Metro Brands Sees Bullish Outlook, Targets Rs 1215: Motilal Oswal Research

Motilal Oswal's Research Report Maintains Strong Bullish Outlook on Metro Brands

Metro Brands Limited (MBL) continues to demonstrate a promising long-term revenue growth trajectory, guided by a 15-18% compound annual growth rate (CAGR). The research report by Motilal Oswal highlights improved confidence in delivering this growth guidance, driven by several positive factors.

Early Signs of Replacement Demand and Store Openings Contribute to Growth

The report identifies three key drivers of growth for MBL: early signs of replacement demand kicking in after a lumpy wardrobe refresh post-Covid in FY23, acceleration in store openings with moderating rental inflation, and strong traction and opportunity in partner brands such as Clarks, FILA, and the acceleration of the Walkway (value) format. These factors are expected to contribute to a return to mid-single-digit same-store sales growth (SSSG), ~10% annual footprint addition, and annualization of contribution from the stores opened last year, ultimately delivering ~15% growth.

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Growth Opportunities and Scale-Up of Relatively Nascent Brands

Given the strong store economics and robust cash flow generation in the core Metro and Mochi formats, a large runway for growth in the Walkway format, and significant growth opportunities in FILA/Foot Locker/Clarks, Motilal Oswal models a revenue/EBITDA/adjusted profit after tax (PAT) CAGR of 15%/15%/11% over FY25-28E.

BUY Rating with Revised Target Price

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Motilal Oswal reiterates its BUY rating on MBL with a revised target price of INR1,215, premised on ~40x Mar'28 pre-IND AS EV/EBITDA (implied 65x FY28E EPS). Following the recent correction, the stock now trades at 55x FY27 P/E (one standard deviation below its long-term one-year forward mean P/E). Consistent double-digit growth remains the key re-rating trigger.