Metro Brands Ltd. share price target

Metro’s Q2FY24 revenue growth at 14% YoY was decent given the context of a high base and a shift in the festive season. Positives in the results were (1) continued thrust on retail expansion (at 28% YoY), (2) CBL’s integration tracking well with PAT loss contained similar to 1Q despite revenue headwinds (plans to focus on brand repositioning similar to China in FY25 and accelerate growth in FY26), (3) premium price point (> INR 3k) outperforms (~30% YoY).

Premiumisation drive continues; Fila to breakeven by FY25

On a steady growth track; store expansion continues

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.