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Ahead Of IPO Today, Metro Brands Raises Rs 410 Crore Funding. Should You Buy?

Metro Brands has allotted 82.05 lakh equity shares to anchor investors at Rs 500 apiece, taking the total transaction size to Rs 410.25 crore, according to a BSE circular.

Footwear retailer Metro Brands Ltd, which is backed by ace investor Rakesh Jhunjhunwala, on Thursday said it has collected a little over Rs 410 crore from anchor investors ahead of its IPO rollout on Friday.

The company has allotted 82.05 lakh equity shares to anchor investors at Rs 500 apiece, taking the total transaction size to Rs 410.25 crore, according to a BSE circular.

Societe Generale, Goldman Sachs, Abu Dhabi Investment Authority, HDFC Life Insurance Company, SBI Life Insurance Co Ltd, Tata AIA Life Insurance Co Ltd, HDFC Mutual Fund (MF), Aditya Birla Sun Life MF,  Sundaram MF and ICICI Prudential MF are among the anchor investors.

The initial share-sale comprises fresh issuance of equity shares worth Rs 295 crore and an offer for sale of 2.14 crore equity shares by promoters and other shareholders.

Through the IPO, the company's promoters will offload nearly 10 per cent stake.  Currently, the promoters and promoter group hold 84 per cent stake in the company.

The issue, with a price band of Rs 485-500 per share, opens for public subscription on December 10 and will conclude on December 14. 

Half of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and 35 per cent for retail investors.

Investors can bid for a minimum of 30 equity shares and in multiples thereof. At the upper end of the price band, the public issue is expected to fetch Rs 1,367.5 crore.

Proceeds of the fresh issue will be used towards expenditure for opening new stores of the company, under the 'Metro', 'Mochi', 'Walkway' and 'Crocs' brands and for general corporate purposes.

At present, the company has 598 stores in 136 cities spread across India. 

Axis Capital, Ambit, DAM Capital Advisors, Equirus Capital, ICICI Securities and Motilal Oswal Investment Advisors are the book running lead managers to the IPO.

The company is an Indian footwear retailer, targeting the economy, mid and premium segments in the footwear market.

According to a report published in Moneycontrol, this is what analysts are saying about the IPO.

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Angel One

The brokerage firm has given a ‘neutral’ rating to the IPO. The company’s historical net profit growth is low compared to its peers like Relaxo Footwears.

However, MBL has an asset-light business model, strong brand value and a wide range of products. It believes that these positives are captured in the valuations commanded by the company, hence it has assigned a neutral rating to the issue.

Choice Broking

The brokerage house said MBL is prone to risks from any fresh wave of the pandemic, poor economic conditions in the future may affect consumer spending, increased competition and slower expansion of store network.

It assigns a ‘subscribe for long term’ rating for the issue as it feels that MBL has reported strong financial performance with robust cash flow generation.

IDBI Capital 

The investment firm assigns a ‘subscribe’ rating to the IPO. It said MBL’s aggressive plans on store addition and product portfolio expansion would cater to growing demand in branded footwear and pave the way for sustainable earnings growth and improved operational parameters in the future.

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