanding shares. The promoters hold the stake mostly through a bunch of trusts. Two key trusts Rafique Malik Family Trust (Trustee – Farah Malik Bhanji) and Aziza Malik Family Trust (Trustee – Farah Malik Bhanji) hold 27.72% and 28.11% respectively.
The key people in the Board of Directors are Mr. Rafique Abdul Malik (Executive Director and Chairperson), Mrs. Farah Malik Bhanji (Executive Director and Managing Director), Mr. Mohammed Iqbal Hasanally Dossani (Executive Director), and Mr. Nissan Joseph (Chief Executive Officer).
Business Model of the Company
The company owns and runs Multi Brand Outlets (MBO) and Exclusive Brand Outlets (EBO). The company had 836 stores (as-of end of Q4FY24) in 193 cities across 31 states and union territories. The company procures and sells shoes of various brands under one roof in the MBOs. While the company has its own brands, a few of them are well known, it also sells footwear and accessories of third-party brands such as Crocs, Fila, Puma, Adidas etc. The company runs stores of third-party brands such as Crocs and Fitflop under exclusive agreements. The company also has an exclusive agreement to sell Fila shoes in India.
A few of its well known brands are Metro, Mochi, Walkway, J Fontini, Vivado, Active etc. The company sources all its products from outside under long-term outsourcing agreements.
Metro Brands caters to every consumer segment such as family, youth, value, and premium.
Current Network and Distribution
The company has presence mostly in West and South India. While the initial focus was on the metro and Tier I cities, the company is fast expanding into Tier II and Tier III cities.
Metro Brands has seen rapid growth in the number of new stores since FY20. It had 551 stores in FY20 which reached 836 stores by the end of FY24 which is an increase of 52% in just four years.
The proportion of revenue coming from Online and Omnichannel is also increasing with every passing year. The percentage of revenue coming from E-commerce was less than 2% in FY19, but it had reached almost 10% by the end of FY24.
Financials of Metro Brand
The company has tremendous growth potential and it has given a glimple of it in the last few years. Between FY19 and FY24, the revenue of the company has grown at a CAGR of 14%. While EBITDA has grown at a CAGR of 16% between FY19 and FY24, the PAT has grown at CAGR of 22% in the same period.
The ROE of the company is 22% and Price to Book Value ratio is 18.27. At the first glance, the stock looks a bit pricey, but when we look at the fast pace of growth that the company has seen in the recent years, the PE ratio of 82 does not look that bad. The PE has remained around the same level in the last one year.
The company has no debt in its books. The ROE of 22% is better than its peers..
The Organized Footwear Industry and the Peers
The company seems to have entered a fast growth trajectory. But it has a number of challenges to deal with in both short and long term. India is a price sensitive market and the footwear industry is dominated by the unorganized sector. The competition is also very high among the organized players.
The per capita footwear consumption is also very low in India. While the per capita consumption isn’t expected to rise very fast, but the average selling price is expected to rise.
The stock has had a great run in the last tow years. It has given a return of 103% in the last 2 years. A detailed analysis of Indian footwear industry can be found here. Metro Brands stock has fared much better than its peers.
References
- Metro Brands website
- Metro Brands Investor Presentation
