Home / Markets / Stock Markets /  Rakesh Jhunjhunwala-backed Metro Brands shares trade below issue price. Should you buy the dip?
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Shares of Rakesh Jhunjhunwala-backed Metro Brands continue to trade below its IPO issue price, a day after making a tepid stock market debut. The footwear retailer's shares are currently hovering around 487 level as compared to its issue price of 500. 

Analysts believe Metro Brands is a fundamentally good business. The company has a wide range of brands, large pan India presence with a brand appeal among aspirational consumer segments and asset light model with high profit margins, said Divam Sharma, Co-founder of Green Portfolio.

“From a valuation point of view the company is trading at one year forward P/E of around ~82x, which we believe is on the higher side given the low revenue growth in the business. We would wait to enter this business at a P/E of less than 50x and advice our investors to wait for a good entry point once there is correction in the price of the stock," Sharma added.

The initial public offering (IPO) of Metro Brands was subscribed 3.64 times by the last day of subscription that opened on December 10 and closed on December 14.

"We are positive on stock for the long term on the back of asset light business, strong brands and wide range of products. We believe every dip in share prices provides buying opportunities to long term investors," said Amarjeet Maurya - AVP - Mid Caps, Angel One.

Metro Brands retails footwear own-brands like Metro, Mochi, Walkway, Da Vinchi and J Fontini, as well as certain third-party brands such as Crocs, Skechers, Clarks, Florsheim and Fitflop. Metro Brands also offers accessories, such as belts, bags, socks, masks and wallets at its stores.

“The company is operating on an asset-light model with the marketing of third-party products. However, due to covid pandemic, the footwear exports has severly impacted with a decline of around 35%. Consumption is again expected to decline further worldwide. We expect Metro Bands to decline further till 460-450 due to weak outlook," said Ravi Singh, Head of Research & Vice President at ShareIndia.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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