Footwear maker Metro Brands finds new spring in its step after GST cut

Tax tweaks and fresh launches give footwear major a leg up on rivals

The stock of the largest listed footwear player, Metro Brands, has outperformed peers, gaining nearly 17 per cent over the past month to close at ₹1,319.75 on Wednesday on the BSE. In comparison, the average return for large listed peers in the sector during this period stood at around 7 per cent. The gains for Metro Brands came on the back of changes in goods and services tax (GST), new launches, and expectations of margin improvement going forward.

 

A key trigger for the stock is the revision in GST rates. While the GST rate for products priced above ₹2,500 remains at 18 per cent, the rate for footwear priced up to ₹2,500 has been cut to 5 per cent. Previously, the rate was 12 per cent for products priced up to ₹1,000 and 18 per cent for those above ₹1,000.

 

Metro Brands derives about 40 per cent of its sales from products priced below ₹2,500. Analysts at Kotak Securities, led by Umang Mehta, expect organised players to gain volume share from the unorganised segment at economy price points through price cuts. At premium price points, they expect relatively lower price elasticity.

 

Emkay Global Financial Services projects a 3 per cent increase in revenue and an operating leverage-driven benefit of 7 per cent at the operating profit level, assuming demand elasticity of 0.8x and full pass-through of the tax benefit to consumers.

 

Further, the GST reduction strengthens prospects for the value-focused Walkway format, which is expected to deliver a sharper value proposition and accelerate the shift from unorganised channels, note analysts at the brokerage led by Devanshu Bansal. Emkay has a ‘buy’ rating on the stock with a target price of ₹1,475.

 

Additional revenue and profit drivers include the launch of Crossover in the premium range (₹4,490–6,990) and the rollout of the company’s own outlet-store format, Shoe Depot, in select markets aimed at discount-seeking customers. Shoe Depot retails in-house brands (Metro, Mochi), exclusive brands (Crocs, FitFlop, Fila), as well as outside brands (Puma).

 

Despite these positives, the Street will watch closely for signs of a demand revival in the sector, which has been sluggish across brands and formats for the past two years. Motilal Oswal notes that performance in July and August was further hit by heavy rains and sales cannibalisation from multiple store openings within the same micro-markets, leading to fragmented demand.

 

Metro and Mochi are seeing store-level sales cannibalisation, keeping overall sales stable but likely pressuring profitability due to higher overheads. High-street formats continue to outperform malls on productivity, supported by repeat sales and impulse buying. However, overall market momentum remains subdued. Store managers remain cautiously optimistic that the GST cut and the early onset of the festival season will lift demand, say analysts at the brokerage led by Aditya Bansal.

 

The analysts expect a subdued July–September quarter with either a decline or low single-digit like-for-like growth. Although the company has underperformed in recent quarters, it has stuck to its guidance of profitability at over 30 per cent and mid-teen net profit margins.

 

Centrum Research, in a note after the first quarter of 2025-26, highlighted that the company has outperformed peers in revenue growth and consistent profitability, and expects it to sustain this trend. The brokerage has a ‘buy’ rating on the stock with a target price of ₹1,270.