Ace investor Rakesh Jhunjhunwala-backed Metro Brands share price has seen strong returns in the last month. Should you invest?
Rakesh Jhunjhunwala Portfolio: Ace investor Rakesh Jhunjhunwala-backed Metro Brands share price has seen strong returns in the last month. This Rakesh Jhunjhunwala stock has appreciated from Rs 515.05 to Rs 570.05 apiece levels in the last one month, logging Rs 47.75 per share or nearly 10 per cent rise in this period. The stock has risen 24.07 per cent this year so far. However, the rise in the past month in Metro Brand share price has helped Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala to earn around Rs 215 crore from this portfolio stock.
According to Metro Brands shareholding pattern for January to March 2022 period, Rakesh Jhunjhunwala has invested in this newly listed footwear stock through his wife Rekha Jhunjhunwala. Rekha Jhunjhunwala holds 3,91,53,600 Metro Brands shares, which is 14.43 per cent of total paid-up capital of the company.
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In last one month, the stock has remained ‘buy on dips’ stock for bulls and it has surged from Rs 515.05 apiece levels to Rs 570.05 per share levels in last one month, logging Rs 55 per share rise in this period.
This Rakesh Jhunjhunwala-backed company launched its public issue worth Rs 1,367.51 crore in December 2021. The Rakesh Jhunjhunwala stock had a weak debut on BSE and NSE as it got listed at a discount of near 14.50 per cent. However, the stock soon attracted buying interest of investors and rebounded strongly after listing. Metro Brands’ share price ended at Rs 493.35 apiece levels on NSE on its listing date after making an intraday high of Rs 507.90 per share.
Should You Invest?
ICICI Securities has initiated a ‘BUY’ rating to this footware brand. In a note, the brokerage house said: “With a portfolio of 624 stores (Mar’22), Metro is looking to add 260 stores in the next three years (expansion of 40 per cent+). We believe the runway of store expansion is good given (1) The brands already have
national presence, (2) able to achieve penetration in lower-tier cities and (3) has
balanced mix of men and women customers.”
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In terms of e-commerce and other opportunities, the analysts said, “given the underlying trend of e-commerce adoption in footwear space, Metro Brands has ramped up capabilities (8 per cent contribution), with separate platforms for its three umbrella brands. Besides, it is also ramping up its digital presence (consumer connect).” Highlighting the key strengths of Metro Brands, the analysts highlighted that Asset light business with an efficient business model, Financial discipline led by focus on unit economics, (Potential) platform of choice for third party brands, Strong portfolio of umbrella brands with in-house (brand) contribution of 70% in these stores, and strong promoter background and management team are the key positives for the company.
“We model revenue / EBITDA / PAT CAGR of 30 per cent / 28 per cent / 31 per cent respectively over FY22-FY24E. We initiate coverage on the stock with a BUY rating and DCF-based target price of Rs 700. Key risks are (1) delay in-store addition and (2) likely increased competition from regional players trying to premiumise,” the report added.
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