Metro Brands IPO: Subscription Status on Third Day of Bidding

5 August 2022
5 mins read
Metro Brands IPO: Subscription Status on Third Day of Bidding

As per the latest information, the Rakesh Jhunjhunwala Metro Brands IPO was subscribed 3.64 times on 14 December 2021. The footwear speciality retailer’s public issue received bids for 6,96,06,480 shares, while 1,91,45,070 equity shares were reserved in total.

The company sells footwear under several of its own popular brands such as Metro, Da Vinchi, Mochi, Walkaway, J Fontini and third party brands like Crocs, Clarks, Fitflop and Skechers. The footwear retailer has a wide presence across the country, with 598 stores across 136 cities in India as of 30 September 2021.

Metro Brands set a price band from Rs. 485 to Rs. 500 per share for its public issue. The stock was valued at a price to sales ratio of 16.9 times based on its FY21 sales.

Now let us look at how far the Metro Brands IPO came to achieve its target at the end of its closing day.

Final Day Performance: Metro Brands IPO

Take a look at the following pointers to see how the Metro Brands IPO has performed across the various investor categories.

  • A total of 54,70,020shares were allotted to the Qualified Institutional Buyers (QIB) while bids were put for 4,64,44,800
  • Out of 41,02,515 equity shares reserved for the Non-Institutional Investors (NII) whereas 1,23,84,780 shares were bid for.
  • Retail Individual Investors (RII) put in bids for 1,07,82,900 equity shares while 95,72,535 shares were reserved for the category.

The following table details how many subscriptions each investor category has received.

Investor Category Number of Times It Was Subscribed
QIBs 8.49
NIIs 3.02
RIIs 1.13
Total 3.64

50% of the Metro Brands IPO was reserved for QIBs, while NIIs were allocated 15%, and RIIs had 35% equity shares reserved.

A Brief Look at Metro Brands IPO’s Anchor Investment

On 9 December, a day before opening its IPO, Metro Brands allocated 82.05 lakh equity shares to 28 anchor investors. With an upper price band of Rs. 500 for each unit, the company managed to raise Rs. 410.25 crores, around 30% of the issue size.

The following table lists the top 16 anchor investors, who accounted for 78.18% of the anchor allocation.

Name of the Anchor Investor Anchor Portion Number of shares Value Allocated
Goldman Sachs India Equity 6.58% 5,40,000 Rs. 27 crores
Abu Dhabi Investment Authority 6.58% 5,40,000 Rs. 27 crores
ICICI Pru ESG Fund 6.58% 5,40,000 Rs. 27 crores
Kotak Emerging Equity Scheme 6.58% 5,40,000 Rs. 27 crores
HDFC Life Insurance 4.88% 4,00,020 Rs. 20 crores
SBI Life Insurance 4.88% 4,00,020 Rs. 20 crores
Kotak Mid Cap Fund 4.88% 4,00,020 Rs.20 crores
Indus India Fund 4.88% 4,00,020 Rs. 20 crores
University of Notre Dame 4.88% 4,00,020 Rs. 20 crores
HDFC Capital Builder Fund 4.06% 3,33,360 Rs. 16.67 crores
Aditya Birla Gennext Fund 3.90% 320010 Rs. 16 crores
Goldman Sachs Singapore 3.90% 320010 Rs. 16 crores
GMO Emerging Markets 3.90% 320010 Rs. 16 crores
Pinebridge India Equity Fund 3.90% 320010 Rs. 16 crores
Valiant India Opportunities Fund 3.90% 320010 Rs. 16 crores
Janchor Partners 3.90% 320010 Rs. 16 crores

Other anchor investors who participated in this issue included:

  • Societe Generale
  • Tata AIA Life Insurance Co Ltd
  • Sundaram MF
  • UTI MF

How Did the IPO Perform on Day 1 and Day 2?

Take a look at the following table to see how the Metro Brands IPO was subscribed on the first two days across investor categories.

Day of Bidding QIB NII RII Total
First NA 0.02% 0.52% 0.27%
Second 0.16% 0.17% 0.87% 0.52%

Metro Brands plans to raise around Rs. 1367.5 crores through its maiden Initial Public Offering (IPO). It comprised a fresh issue worth Rs. 295 crores and an offer for sale (OFS) of Rs. 2.14 crores equity shares by promoters. The following are the objectives of this public issue.

  • The company plans to use the net proceeds of the issue to open new company stores under the brand names Metro, Mochi, Crocs and Walkaway.
  • They plan to establish a total of 260 new stores across India.
  • All new stores will be set up from the proceeds of the IPO.
  • They will use some funds for general business purposes.

Parting Thoughts

Metro Brands is one of India’s largest footwear retailers with a 3-4% market share and a brand appeal towards aspirational consumer segments. Its products cater to all age groups and price segments, resulting in strong customer loyalty.

The company has reported weak net profit growth lately, mostly due to the effects of the COVID-19 pandemic. However, its many strong positives like strong brand names, wide product line and light business model make up for it.

 

Frequently Asked Questions

  1. Who are the book running lead managers for the Metro Brands IPO?

The following are the book running lead managers (BRLM) to this issue:

  • Axis Capital
  • ICICI Securities
  • Equirus Capital
  • Motilal Oswal Investment Advisors
  • DAM Capital Advisors
  • Ambit
  1. How has the COVID-19 pandemic affected Metro Brands’ business?

Metro Brands was doing well till the COVID-19 pandemic disrupted their business with lockdowns and travel restrictions. Despite dips in profitability, its strong track of growth and financial discipline allowed it to report the highest operating margin among its peers.

  1. What are the dates for share allotment and listing of shares?

The equity shares of the IPO will be allotted on 17 December 2021, and they will be listed on the stock exchanges on 22 December.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.