Metro Brands Q3 Results Review - Disappointing Performance; Downgrade To 'Accumulate': Dolat Capital

Dolat Capital Report

Metro Brands Ltd. reported subdued performance during the quarter as the results were below our estimate. The company reported mere 6.1% revenue growth – breaking double digit growth momentum for the first time in recent past.

Though the revenue growth was below our estimate, the company was able to maintain three year compound annual growth rate at 28%. Barring few hiccups due to slow economic growth and high base, we believe that the company would re-gain lost momentum in the FY25E. Considering penetration opportunity and ongoing brand additions, we expect the growth momentum to remain strong. Further, continuous premiumisation is expected to keep average selling price higher.

We have downward revised our FY24/25/26E earning per share estimates by 11.2/11.7/11% at Rs 13.5/18.2/22.8 to factor in Q3 performance and muted demand across industry.

However, we continue to believe that Metro Brands would outperform peers due to premium brand positioning, higher aspirations, demographic support and low penetration.

Valuing the stock at 57 times FY26E earnings per share, target price reduced at Rs 1,301. Downgrade to 'Accumulate'.

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