Metro Brands IPO - 7 Things to Know
Metro Brands, the retail footwear brand backed by Rakesh Jhunjhunwala, is opening its IPO on 10th December and it will be a mix of a fresh issue and an offer for sale. Metro Brands has a 65 year legacy in the footwear retail business and has become an aspirational brand for the growing middle class in India.
Some of its well-known footwear brands include Metro, Mochi, Walkway, Da Vinci and Fontini. It retails its products through multi-brand outlets (MBO) as well as through exclusive brand outlets (EBO).
Seven things to know about the Metro Brands IPO
1) Metro Brands operates a total of 598 stores across 136 cities in India and while it largely a big-city brand, it has also forayed into smaller towns. The company’s retailing model is “Company Owned and Company operated (COCO) and both its EBOs and MBOs fit into the broad COCO model only.
2) The IPO will comprise of a fresh issue of Rs.295 crore and an offer for sale of 2,14,50,100 shares. The offer for sale is predominantly by the promoter group only. Ace investor, Rakesh Jhunjhunwala, has been backing the company as an investor since 2007.
It will be interesting to see the response to the issue after Star Health, another RJ backed outfit.
3) The Metro Brands IPO will open for subscription on 10-Dec and close on 14-Dec. The basis of allotments will be finalized on 17-Dec and refunds will be initiated on 20-Dec. The shares are expected to be credited to the demat account of eligible shareholders on 21-Dec and the stock will be listed on the stock exchanges on 22-Dec.
4) The fresh issue portion of Rs.295 crore will be used for organic by opening new stores for some of its leading brands like Metro, Mochi, Walkway and Crocs. The OFS portion will only give an exit to promoters and the IPO also intends to list the stock so that at a future date, the valuation will help stock as currency.
5) The company is a profit making company but profits have fallen sharply between FY19 and FY21 by -57.7% to Rs.64.62 crore due to the lag impact of the COVID syndrome on retail sales and footfalls.
Retail, being a high-touch business, had been among the worst affected. Revenues fell from Rs.1,237 crore to Rs.Rs.879 crore between FY19 and FY21.
6) Metro Brands brings some core strengths to the table. It offers a wide retail reach and a footwear brand that is well entrenched with strong mindshare and wallet-share. It has also had a strong track record of growth and profitability, if you ignore the exceptional COVID period.
The presence across multiple formats and channels plus focus on COCO model gives greater business control to Metro Brands.
7) The issue is being lead managed by Ambit, Axis Capital, DAM Capital, Equirus, ICICI Securities and Motilal Oswal. Link Intime India will be the registrars to the initial public offer.
The promoters currently hold 83.99% stake in the company and this will be diluted post the IPO due to the combination of the fresh issue and the OFS.
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