Rakesh Jhunjhunwala-Backed Metro Brands IPO Subscribed 3.64 Times On Final Day Of Issue
Ace investor Rakesh Jhunjhunwala-backed Metro Brand's initial public offer (IPO) was subscribed 3.64 times on the third and final day of its issue, according to subscription data on the stock exchanges. The leading fotwear retailer's IPO opened for subscription on December 10, and closed today, December 13. Metro Brands had fixed the price band at Rs 485 - 500 per equity share of face value Rs 5 each.
On Tuesday, the portion reserved for qualified institutional buyers or QIB was subscribed 8.49 times - the highest among the three groups of investors. The portion set aside for non-institutional investors was subscribed 3.02 times, while the portion reserved for retail individual investors was subscribed 1.13 times today.
At upper price band, the offer is priced at Rs 1,367.5 crore. The offer comprised a fresh issue of shares worth Rs 295 crore and an offer for sale of Rs 1,072.5 crore by promoter selling shareholders who offloaded 2.14 crore equity shares.
A part of the IPO proceeds will be utilized to fund the expenditure for opening new stores of the company under the “Metro”, “Mochi”, “Walkway” and “Crocs” brands.
''At the higher end of the price band, Metro Brands IPO is priced at a Price/Earnings of more than 210 times FY21 EPS (on a fully diluted basis), due to lower earnings in the previous year. If we annualize Apr-Sep 21 earnings, then the IPO is valued at about 158 times, which is still aggressive.
However, peers Relaxo Footwear (108 times) and Bata India are also trading at very high valuations. Relaxo Footwear has higher return ratios as compared to the other two. Metro Brands Limited is one of the largest footwear specialty retailers in the country and caters to the footwear needs through a range of branded products.
Given the company's strong product profile, asset light business model, healthy margins, strong sentiment due to marquee investors but aggressive valuations, investors with a higher risk appetite and a long-term view could consider investing in this issue,” SEBI-registered investment advisor INDmoney said in a report.
