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Rakesh Jhunjhunwala held footwear stock hits new 52-week high, wealth rises 221 cr in a day

Metro Brands is one of the largest Indian footwear specialty retailers and is amongst the aspirational Indian brands in the footwear category. (MINT_PRINT)Premium
Metro Brands is one of the largest Indian footwear specialty retailers and is amongst the aspirational Indian brands in the footwear category. (MINT_PRINT)

  • Since its listing, Metro Brands shares have skyrocketed by a whopping more than 76% on BSE. So far, in 2022, the shares have advanced by a massive over 91.5% making many investors rich including Jhunjhunwala.

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Multi-brand footwear retail chain in India, Metro Brands witnessed a strong bull run on Dalal Street with shares settling at a fresh 52-week high on Friday. The shares climbed by nearly 7% in the day. Due to the latest rally, the big bull of D-Street, Rakesh Jhunjhunwala emerges as one of the biggest beneficiaries in the stock. Jhunjhunwala's wealth climbed nearly 221 crore in this footwear company in a single day. The investor who is often referred to as the 'Warren Buffett of India', is the largest public shareholder in the company. There is huge upside potential in Metro Brands shares as the company's right mix of brands provides a growth runway.

On BSE, Metro Brands  shares settled at 854.30 apiece up by 41.70 or 5.13%. The shares had touched a new 52-week high of 869 apiece – resulting in at least 6.9% or 56.40 gain in the day. The company's market cap is around 23,199.04 crore.

Metro Brands shares debuted on stock exchanges last year on December 21. The IPO had a price band of 485 to 500 per piece. The 100% book building subscribed by 3.64 times on the primary market.

Since its listing, Metro Brands shares have skyrocketed by a whopping more than 76% on BSE. So far, in 2022, the shares have advanced by a massive over 91.5% making many investors rich including Jhunjhunwala.

As per the latest shareholding pattern, as of June 30, 2022, Rakesh now holds Metro Brands shares through his wife Rekha Jhunjhunwala to the tune of 39,153,600 equity shares or 14.43%.

Rakesh manages his and wife's portfolio.

Taking into consideration Friday's new 1-year high, then Rakesh's wealth has jumped by at least 220.83 crore (39,153,600 X 56.40) in the day.

Overall, Jhunjhunwala's shareholding is valued at around 3,296 crore in Metro Brands, as per Trendlyne data.

Metro Brands is the third largest stock in Jhunjhunwala's portfolio after Star Health and Titan where his holding is valued around 7,033.1 crore and 11,104.9 crore as of August 12, as per the data.

In Q1FY23, Metro Brands posted a consolidated net profit attributable to owners at 104.76 crore compared to a loss of 11.29 crore in Q1FY22. Consolidated revenue from operations came in at 507.95 crore - rising by nearly 4 folds from 131.39 crore in Q1 of FY22. EBITDA in Q1FY23 stood at 183.4 Crore, as compared to 14.4 Crore in the corresponding quarter of last year. EBITDA margin stood at 36.1% in Q1FY23 as compared to 11.0% in Q1FY22.

Metro Brands is one of the largest Indian footwear specialty retailers and is amongst the aspirational Indian brands in the footwear category.

Metro Brands growth outlook:

Akhil Parekh, Research Analyst, and Kevin Shah, Research Associate at Centrum in their note said, "Entry into newer geographies, tie-up with international brands (Crocs and Fitflops) coupled with variable cost structure should help company to grow its sales/EBITDA/PAT CAGR at 34/36/47% respectively over FY22-24E. On a low base, we expect volume (no of pairs) to grow at CAGR 25% and ASP at 7% over FY22-24E."

According to the analysts, Metro has the strongest brand equity in South and West India followed by North and East. Contribution from N&E combined has increased from 35% to 37% over FY20-1QFY23. Similarly, Metro’s contribution from tier II/III towns has increased from 30% to 32% over the same period. This highlights that Metro can get similar traction in tier II towns despite having an ASP of Rs1500. Online & omni channels contributed ~8% to the total sales.

Metro plans to open 260 new stores on a net level over FY22-25. Brands in discretionary space such as Raymond and Titan are present across 500+ and 300+ cities respectively. The analysts said, hence, management sounded confident about achieving the aforementioned target.

Meanwhile, Manoj Menon, Aniket Sethi, and Karan Bhuwania Research Analysts at ICICI Securities in their note said, "Metro Brands’ right mix of brands provide growth runway (of store addition). Its focus on financial discipline along with balance sheet strength provides confidence on the execution. It has an optimized mix of in-house brands and third-party brands in MBOs to drive customer footfalls, improve sales density and gross margins. Besides, a platform of choice for international brands aids confidence on new avenues (of growth)."

Further, ICICI Securities analysts said, "We increase our earnings estimates by 24-16% for FY23- 24E. We model revenue / EBITDA / PAT CAGR of 34% / 36% / 41% respectively over FY22-FY24E."

 

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

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