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Metro’s Q3 results were largely inline – Revenue growth inched up to doubledigits (11%), aided by recovery in revenue per sqft (vs declining trend), ~9% network expansion, and faster ~37% growth in the e-com channel (~11% of sales). With EOSS and higher number of weddings, Metro expects to sustain the improving growth trajectory in Q4.
Shoppers Stop (SHOP) reported in-line results, with a slight pick-up in revenue growth (+9% YoY) on 4% LFL growth (-4% YoY in 2Q). EBITDA rose 11% YoY, driven by higher gross margins on lower write-offs and improved intake margins in private brands.
Avenue Supermarts (DMART) posted weak results in 3QFY25 as standalone EBITDA grew 10% YoY (4% miss) due to weaker gross margin and higher cost of retailing (CoR).
We initiate coverage on Metro with BUY and DCF based TP of Rs1,500 (implied target multiple of 70x Dec-26 EPS). Metro is the epitome of financial discipline, given long-term mid-teen revenue CAGR and consistent rewards to shareholders (~30% dividend payout).
Metro Brands’ (MBL) stock performance has been flattish in CY24 and has underperformed benchmark indices due to both internal and external factors. Internal factors included: a) the liquidation of old FILA inventory, which impacted gross margins, and b) a decline in revenue per sq. ft., driven by a lower share of Crocs in the incremental store rollouts.
