Metro Brands share jumps 20% on reporting strong Q3 results

Metro Brands shares jumped nearly 20% to Rs 609.45 on the BSE in the intraday session on Monday after the footwear business posted impressive results for the quarter ending December 2021. (Q3FY22).

The stock is now trading at its highest level since its initial public offering on December 22, 2021. With today’s jump, it has risen 22% from its issue price of Rs 500 per share.

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Metro Brands was trading 19.99% higher at Rs 609.45 at 11:18 a.m., compared to a 0.22% increase in the S&P BSE Sensex. Trading volumes on the counter grew more than fivefold, with a total of 27 lakh equity shares changing hands on the NSE and BSE.

According to the shareholding pattern data, Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala owned 14.42% of Metro Brands as of December 21, 2021.

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Metro Brands reported a 53.2% year on year (YoY) surge in consolidated net profit at Rs 102 crore for Q3FY22, on the back of excellent revenue growth. The company’s overall revenue from operations increased by 59% year on year to Rs 484 crore.

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Earnings before interest, taxes, depreciation and amortization (EBITDA) margin increased 220 basis points (bps) to 34.9% in Q3FY22 from 32.7% in Q3FY21. The high gross margins were attained by reducing the impact of bargain sales and improving the total sales mix. 

Overall gross margins are likely to return to typical levels in the next quarters, hovering around 55-56%. (Over the previous five years, this has been the average).

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Q3FY22 was the first quarter following March 2020 that did not have any substantial Covid-related restrictions. The company’s best-ever quarterly revenues were achieved because of a sustained recovery in client attitudes that began in August 2021.