Rakesh Jhunjhunwala portfolio stock Metro Brands share price may rally 18 per cent to Rs 683 apiece in six months, HDFC Securities said in a report, initiating coverage on the stock. The brokerage firm has advised to buy the stock in the range of Rs 571-583, and add more on dips at Rs 506-516 band. On Wednesday, Metro Brands stock price was ruling at Rs 575.80 apiece, down 0.4 per cent. From its all-time high of Rs 673. So far this year, Metro Brands share price has rallied 28%, outperforming benchmark Nifty 50 by a margin.
Asset light biz, growth potential in 3rd party brands, strong fundamentals: Key positives
HDFC Securities noted that amid the ongoing trend of e-commerce adoption in footwear space, Metro has ramped up capabilities with separate platforms for its three umbrella brands and is also ramping up its digital presence. “Besides, the company is also very efficient on cost optimization and profit generation,” it added. It also said that Metro Brands’ asset light business model with an efficient business model, potential of growth in third party brands, strong fundamentals with robust revenue and profitability growth, zero debt status and strong promoter & experienced management team brings a positive view on the stock.
Add on dips, target price at Rs 634
Investors could buy in the Rs 571-583 band and add more on dips in the Rs. 506-516 (41.5x FY24E EPS), HDFC Securities noted. It also added that the base case fair value of the stock is Rs 634 (51.5x FY24E EPS) and the bull case fair value of the stock is Rs 683 (55.5x FY24E EPS) over the next 2 quarters. “At the CMP of Rs 577 the stock trades at 46.8x FY24E EPS,” it said.
The research firm highlighted that in the next three years, Metro Brands is looking to open 260 new stores, which is equivalent to more than 40 per cent of its existing store print. HDFC Securities believes that store addition is likely to be the key driver of growth for Metro Brands. On a gross basis, it has added 298 stores in the last four years. It is also on the way to strengthen its retail presence through franchisees for the Walkway brand. The company plans to utilize proceeds from the equity issuance to establish 260 new stores, under various formats.
Metro Brands stocks were listed at Rs 436 per share, down Rs 64 or 12.8 per cent from the IPO price of Rs 500 per share in December last year. As of 30 June 2022, Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala held 14.4% or 3.9 crore equity shares in Metro Brands. As per Trendlyne data, Jhunjhunwala’s shareholding in Metro Brands has valued around at Rs 2,255.6 crore as of 27 July 2022.
The stock recommendation in this story is by the respective research analyst and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.