Sharekhan's research report on Relaxo FootwearRelaxo Footwear (Relaxo) posted another quarter of healthy performance, wherein despite challenging times and muted on-ground demand, its top line grew at 16.6% YoY, driven by combination of volume and premiumisation. This doubledigit growth is commendable and signifies the strong on-ground execution and brand salience efforts of the company. The growth in the revenue along with falling prices of raw materials (EVA and other chemicals that are crude derivatives) boosted the operating profit margin (OPM) by 116BPS in Q3FY2016, and the OPM stood at all-time high of 14%, driven by a healthy operating performance, the net earnings grew by 22.7% YoY. Relaxo’s strong presence in the lucrative mid-priced footwear segment (through its top-of-the-mind recall brands like Hawaii, Flite and Sparx) along with its integrated manufacturing set-up, lean working capital requirement and vigilant management puts it in a sweet spot to cash in on the strong growth opportunity unfolding in the footwear category due to a shift from unbranded to branded products. Thus, we remain positive on the stock with our price target revised to Rs600 (Rs635 previously). For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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