Metro Brands, the Rakesh Jhunjhunwala-backed footwear speciality retailer, set a price range of INR 485-500 per equity share for its initial public offering on December 7. The offer will net the corporation INR 1,367.5 crore at the top end of the pricing range.
The offer consists of a INR 295 crore new issue and a INR 1,072.5 crore offer for sale by promoters, who will dispose 2.14 crore equity shares. Subscriptions for the issue will be available from December 10 to 14.
Bids can be placed for a minimum of 30 equity shares and in increments of 30 shares after that. As a result, ordinary investors can invest as little as INR 15,000 in a single lot and as much as INR 1.95 lakh in a total of 13 lots.
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The net proceeds from the new issuance will be used to open new stores under the Metro, Mochi, Walkway, and Crocs brands, as well as for general corporate objectives. Qualified institutional buyers will receive half of the offer, retail investors will receive 35%, and non-institutional investors would receive 15%.
Metro Brands sells shoes under the Metro, Mochi, Walkway, Da Vinchi, and J. Fontini brands, as well as third-party brands such Crocs, Skechers, Clarks, Florsheim, and Fitflop. Accessories such as belts, backpacks, socks, masks, and wallets are also available in retailers. As of September 2021, the company had 598 outlets in 136 cities throughout 30 Indian states and union territories.
Due to pandemic-led lockdowns, the company’s profit fell dramatically from INR 160.57 crore in FY20 to INR 64.62 crore in FY21. In the same time, revenue fell to INR 800.06 crore from INR 1,285.16 crore.
In the six months ending September 2021, the company made a profit of INR 43.07 crore, compared to a loss of INR 43.11 crore the previous year. During the same year, revenue climbed to INR 456 crore from INR 176.54 crore.
Ambit ICICI Securities, Motilal Oswal, Equirus Capital, DAM Capital Advisors and Axis Capital Investment Advisors are the book running lead managers for the offer.
What are Metro Brands Limited’s Advantages?
- In the fast-growing footwear retail market, the firm is one of the nation’s biggest footwear retailers, with a brand appeal among aspirational consumer categories.
- It offers a diverse choice of brands and items to suit all situations and market segments, resulting in high consumer loyalty.
- It has a cost-effective operating model thanks to solid vendor relationships and a TOC-based supply chain.
- It is a low-asset business with a lean operating style that leads to long-term profitable growth.
- Third-party brands wishing to expand in India can use the company’s platform.
Risks of Investing in Metro Brands’ Initial Public Offering
- The offer price, market capitalization to revenue multiple, and price to earnings ratio based on the company’s offer price may not be indicative of the company’s market price on or after listing.
- Because the bases are independent of each other, the cumulative cost of the company’s entire number of stores across regions may not be a benchmark of the company’s market capitalization following the offer.
- The ongoing pandemic has had a substantial influence on the company’s business and operations.
- Prior to engaging in this initial public offering, investors must examine all of the risk considerations included in the red herring prospectus.