MarketsMOJO Upgrades Metro Brands to 'Hold' Rating Based on Strong Management and Growth Potential

Metro Brands, a leading player in the consumer durables industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on the company's strong management efficiency, ability to service debt, and healthy long-term growth prospects.
One of the key factors contributing to the 'Hold' rating is Metro Brands' high return on capital employed (ROCE) of 23.60%, indicating efficient management of its resources. Additionally, the company has a low debt to EBITDA ratio of 0.51 times, showcasing its strong ability to service debt.

Furthermore, Metro Brands has shown consistent growth in its operating profit, with an annual growth rate of 31.85%. This indicates a healthy long-term growth potential for the company.

From a technical standpoint, the stock is currently in a mildly bullish range and has shown improvement from a sideways trend on 27-Nov-24. The Bollinger Band and OBV technical factors also suggest a bullish trend for the stock.

The majority shareholders of Metro Brands are its promoters, and with a market cap of Rs 32,620 crore, it is the largest company in the consumer durables sector, constituting 23.87% of the entire sector. Its annual sales of Rs 2,380.01 crore make up 6.98% of the industry.

However, the company did report negative results in September 2024, with a fall of -32.4% in its PAT (Q) and the lowest ROCE (HY) at 17.48%. The operating profit to interest (Q) ratio was also at its lowest at 7.10 times.

With a ROE of 21, Metro Brands has a very expensive valuation with a price to book value of 16.8. This indicates that the stock is trading at a premium compared to its average historical valuations. In the past year, while the stock has generated a return of -9.54%, its profits have risen by 21.9%, resulting in a PEG ratio of 3.7.

It is worth noting that Metro Brands has underperformed the market (BSE 500) in the last year, generating negative returns of -9.54% while the market has generated returns of 28.06%. However, with its strong fundamentals and potential for growth, the 'Hold' rating from MarketsMOJO suggests that the stock may be worth considering for long-term investors.