Buy Relaxo Footwear; target of Rs 1005: Sharekhan

Sharekhan's research report on Relaxo Footwear

Relaxo delivered a q-o-q improvement in performance with revenue/PAT growth at 12.3%/2.1x to Rs. 765 crore and Rs. 63 crore, respectively, and EBITDA margin expansion of 481 bps to 15.4%. With relevant pricing actions, the management expects double-digit volume-led revenue growth in FY2024. Expansion in domestic distribution reach, higher share of close-ended footwear and a better mix would help in the double digit growth in the medium term.. With raw material prices correcting from highs, EBIDTA margins are expected to rise to ~15-16% in FY2024. Return ratios are expected to rise to double digits in the coming years.

Outlook

The stock is trading at 96x/62x its FY2024E/FY2025E earnings. We maintain a Buy rating with a revised PT of Rs. 1,005.

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