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Buy Relaxo Footwear; target of Rs 1130: Sharekhan

Sharekhan is bullish on Relaxo Footwear has recommended buy rating on the stock with a target price of Rs 1130 in its research report dated July 27, 2022.

July 29, 2022 / 10:33 PM IST
 
 
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Sharekhan's research report on Relaxo Footwear


Relaxo Footwear registered modest performance in Q1FY2023 despite the low base of Q1FY2022 (affected by COVID-19 lockdown), as high inflationary pressures hit revenue growth while margins decreased due to higher input prices. Revenues grew by 34.2% y-o-y to Rs. 667.2 crore. Gross margins and OPM decreased by 40 bps each to 54.1% and 12.9%, respectively, affected by higher input cost inflation. A diversified portfolio, recent capacity addition, enhanced distribution network, sustained investment on brands and a customer-centric approach will aid Relaxo in achieving consistent topline growth in the medium to long term. Settling down of EVA prices (key input) would help margins to improve in the coming quarters.



Outlook


The stock has corrected by 22% in the past six months and trades at 87.8x/65.0x its FY2023/FY2024E EPS. We maintain Buy with a revised PT of Rs. 1,130

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Relaxo Footwear - 280722 - khan

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first published: Jul 29, 2022 10:33 pm
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