Hold Relaxo Footwears: target of Rs 1330: ICICI Direct

ICICI Direct's research report on Relaxo Footwears

Relaxo is India’s leading footwear manufacturing company, boasting of largest capacity of 10.0 lakh pairs per day. It is a dominant player in the open footwear space (~80% of sales), with its strong portfolio of brands (‘Flite’, ‘Bahamas’, ‘Sparx’, ‘Relaxo). Market leader in value priced segment selling ~19 crore pairs annually Relaxo has, over the years, maintained balance sheet prudence with controlled working capital cycle (NWC days: 60 days), healthy asset turns of 2.5x and generating RoCE of 20%+

Outlook

We continue to remain structurally positive. However, due to recent run-up in the stock and near term headwinds (higher RM prices, its impact on volumes), we reiterate HOLD on the stock and await better entry price point We value Relaxo at Rs 1330 i.e. 65x FY24E EPS