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Dolat Capital Report
Metro Brands Ltd.'s Q1 FY25 results missed our estimates with revenue de-grew by 1.1% due to subdued demand conditions on account of harsh summer season, elections and lower wedding dates during the quarter.
Metro Brands opened 15 (net) new stores during Q1 FY25 - taking the total count to 851 and aims to add 225 stores over next couple of years. We believe that lost momentum will be regained in H2 FY25E driven by the festive season, penetration opportunities and ongoing brand additions.
Further, continuous premiumisation is expected to keep the average selling price higher.
We downward revise our FY25/26E EPS estimates by 3.5/2.9% at Rs 14.4/20.1 to factor in Q1 performance and muted demand across industry. However, we continue to believe that Metro would outperform peers given its-
premium brand positioning,
higher aspirations,
demographic support and
low penetration.
Considering the recent run-up in the stock price, we maintain our ‘Reduce' rating with a revised target price of Rs 1,312 (Rs 1,177 earlier) valuing at 65 times FY26E earnings per share.
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