Metro Brands shares list at 12% discount; should you buy, sell or hold?

Footwear retailer Metro Brands witnessed a tepid debut on the bourses as it eroded over 12 per cent of investors’ wealth on the listing. The scrip kicked off its first day of the trade at Rs 437 on the NSE against the issue price of Rs 500. On the other hand, it listed at Rs 436 on the BSE.

The public offer, which opened for subscription on December 10, was oversubscribed by 3.64 times on the last day of the bidding process on December 14. The company had fixed a price band of Rs 485 to 500 per share for the initial share sale.

While sharing his advice with investors, Santosh Meena, head of research, Swastika Investmart said, “With an asset-light model, Metro Brands derives most of its revenues from third parties. It has demonstrated decent growth, profitability and financials in the past.”

He further added that long-term investors are advised to hold the stock, while short-term investors can keep their stop loss at Rs 380. If the price holds above Rs 380 on a closing basis, fresh positions can be taken and can be bought on dips.

The company posted a profit after tax of Rs 65.82 crore for the financial year ended March 31, 2021 against Rs 160.58 crore in FY20. It had reported a PAT of Rs 152.73 crore in FY19. Net sales of Metro Brands stood at Rs 800.10 crore in FY21 against Rs 1285.20 crore in FY20 and Rs 1217.10 crore in FY19.

Ajit Mishra, VP-research, Religare Broking said, “Though the listing is subdued, it could be due to the market sentiment. Overall, the company has done well in the past except for the Covid period which dented the financial performance. Existing investors can continue to hold with the long-term view but for fresh buying, one should wait.”