Did you know Metro shoes’ name was inspired from Mumbai’s iconic Metro Cinema? Since India’s independence, the homegrown footwear retailer has come a long way and is now set to hit the exchanges soon. Barring the pandemic-related hit FY21, the company has had a healthy financial track record. It has one of the highest profit margins among its peers. It operates nearly 580 stores pan-India. With plans to open new stores, it is positioning itself to ride the growth wave in the organized footwear market that is expected to grow at 20% CAGR over FY22-FY25. It has been backed by marquee investors like Rakesh Jhunjhunwala since 2007.
Offer details
- Start date: 10 December 2021
- End date: 14 December 2021
- Price band: To be announced
- Minimum investment: To be announced
- IPO size: To be announced
All about the IPO
Malik Tejani, the grandfather of the company’s current Managing Director Farah Malik Bhanji, took out a loan to buy a store in Colaba, Mumbai and then re-named it Metro Brands.
From a single store in Mumbai, the family-run business has today expanded its footprint with 586 stores across 134 cities in the country. The management plans to further expand its store network by opening 219 stores using the proceeds of the issue.
Business highlights
- One of the largest Indian footwear specialty retailers with an aspirational positioning
- Offers own brands such as Metro, Mochi and even third party premium brands such as Crocs, Skechers, Clarks, etc.
- Strong promoter background with third generation now managing the company
Financials
Revenue: -19%; Net profit: -35% (FY19-21 CAGR)
The business performance was adversely impacted due to the pandemic.
Strengths
- A strong brand appeal and recall among consumers
- Operates through an asset light model by outsourcing all its products without any owned manufacturing facility
- Recorded the highest realization per unit among peers such as Bata India, Liberty Shoes and Relaxo Footwear
- Well spread revenue-base with metros, tier 1 and tier 2 cities contributing about 30% each to the revenue.
Risks
- The impact of the new virus variant on its business, operations and sales
- Dependence on third-parties to manufacture products
- A significant portion of revenue comes from sale of third-party brands (around 30%)
- The business is manpower sensitive and faces the risk of high attrition
Good to know
As the economy sharply recovers, one of the beneficiaries of rising consumer expenditure is expected to be the footwear industry. Also, the share of organised players in this space is expected to increase from 36% in FY22 to 40% in FY25. The company is also scaling up its online presence to take advantage of the growth in the industry.
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