The grey market is losing interest in Metro Brands’ IPO, but the analysts are still gung ho ⁠— here’s what the data have to say

• Today is the second day to subscribe to footwear retailer Metro Brands, which will close its IPO on December 14.
• The Rakesh Jhunjhunwala-backed company is looking to raise ₹1,367 crore, which consists of a fresh issue of ₹295 crore and an offer for sale of 2.14 crore shares by promoters.
• Shares of the company are demanding a premium of ₹25 in the grey market while the price band is at ₹485 to ₹500.

Today, December 13, is the second day to subscribe to marquee investor Rakesh Jhunjhunwala-backed Metro Brands, which is one of the largest Indian footwear specialty retailers in India.

The initial public offering (IPO) has been subscribed just 27% on the first day of the bidding process. Meanwhile, the grey market premium of the company’s shares has been falling since the last couple of days from ₹80 to now at ₹25 per share.

The company was performing well until COVID-19 hit the entire footwear retailing segment because of the pandemic led restrictions across the country. Its profitability slipped in FY21 because of the pandemic.

However, most analysts suggest subscribing to the issue because of the growth opportunities in the footwear segment along with the company’s strong financial track record.


Analysts at Hem Securities recommend subscribing to the issue because of the experienced management team at Metro Brands and its strong track record of growth, profitability and financial discipline.

Metro Brands operate 586 stores across 134 cities spread across 29 states and union territories in India. Some of Metro’s brands include Mochi, Walkway, Davinchi and J. Fontini, as well as certain third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop.

Categories and players in India’s footwear industry

“Due to [the] pandemic, the industry has opened up much more growth opportunities like transition from large unorganised segments to organised players, many acquisition prospects, e-commerce expansion etc. We expect Metro Brands to continue the growth momentum, given above set-up in addition to tying up with third party brands like FitFlops. We recommend “Subscribe for long term,” said analysts at Nirmal Bang Securities.

A report by Choice Broking firm says that Metro Brands is one of the largest footwear retailers with around 3-4% market share in the organised market space. “It has reported strong financial performance with robust cash flow generation. The company is [sic] consistently paying dividend [sic] since FY2000. Thus considering the above observations, we assign a “Subscribe for long Term” rating for the issue,” said the report.


Analysts at Angel One believe that the company is demanding an expensive valuation. “The company’s historical net profit growth is low compared to its peer Relaxo Footwears. However, Metro Brands has asset light business, strong brands and wide range of products but we believe that these positives are captured in the valuations commanded by the company. Thus, we have a NEUTRAL rating on the issue,” said the brokerage firm.

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