Metro Brands' FILA and Foot Locker ramp-up has been impacted due to challenges posed by BIS implementation.
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Motilal Oswal Report
Metro Brands Ltd. reported in-line Q3 results, with revenue growth recovering to ~11% YoY (versus 5% YoY in Q2), driven by a 43% YoY growth in Ecommerce sales. In-store sales grew ~8% YoY (versus 5% YoY in Q2), led by ~9% YoY area additions.
Gross profit grew 8% YoY (in-line) as margin contracted ~125 bp YoY due to higher e-commerce sales and the residual impact of the FILA inventory liquidation (~50 bp impact).
Ebitda was up ~13% YoY (in-line), as better cost controls offsets tad weaker gross margin, while adjusted PAT grew 22% YoY (in-line).
Despite weaker store additions in 9MFY25, management maintained its guidance of opening 225 stores over FY25-26, with 140-145 store additions targeted for FY26.
We lower our FY26-27E Ebitda by a marginal 1-2% on account of slightly weaker productivity assumptions (primarily due to a change in the format mix).
Given the strong runway for growth in Metro, Mochi, and Walkway formats, along with significant growth opportunities in FILA/Foot Locker, we build in revenue/Ebitda/PAT CAGR of 13%/17%/20% over FY24-27E.
We reiterate our Buy rating on Metro Brands with a revised target price of Rs 1,525 (earlier Rs 1,460) based on 70 times Mar'27 EPS (earlier Dec-26).
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