Best Footwear Stocks – Metro Brands Ltd Vs Bata India Ltd

Company Overview of Metro Brands Limited

Metro Brands Limited, formerly known as Metro Shoes, is a prominent Indian footwear and accessories retailer headquartered in Mumbai. Established in 1955, the company offers a diverse range of products for men, women, and children under brands like Metro, Mochi, Walkway, and Da Vinchi, as well as third-party brands such as Crocs and FitFlop. 

With over 850 stores across 195 cities in India, Metro Brands has a significant market presence. In December 2021, the company launched a ₹1,367.5 crore initial public offering (IPO), further solidifying its position in the industry. 

Company Overview of Bata India Ltd

Bata India Limited, established in 1931 as Bata Shoe Company Pvt. Ltd., is a leading footwear manufacturer and retailer in India. Headquartered in Gurugram, Haryana, the company offers a diverse range of footwear and accessories for men, women, and children under brands like Bata, Hush Puppies, Power, and North Star. 

Bata India operates through a vast retail network of over 1,500 stores across the country and maintains a strong online presence. The company has manufacturing facilities in Batanagar (West Bengal), Bataganj (Bihar), and Hosur (Tamil Nadu), ensuring a robust supply chain to meet consumer demand. 

Stock performance of Metro Brands Ltd

The table below displays the month-by-month stock performance of Metro Brands Ltd Ltd for the past year.

Stock performance of Bata India Limited

The table below displays the month-by-month stock performance of Bata India Ltd Ltd for the past year.

Fundamental Analysis of Metro Brands

Metro Brands Ltd is a prominent footwear retailer in India, known for its extensive range of stylish and comfortable shoes. Established in 1977, the company operates a variety of brands, including Metro, Mochi, and Walkway, catering to diverse customer preferences.  

The stock close price is ₹1254.20 and a market cap of ₹34,120.01 crore, offers a 0.40% dividend yield. Despite a 1-year return of -9.20%, its 6-month return shows an 8.99% recovery. Currently, it trades 14.02% below its 52-week high, reflecting potential for further growth. 

• Close Price ( ₹ ): 1254.20
• Market Cap ( Cr ): 34120.01
• Dividend Yield %: 0.40
• Book Value (₹): 1893.09
• 1Y Return %: -9.20
• 6M Return %: 8.99
• 1M Return %: 3.89 
• % Away From 52W High: 14.02
• 5Y Avg Net Profit Margin %: 13.68

Fundamental Analysis of Bata India

Bata India is one of the country’s leading footwear retailers and manufacturers, known for its quality and stylish designs. Founded in 1931, the company has established a strong presence across India with a vast network of stores. Bata India caters to diverse customer segments, offering a wide range of products that include casual, formal, and sports footwear.   

With a close price of ₹1425.90 and a market cap of ₹18,326.74 crore, the company has a book value of ₹1526.89. Despite a 1-year return of -12.52%, its 1-month and 6-month returns show modest recovery at 5.76% and 4.20%. 

• Close Price ( ₹ ): 1425.90
• Market Cap ( Cr ): 18326.74  
• Book Value (₹): 1526.89
• 1Y Return %: -12.52
• 6M Return %: 4.20
• 1M Return %: 5.76
• 5Y CAGR %: -3.21
• % Away From 52W High: 20.92
• 5Y Avg Net Profit Margin %: 5.29 

Financial Comparison of Metro Brands Ltd and Bata India Ltd

The table below shows a financial comparison of Metro Brands Ltd and Bata India Ltd.

Points to be noted:

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Measures a company’s profitability before accounting for financial and non-cash expenses.
• PBIT (Profit Before Interest and Tax): Reflects operating profit by excluding interest and taxes from total revenue.
• PBT (Profit Before Tax): Indicates profit after deducting operating costs and interest but before taxes.
• Net Income: Represents the company’s total profit after all expenses, including taxes and interest, are deducted.
• EPS (Earnings Per Share): Shows the portion of a company’s profit allocated to each outstanding share of stock.
• DPS (Dividend Per Share): Reflects the total dividend paid out per share over a specific period.
• Payout Ratio: Measures the proportion of earnings distributed as dividends to shareholders.

Dividend of Metro Brands Ltd and Bata India Ltd

The table below shows the dividends paid by the companies.

Advantages and Disadvantages of Investing in Metro Brands

Metro Brands Ltd

The primary advantage of Metro Brands Ltd. is its extensive retail network, encompassing over 800 stores across 182 cities in India, which enhances its market reach and customer accessibility.

1. Diverse Brand Portfolio
   Metro Brands offers a wide range of products under various brands, including Metro Shoes, Mochi, Walkway, and FitFlop, catering to different customer segments and preferences. 
2. Strategic Partnerships
   The company has established partnerships with international brands like Crocs, enabling it to offer exclusive products and strengthen its market position. 
3. E-commerce Integration
   Metro Brands has enhanced its online presence, providing customers with the convenience of shopping through digital platforms, which complements its physical stores and broadens its customer base. 
4. Financial Performance
   The company has demonstrated consistent financial growth, with a reported revenue of ₹2,383 crore and a net profit of ₹410 crore in FY23, reflecting its operational efficiency and market demand. 
5. Experienced Leadership
   Led by Chairman Rafique Malik and Managing Director Farah Malik Bhanji, Metro Brands benefits from experienced leadership guiding its strategic direction and expansion initiatives. 

The main disadvantage of Metro Brands Ltd. lies in its dependency on discretionary spending, making it vulnerable to economic slowdowns. Reduced consumer spending during challenging times can significantly impact the company’s sales and profitability.

1. Economic Sensitivity
   Metro Brands’ reliance on discretionary spending makes it sensitive to economic conditions. In times of recession or economic uncertainty, customers may prioritize essential expenses, reducing demand for the company’s products.
2. Intense Competition
   The footwear market faces significant competition from both domestic and international brands. This competition can pressure Metro Brands to innovate constantly and maintain competitive pricing, which may strain margins.
3. Limited Presence in Rural Areas
   Despite its extensive retail network, Metro Brands has a weaker presence in rural markets. This limits its ability to tap into untapped customer segments in less urbanized regions.
4. Dependency on Imported Products
   The company’s reliance on imported materials or products makes it susceptible to currency fluctuations and supply chain disruptions, which can affect costs and inventory management.
5. High Operational Costs
   Operating a vast retail network requires substantial investments in store maintenance and staffing. These high operational costs can impact profitability, especially during periods of reduced sales or economic downturns.

Advantages and Disadvantages of Investing in Bata India

Bata India Ltd

The primary advantage of Bata India Ltd lies in its strong brand reputation, established over decades, and its extensive retail presence. The company’s focus on quality and affordable pricing ensures customer loyalty and widespread market reach.

1. Extensive Retail Network
   Bata operates over 1,500 stores across India, making its products highly accessible. Its strong presence in urban and semi-urban areas ensures it remains a household name for footwear.
2. Diverse Product Portfolio
   The company offers a wide range of footwear catering to men, women, and children under various brands like Bata, Hush Puppies, and Power. This diversity appeals to a broad demographic.
3. Global Brand Legacy
   As part of the international Bata Shoe Organization, Bata India benefits from a global reputation. Its long-standing history of trust and quality enhances its competitive edge in the Indian market.
4. Focus on Affordability
   Bata provides quality footwear at affordable prices, ensuring its products remain accessible to middle-income customers. This focus on affordability strengthens its position as a market leader in India.
5. Technological Advancements
   Bata has embraced e-commerce and omnichannel strategies, integrating online platforms with its retail network. This technological adoption helps the company reach tech-savvy customers while enhancing overall customer convenience.

The main disadvantage of Bata India Ltd is its reliance on physical retail stores, making it vulnerable to disruptions like economic slowdowns or pandemics, which can significantly impact sales and operational efficiency.

1. High Dependency on Offline Retail
   Bata’s vast network of physical stores contributes significantly to its revenue. However, reliance on offline channels makes the company vulnerable to disruptions such as lockdowns or reduced footfall during economic downturns.
2. Limited Presence in Rural Areas
   Despite its strong urban presence, Bata has limited penetration in rural markets. This restricts its ability to tap into the growing demand for affordable footwear in underserved regions.
3. Intense Market Competition
   The footwear industry is highly competitive, with several domestic and international brands offering similar products. This competition puts pressure on Bata to maintain pricing strategies and innovate to retain its market share.
4. Dependency on Imports
   Bata sources some materials and products from international markets, making it susceptible to supply chain disruptions and currency fluctuations, which can impact costs and margins. 

How to Invest in Metro Brands and Bata India Stocks?

To invest in Metro Brands and Bata India stocks, start by opening a Demat and trading account with a reputable stockbroker like Alice Blue.  

1. Conduct Thorough Research
   Analyze the financial health, market position, and growth prospects of Metro Brands and Bata India. Review their annual reports, recent news, and industry trends to make informed investment decisions.
2. Assess Market Conditions
   Monitor current market trends and economic indicators that may impact the retail and footwear sectors. Understanding these factors helps in timing your investments effectively.
3. Diversify Your Portfolio
   Avoid concentrating all your investments in a single sector. Diversifying across various industries and companies can mitigate risks and enhance potential returns.
4. Utilize Alice Blue’s Trading Tools
   Leverage Alice Blue’s advanced trading tools and resources to track stock performance, set alerts, and execute trades efficiently. Their platform provides real-time data and analytics to support your investment strategy.
5. Regular Portfolio Review
   Periodically review your investment portfolio to assess performance and make necessary adjustments. Staying proactive ensures alignment with your financial goals and market dynamics.

Metro Brands Ltd vs. Bata India Ltd – Conclusion

Metro Brands Ltd excels with its diverse product portfolio, strong retail network, and strategic partnerships, such as with Crocs. Its focus on niche markets and e-commerce integration positions it as a growing player in India’s footwear industry.

Bata India Ltd stands out as a trusted brand with a legacy spanning decades. Its extensive retail network, affordable pricing, and focus on quality ensure widespread market appeal, making it a leader in India’s footwear market despite growing competition.

Best Footwear Stocks – Metro Brands Ltd vs. Bata India Ltd – FAQ

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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory.