Rakesh Jhunjhunwala-backed Metro Brands IPO opens today: Should you subscribe to the issue?

Metro Brands shares are fetching a grey market premium of Rs 40, according to market observers. The company's shares are expected to be listed on exchanges on December 22, 2021.

MBL sells shoes under the Metro, Mochi, Walkway, Da Vinchi, and J Fontini brands, as well as third-party brands like Crocs, Skechers, Clarks, Florsheim, and Fitflop.

Most brokerages feel that the company has good growth prospects and have a ‘subscribe’ rating to the issue. Here's what brokerages recommend for the stock:

IDBI Capital has a ‘subscribe’ rating to the Metro IPO taking into consideration MBL’s strong growth potential as it is one of the largest pan-India footwear retailers.

“MBL’s aggressive plans on store addition and product portfolio expansion would cater to growing demand in branded footwear and pave the way for sustainable earnings growth and improved operational parameters in future,” the brokerage noted.

Marwadi Financial Services has a ‘subscribe’ rating to the IPO as it is available at a reasonable valuation compared to its peers. “Considering the TTM (September 2021) adjusted EPS of Rs 5.55 on a post-issue basis, the company is going to list at a P/E of 90.01 with a market cap of Rs 13,5,75 crore while its peers namely Bata India and Relaxo Footwear are trading at a P/E of 922 and 111 respectively,” it said.

“The company’s historical net profit growth is low compared to its peers Relaxo Footwears. However, MBL has Asset light business, strong brands and a 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 Angel One.