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Metro Brands shares drop despite 50 percent jump in net profit; Here's why

Metro Brands shares drop despite 50 percent jump in net profit; Here's why

Metro Brands shares drop despite 50 percent jump in net profit; Here's why
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By Oct 20, 2022 11:18:54 AM IST (Published)

The company's earnings look good on a year-on-year basis but when compared to the June quarter, appear weak.

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Shares of Metro Brands Ltd. declined on Thursday despite the company reporting a 50 percent year-on-year growth in its net profit for the September quarter.
The company's bottom line grew to Rs 102.7 crore in the September quarter from Rs 68.3 crore during the same period last year.

Consolidated revenue grew 47 percent year-on-year to Rs 476 crore during the quarter under review.

On the operational front, the company's EBITDA grew over 50 percent from last year, rising 51.9 percent to Rs 147.1 crore from Rs 96.8 crore. Margin saw an expansion of 110 basis points to 30.9 percent from 29.8 percent last year.

However, shares are trading lower as the results are subdued on a sequential basis. Growth on a year-on-year basis was courtesy of a low base. In comparison to the June quarter, Metro Brands' revenue dropped 6.2 percent, EBITDA declined 19.5 percent while its net profit declined nearly 30 percent for the quarter.

Metro Brands added 28 stores across all formats during the quarter and 48 stores during the first half of the year.

It recorded the highest-ever quarterly e-commerce sales (including omnichannel) of Rs 41 crore.

The company's gross margins moderated in the September quarter due to end-of-season sales in August and September. The management expects gross margins to normalise between 55-57 percent levels over the next few quarters.

Metro Brands also informed the bourses that it has signed a share purchase agreement for the 100 percent acquisition of Cravatex Brands Limited. Shares of Cravatex are locked in a 20 percent upper circuit.

Shares of Metro Brands are trading 1.3 percent lower at Rs 883.75 as of 11:10 AM.
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