Hold Metro Brands; target of Rs 1302: Prabhudas Lilladher

Prabhudas Lilladher's research report on Metro Brands

We revise our FY26/FY27 EPS estimates by 7.2%/11.8% on improved demand outlook, given 1) GST rate rationalization on sub-Rs2,500 footwear is expected to materially boost demand for 40% of its SKU’s.2) demand push from increase in disposable income due to recent cut in income tax and interest rates and multi-year low inflation and 4) footwear replacement cycle is likely to kick in (Strong buying had happened in FY22-23) as GST rate rationalization will provide a trigger for consumers to buy more footwear. We believe Metro Brands is well-positioned to capture these demand tailwinds, supported by 1) strong brand positioning with Metro, Mochi and Crocs in the premium footwear. 2) expected growth pick-up in FILA as it is all set to open EBO’s as design inventory for a refreshed portfolio builds up. 3) Scalability in Foot Locker as a premium format in athleisure with steady addition in number of stores in Tier-1 cities 4) Clark’s acquisition is on track with good initial response given consumer awareness about the brand.

Outlook

We estimate 18.4% EPS CAGR over FY25–FY28 and assign DCF based TP of Rs1302 with implied PE of 60.3x on Mar’28 at TP (Rs1135 earlier). While the recent rally in the stock price limits near-term upside, any pullback will provide an opportunity for LT gains. Retain Hold.

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Metro Brands - 25 - 09 - 2025 - prabhu