Buy Relaxo Footwear; target of Rs 1080: Sharekhan

Sharekhan's research report on Relaxo Footwear

Relaxo Footwears’ (Relaxo’s) Q2FY2024 performance mirrored Q1, with revenue growing by 7% y-o-y (volume growth of 23%; average realisation fell by 13%), EBITDA margin rose 392 bps y-o-y to 12.8%, leading to strong 97% y-o-y rise in PAT. Management eyes double-digit revenue growth in H2, (~15% volume growth), with EBITDA margin expected to be at 14%. We expect the company to clock a 12% and 37% revenue and PAT CAGR over FY2023-26E aided by focus on premiumisation, wider distribution, innovation and operating efficiencies.

Outlook

Stock trades at 98x/68x/57x its FY2024E/25E/26E earnings. We maintain a Buy rating with an unchanged PT of Rs. 1,080.