Metro Brands Q3 Results Review - Healthy Performance In A Weak Environment: Motilal Oswal

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Motilal Oswal Report

Metro Brands Ltd. posted revenue growth of 24% YoY in Q3 FY23, with strong store additions (48 stores) and healthy same-store sales growth.

Profit after tax growth was soft at 12% YoY, despite high gross margin, due to aggressive store additions and marginal losses in Cravatex Brands post integration.

We have largely maintained FY23/24 estimates as we have built in limited upside from FILA given its slow improvement in the next two-four quarters, though we are upbeat about it.

We expect a revenue/profit after tax compound annual growth rate of 23%/ 21% over FY23-25.

Metro Brands’ superlative store economics, healthy portfolio of products and strong balance sheet/free cash flow productivity warrant a rich valuation.

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