Sell Relaxo Footwears; target of Rs 410: Motilal Oswal

Sell

Motilal Oswal's research report on Relaxo Footwears

Relaxo Footwears’ (RLXF) 1QFY26 results reflect persistent volume pressure amid restructuring of distribution, muted demand and heightened competition. However, margins remained resilient, with EBITDA margin expanding ~200bp to 15.2% on the back of robust cost controls. Management remains cautious on near-term revenue recovery but expects profitability to improve through the streamlining of backend process and operational efficiencies. We cut our FY26-28 revenue estimates by ~5% each, though EBITDA margin assumptions are raised by 60-80bp, driven by cost controls, resulting in broadly unchanged EBITDA estimates over FY26-28E.

Outlook

The recent ~10% run-up in RLXF’s stock price over the past month appears to fully price in the near-term margin optimization. At ~56x 1-year forward P/E, valuations remain rich for modest growth. We maintain Sell rating with a revised TP of INR410, based on 40x Sep’27E P/E.

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