Sharekhan is bullish on Relaxo Footwears has recommended buy rating on the stock with a target price of Rs 825 in its research report dated June 08, 2020.
Sharekhan's research report on Relaxo Footwears
Relaxo Footwears Limited (Relaxo) posted mixed performance in Q4FY2020 with revenues declining by 15% y-o-y (affected by lockdown) but higher gross margins led to 282 bps expansion in reported OPM to 17.8% (comparable OPM improved by ~70 bps to 15.7%). FY2021 would be affected by lower sales affected by lockdown during the COVID-19 spread; strong recovery expected in FY2022. Lower per capita consumption in India at 1.66 pairs per annum as compared to developing countries at 6-7 pairs per annum, lower penetration of company in southern markets and strong product portfolio straddling the pyramid provides opportunities to grow in the long run.
Strong cash flows and stable balance sheet will take care of near term uncertainties; we maintain our Buy recommendation on the stock with revised PT of Rs. 825.
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