Metro Brands Ltd. share price target

There are three key positives in the result (1) highest retail expansion rate (at 27% YoY) compared to results declared by other retail companies so far (22-23% by GoFashion and Vedant), (2) CBL’s integration going on well (3% negative impact on NPM, inventory issue likely to be solved by Mar’24, closed 2 stores), (3) premium price point (> INR 3K) outperforms (31% YoY) value range.

Lifts store expansion guidance; FILA to break even in FY25

Metro continues to fair well on revenue performance (+30% LFL (excluding Cravatex) vs. 26% retail expansion) during 4QFY23. Retail area (in mn sqft) expansion rate (at ~26% on FY23) is one of the most aggressive in retail industry, in our opinion.

Stepping up at a swift pace

Metro’s 3QFY23 performance was a positive surprise with highest ever store (48 stores) addition till date. This may drive consensus upgrades. Incremental focus towards distribution driven revenue growth under Fila and Proline brands (now consolidated in standalone financials effective 1st Dec’22) is a key growth vector.

Metro’s addition of Fila and Proline to its portfolio (details below) places it a step closer to (directly) participate in the fast growing sports category.