Consumption To Spur Growth, Margins To Remain Same: Metro Brands' Nissan Joseph On GST 2.0 Impact

Metro Brands, one of India’s leading footwear retailers, will fully pass on the benefits of the recent 7% GST (Goods and Services Tax) reduction on footwear priced below Rs 2,500 to its customers, according to the company’s CEO, Nissan Joseph.

Under the revised GST structure, footwear priced below Rs 2,500 will attract 5% tax, compared to the existing 12%. The new GST rates will come into effect from Sept. 22.

Joseph emphasised that the company will pass on the benefits of the GST completely to customers. This will boost consumption and won’t impact the company’s margins.

“Our margins are going to continue to remain the same simply because all our margins are calculated net of GST taxes and we have every intention of turning these lower GSTs back to our consumers,” he said during a conversation with NDTV Profit on Tuesday. 

The company is targeting Ebitda margins of 30% in FY26, according to Joseph. 

Commenting on the impact of GST rate cuts, he outlined that GST rationalisation will make the Rs 2,500 to Rs 2,700 price point redundant.

“You're going to see a vacant price point between Rs 2,500 and Rs 2,700 because it makes no sense to sell items in that price point. It makes the price point of Rs 2,599 and 2,699 obsolete because you would rather sell it at Rs 2,499 and get the GST benefit for both sales,” he said.

Joseph said that 44% of Metro Brands’ sales come from products priced under Rs 3,000, with around 40% falling below the Rs 2,500 mark. 

“A 7% slash in GST is terrific news. What we plan on doing is turning that entire amount over to our consumers. I think as you start lowering prices, that spurs demand in the long run. We plan on using that to continue our growth run,” the top executive said.

When asked if the anticipated demand surge could lead to a revision of Metro Brands’ long-term guidance of 15% CAGR in sales and mid-teens profit margins, Joseph remained cautiously optimistic.

“We're talking about a long period of time and retail has its ups and downs, its highs and lows, its headwinds and tailwinds. So, I think we can continue to feel very comfortable about that number,” he said. 

“Does this put us in a position to catch up to that number faster? Absolutely, I think that's the perspective we would take on it,” the top executive added.

Shares of Metro Brands closed 4.38% higher at Rs 1,247 apiece on the NSE, while the benchmark Nifty50 settled at 24,868.6, with marginal gains of 95.45 points, or 0.39%.