74 years old Metro Shoes’ ₹1,367 crores IPO to hit the market | Should you invest?
Metro Shoes is engaged in animal cruelty as the company sells leather shoes. As part of our ethical policy, we do not provide any recommendation on companies engaged in the business of animal cruelty, tobacco, or alcohol. – Arihant Capital Markets
Metro established its first store in Colaba, Mumbai in 1947 (Source), and today the company is one of the largest Indian footwear retailers in India. Metro is practically a household name and a preferred choice for everyone for their footwear pick. They offer shoes for all age groups and for all occasions.
As of September 30, 2021, the company had the third-highest number of exclusive retail outlets which operated 598 Stores across 136 cities and covered 30 states and union territories in India. Some of the company’s well-reputed brands include Mochi, Walkway, Da Vinchi, and J. Fontini. The company also retails well-known third-party brands through its stores including Crocs, Skechers, Clarks, Florsheim, and Fitflop. In addition to footwear, Metro also retails accessories including belts, bags, socks, masks, and wallets at its stores. They have also retailed foot care and shoe-care products through the joint venture, M.V. Shoe Care Private Limited, making it a ‘one-stop-shop’ for all footwear and related accessories to customers.
Metro IPO offers details
- IPO open from: Dec 10th – Dec 14th 2021
- Face value: ₹5
- Price Band: ₹485-500
- Market Lot: 30 shares
- Minimum Investment: ₹15,000
- Listing on: BSE and NSE
- Fresh Equity Issue: up to ₹295 crore
- Offer for sale: up to ₹1,072 crore
- Total issue: up to ₹1,367 crore
- Promoters: Rafique A. Malik, Farah Malik Bhanji, Alisha Rafique Malik, Rafique Malik Family Trust and Aziza Malik Family Trust.
- Book running lead managers: Ambit Private Limited , Axis Capital Limited, DAM Capital Advisors Ltd, Equirus Capital Private Limited, ICICI Securities Limited, Motilal Oswal Investment Advisors Pvt Ltd
What is an IPO and should you invest in them?
Offer Break-up
The offer is broken up into the following investor classes:
Why is the company raising money?
Metro Brands Limited IPO Size is ₹1,367 Crores and below are the objects of the IPO:
1) Offer for Sale (OFS) ₹1,072crores: Under this OFS, shareholders would sell their shares and the company would not receive any part from IPO proceeds.
2) Fresh issue of ₹295crores: Fresh issue would be done towards the following purposes:
- To open new stores of the company, under the Metro, Mochi, Walkway and Crocs brands
- General corporate purposes, subject to applicable laws.
IPO Strengths
- One of India’s largest footwear retailers: Company operates a total retail business area of 734,217 sq. ft. and operations are well-spread across metro cities, tier I, II and III and towns.
- Wide range of brands and products: The company offers a massive range of products catering to all occasions and all age groups and market segments.
- Efficient operating model: It has deep vendor engagement making its model extremely efficient.
- Trusted brand name: Metro is a well-known name in the footwear segment with high recall value and client loyalty. Due to its strong brand-name and network, it is also the preferred choice for third-party brands looking to expand in India
- Strong track record of growth: Its total store count has grown from 504 Stores across 116 cities from 2019 to 598 Stores across 136 cities in Sep 2021.
- Experienced promoter and management: Company’s chairman and promoter, Mr. Rafique A. Malik, has over 50 years of experience in the footwear retail business and continues to provide direction to the business.
Key Risks
- Identify customer demand: Inability to identify customer demand accurately and maintain an optimal level of inventory in stores may impact operations adversely.
- All the stores are on lease: Any failure to renew leases on competitive terms or unable to manage lease rental costs could adversely affect the company’s operations.
- Sale of third-party brands: Significant portion of the company’s revenues are generated from sale of third-party brands, and the loss of any such brands, could adversely affect its business.
- Facing pricing pressure: Continued growth of online retailers may create pricing pressures and increasethe competition.
- Competitive market: Company faces competition from existing footwear retailers and any further increase in competition or inability to identify customer demand accurately may adversely affect their business and financial condition.
- COVID-19 pandemic: Its continuing impact and as well as government measures to reduce the spread of COVID-19 may have adverse effect on business and operations.
Financial Data
| (₹ in crores) | 6M Ended 30-Sep-21 | Year Ended 31-Mar-21 | Year Ended 31-Mar-20 | Year Ended 31-Mar-19 |
| Total Assets | 1,740 | 1,659 | 1,617 | 1,321 |
| Total Revenue | 489 | 879 | 1,311 | 1,237 |
| Profit After Tax | 43 | 65 | 161 | 153 |
Valuation and View
Metro Shoes is engaged in animal cruelty as the company sells leather shoes. As part of our ethical policy, we do not provide any recommendation on companies engaged in the business of animal cruelty, tobacco, or alcohol.
