Neutral Relaxo Footwears; target of Rs 850 : Motilal Oswal

Motilal Oswal's research report on Relaxo Footwears

Relaxo Footwears (Relaxo) posted a soft 5% YoY revenue growth, but improvement in GM and controlled cost translated into 21%/28% YoY growth in EBITDA/PAT (in line). Price cuts taken in the last couple of quarters have improved its competitive edge, driving a steep 15% volume growth YoY. Relaxo’s volume growth, led by price reduction, softening RM prices, and renewed focus on sports footwear should bolster the growth outlook. We have cut our estimates on the current weak macro environment and slow recovery, building revenue/PAT CAGR of 15%/34% over FY24-26. The stock is trading at 56x FY26E P/E and appears expensive in a soft earnings environment. We reiterate our Neutral stance on the stock.

Outlook

We ascribe a P/E of 55x on FY26E EPS to arrive at our TP of INR850 and reiterate our Neutral rating on the stock.