METROBRAND - Metro Brands

📊 NSE: METROBRAND 🏢 Leather / Leather Products 📅 Last Updated: 12/14/2025 9:49

💰 Financial Performance

Revenue Growth by Segment

Standalone revenue for H1 FY26 reached INR 1,251 Cr, representing a 10.7% growth compared to INR 1,130 Cr in H1 FY25. E-commerce revenue grew 39% in Q2 FY26, now contributing 14% to total revenue. The subsidiary Metmill Footwear reported a 32.54% turnover increase to INR 65.37 Cr in FY25, while Metro Athleisure (MAL) reported gross sales of INR 12.42 Cr.

Geographic Revenue Split

The company operates a pan-India distribution network across 30 states and union territories. While specific regional percentage splits are not disclosed, the company expanded its footprint with a net addition of 70 stores in FY 2024-25, reaching a total of 836 stores across 193 cities.

Profitability Margins

Standalone Gross Margins remained stable at 57.5% for H1 FY26. However, PAT margins declined to 12.8% (INR 161 Cr) in H1 FY26 from 14.0% (INR 158 Cr) in H1 FY25. Consolidated EBITDA margins improved from 29.8% in FY24 to 30.3% in FY25 due to better cost control and reduced losses in the FILA segment.

EBITDA Margin

Standalone EBITDA margin for H1 FY26 was 28.8% (INR 360 Cr), a slight decrease from 29.2% (INR 330 Cr) in H1 FY25. Q2 FY26 standalone EBITDA margin was 26.2% (INR 171 Cr) compared to 26.5% (INR 155 Cr) in Q2 FY25, reflecting a 30 bps compression due to competitive pressures.

Capital Expenditure

Net capital expenditure for H1 FY26 was INR 61 Cr, a 27% increase from INR 48 Cr in H1 FY25. This spending primarily supports the aggressive store expansion strategy, including the launch of 79 new stores in the previous fiscal year.

Credit Rating & Borrowing

CARE Ratings reaffirmed 'CARE AA; Stable / CARE A1+' for bank facilities totaling INR 46 Cr as of March 25, 2025. The company maintains a low overall gearing and a robust financial risk profile, though borrowing costs are not explicitly stated, treasury funds currently yield approximately 7% returns.

⚙️ Operational Drivers

Raw Materials

Not disclosed in available documents. The company operates an asset-light model relying on third-party manufacturers rather than direct raw material procurement.

Import Sources

Not disclosed in available documents. Manufacturing is primarily outsourced to a network of unorganized vendors and third-party suppliers within India.

Key Suppliers

Not disclosed in available documents. The company relies on a fragmented base of unorganized vendors and third-party manufacturers to maintain flexibility and cost-efficiency.

Capacity Expansion

The company added 79 new stores and closed 9 in FY 2024-25 (net 70). Recent expansion includes launching 4 Foot Locker stores and expanding Clarks footwear into 200 Metro/Mochi doors, with a target of 300 doors by Q3 FY26.

Raw Material Costs

Not disclosed as a percentage of revenue. The company focuses on 'deep operational rigor' to keep retail costs lower than what a manufacturer-retailer might achieve, leveraging its scale to negotiate with third-party vendors.

Manufacturing Efficiency

The company does not manufacture; efficiency is measured by 'Revenue per sq. ft.', which was INR 8,500 in H1 FY26, a 2.3% decrease from INR 8,700 in H1 FY25 due to the rapid addition of new, larger store formats.

Logistics & Distribution

Not disclosed as a specific percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

15%

Growth Strategy

Growth will be driven by a 'top-up' strategy where new towns are entered with a Metro store, followed by a Mochi store once revenue hits INR 30-35 lakhs. The company is also scaling its e-commerce (targeting 15-20% of mix) and expanding premium/athleisure segments through the Foot Locker partnership and Clarks distribution.

Products & Services

Footwear (formal, casual, sports), handbags, belts, socks, and shoe care products sold through MBOs (Multi-Brand Outlets) and EBOs (Exclusive Brand Outlets).

Brand Portfolio

Metro, Mochi, Walkway, FILA, Clarks (exclusive partner), and Foot Locker (exclusive partner).

New Products/Services

Expansion of the 'Foot Locker' format (4 stores launched) and 'Clarks' (expanding from 200 to 300 doors) are expected to drive volume growth, though Foot Locker may have lower margins due to the sale of external brands.

Market Expansion

Targeting 15% overall growth by expanding into new towns and increasing digital channel contribution, which grew 39% in the most recent quarter.

Market Share & Ranking

One of India's largest pan-India footwear retailers with a strong appeal among aspirational consumer segments.

Strategic Alliances

Exclusive Retail and Digital Partnership with Clarks for India and neighboring countries (Bangladesh, Bhutan, Nepal, Maldives, Sri Lanka). Long-term partnership with Foot Locker for the Indian market.

🌍 External Factors

Industry Trends

The Indian footwear industry is evolving toward organized retail and athleisure. Metro is positioning itself by liquidating old FILA inventory and re-launching the brand through Foot Locker to capture the 'sneakerhead' and sports-lifestyle trend.

Competitive Landscape

Faces fierce competition from unorganized players (street vendors) and organized national/international retailers like Bata India Limited and Mirza Shoes.

Competitive Moat

Durable advantages include a 70-year brand legacy (Metro started in 1955), a wide distribution network of 800+ stores, and 'deep operational rigor' that allows them to maintain 55%+ gross margins despite not being a manufacturer.

Macro Economic Sensitivity

Highly sensitive to urban consumer spending and inflation. Management targets Same-Store Sales Growth (SSG) at a percentage higher than the normal inflation rate to ensure sustainable profitability.

Consumer Behavior

Increasing consumer preference for convenience and choice is driving a shift toward omni-channel retail, with Metro's online sales now reaching 10.6% of the total FY25 mix.

Geopolitical Risks

Expansion into neighboring countries (Nepal, Sri Lanka, etc.) via the Clarks partnership exposes the company to regional regulatory and economic stability risks.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Companies Act, 2013 and Indian Accounting Standards (Ind AS). The company underwent a Secretarial Audit for FY 2024-25 to ensure compliance with applicable statutory provisions.

Environmental Compliance

The company has initiated 'Sustainability Initiatives' as part of its business highlights, though specific costs are not disclosed.

Taxation Policy Impact

Income taxes paid in H1 FY26 were INR 57 Cr compared to INR 59 Cr in H1 FY25. GST changes led to a 6-11% price reduction in key product categories, which the company utilized to drive volume.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the ability to scale the Walkway format to achieve a 20-30% ROCE within 3-5 years, as its current margins are lower than the core Metro/Mochi brands.

Geographic Concentration Risk

While pan-India, the company is exposed to retail rental market conditions as all stores are operated on leased or leave-and-license properties, creating renewability risks.