Shares of Metro Brands, backed by Rakesh Jhunjhunwala, are trading below the issue price. Should you buy the dip?


Shares of Metro Brands, backed by Rakesh Jhunjhunwala, continue to trade below its IPO issue price, a day after making a tentative start on the stock market. Shares of the shoe retailer are currently hovering around ??487 compared to its issue price of ??500.

Analysts believe Metro Brands is an inherently good company. The company has a wide range of brands, a large presence in India with brand appeal among ambitious consumer segments, and a thin asset model with high profit margins, said Divam Sharma, co. -founder of Green Portfolio.

“From a valuation perspective, the company is trading at a one-year P / E of around ~ 82x, which we believe is higher given the low revenue growth for the company. We would wait to enter this company at a P / E below 50x and advise our investors to wait for a good entry point once there is a correction in the share price, ”added Sharma .

Metro Brands’ initial public offering (IPO) was subscribed 3.64 times on the last day of subscription, opened on December 10 and closed on December 14.

“We are positive for the long term through light businesses, strong brands and a wide product range. We believe that every drop in stock prices offers buying opportunities for long term investors,” said Amarjeet Maurya – AVP – Mid Caps, Ange One.

Metro Brands retail footwear brands such as Metro, Mochi, Walkway, Da Vinchi, and J Fontini, as well as some third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop. Metro Brands also offers accessories, such as belts, bags, socks, masks and wallets in its stores.

“The company operates on a light asset model with the marketing of third-party products. However, due to the covid pandemic, footwear exports have been hit hard with a drop of around 35%. Consumption is expected to fall further around the world again. We expect Metro bands to continue declining until ??460-450 due to poor outlook, ”said Ravi Singh, head of research and vice president at ShareIndia.

The opinions and recommendations expressed above are those of individual analysts or brokerage firms, not Mint.

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