All About Rakesh Jhunjhunwala Backed Metro Brands IPO

Metro Brands Ltd., backed by experienced investor Rakesh Jhunjhunwala, will launch its initial public offering on Friday, allowing its promoters and promoter group shareholders a partial exit. After Star Health and Allied Insurance Co., this is the second initial public offering by a Jhunjhunwala-backed business this month. Let us read all we need to know about Metro Brands IPO to properly assess this opportunity.

About Metro Brands

Metro Brands is a footwear retailer in India that focuses on the economy, mid, and luxury sectors of the footwear industry. It inaugurated its first Metro store in Mumbai in 1955 and has since expanded into a one-stop shop for all footwear requirements, retailing a broad choice of branded items for the entire family. As of 30 September 2021, this corporation operated 598 stores in 136 cities throughout 30 Indian states and union territories.

With shifting customer attitudes regarding footwear, the Indian footwear sector has seen increased activity in recent years. As of FY 2020, the footwear category accounts for roughly 1.5% of the whole retail business and is valued at Rs. 1 tn. The category is predicted to develop in the next few years, reaching an estimated Rs. 1.4 tn. by FY 2025, at a CAGR of roughly 21% between FY 2021 and 2025. (Source: CRISIL Report).

The firm focuses on the footwear market’s mid and premium segments, which have a stronger presence than organised competitors and are growing in the total footwear industry. Metro, Mochi, Walkway, Da Vinchi, and J. Fontini are some of the company’s well-known brands, as are some third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop.

Metro Brands stores also sell accessories such as belts, backpacks, socks, masks, and wallets. M.V. Shoe Care Private Limited, the company’s joint venture, also sells footcare and shoe-care items at its stores. To manage its stores, the firm employs the company-owned and company-operated (COCO) retailing model, with their own Multi Brand Outlets (MBOs) and Exclusive Brand Outlets (EBOs).

Promoter and investors exiting their shares

• The company’s promoters are Rafique A. Malik, Farah Malik Bhanji, Alisha Rafique Malik, Rafique Malik Family Trust, and Aziza Malik Family Trust.
• The promoters will sell 1.30 cr. equity shares.
• The promoter group will sell 84.2 lakh equity shares.
• Other shareholders will sell 8,100 equity shares.

About Metro Brands IPO

• This is the maiden IPO consisting of a fresh issue of shares worth Rs. 295 cr. an offer for sale of shares worth Rs. 1,073 cr. via the book building process.
• The issue size is Rs 1,367.51 cr. at the top of the price range.
• The opening date for this IPO is 10 December 2021 and the closing date is 14 December 2021.
• Metro Brands IPO is likely to be listed on the BSE and NSE.
• The face value of each share is Rs. 5.
• The set price band of this IPO is Rs. 485 — Rs. 500.
• The allocation is expected to be finalised by 17 December, and refunds will be initiated by 20 December. Meanwhile, credit of shares in the Demat account is expected by 21 December.
• One lot consists of 30 shares and is worth Rs. 15,000 at the upper range of the pricing band.

Book running lead managers and registrar of the Metro Brands IPO

The joint global coordinators and lead managers of the Metro Brands IPO are Axis Capital, Ambit, DAM Capital Advisors, Equirus Capital, ICICI Securities and Motilal Oswal Investment Advisors.

The issue’s registrar is Link Intime India Pvt. Ltd.

Reservation of Metro Brands IPO for various investor categories

• 35% is the maximum subscription amount reserved for retail investors.
• 15% is reserved for the Non Institutional Individuals (NII).
• 50% is reserved for the Qualified institutional buyers (QIBs), wherein 60% is for anchor investors, 1/3rd of which shall be reserved for domestic mutual funds only.

Objects of the Metro Brands IPO

• Rs. 225.37 cr. will be used for opening new stores of the Company, under the “Metro”, “Mochi”, “Walkway” and “Crocs” brands.
• General corporate purposes.

Continue to read the financials, peer comparison, strengths and risks of Metro Brands.