Hold Relaxo Footwears; target of Rs 930: 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. Relaxo is a dominant player in the open footwear space (~76% of sales), with its strong portfolio of brands (‘Flite’, ‘Bahamas’, ‘Sparx’, ‘Relaxo). Market leader in value priced segment selling ~19 crore pairs annually • Over the years, it has maintained b/s prudence with controlled working capital cycle, healthy asset turn of 2.5x and generated RoCE of 20%+.

Outlook

Hence, we reiterate HOLD on the stock with a revised target price. With correction in ASPs, key monitorable remains recovery in the volume trajectory that has stagnated in the past couple of quarters to ~ 4 crore pairs. We value Relaxo at Rs 930 i.e. 65x FY24E EPS.