Buying behaviour of Indian consumer is changing rapidly with increasing urbanisation. Consumer is becoming more brand-centric even in smaller towns and rural markets as a result of which we are witnessing a shift from unorganised segment to organised segment, said Atish Matlawala of SSJ Finance.
In the last one year, the Indian equity market has seen an excellent surge despite uncertainty on the economic recovery and Covid situation. Among the stocks that rallied were footwear companies', running up about 20-100 percent each, according to ACE Equity data. We excluded companies below Rs 100-crore market-cap.
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Long-term growth prospects of the footwear industry are intact, Sharekhan said in last month's research report. "India is the second-largest footwear manufacturer after China, accounting for 9% of the world’s market with 22 billion pairs. Domestic production contributes ~90% to the overall footwear market in India. The domestic footwear market was badly affected by the lockdown during the pandemic (Q1 FY21 was the worst affected)." said Sharekhan.
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Atish Matlawala, senior Analyst, SSJ Finance & Securities said, "Buying behaviour of Indian consumer is changing rapidly with increasing urbanisation and penetration of internet. Consumer is becoming more brand-centric even in smaller towns and rural markets as a result of which we are witnessing a shift from unorganised segment to organised segment. Also valuation catch up with other retail sectors like clothing, gold, etc is also helping the footwear sector. Our top pick in the sector is Relaxo footwear. It has maintained healthy operating cash flows, asset turnover (~3x) and EBITDA margins over the years making it a capital efficient business. In the short term, earnings of the company are likely to be negatively impacted on account of COVID-19 led slowdown. However, over longer term Relaxo through its strong balance sheet, efficient working capital cycle (~60 days), RoCE of 20%+ and D/E ratio of 0.1x could sail through current situation comfortably."
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Superhouse | In last 1 year, the stock has risen 104 percent to Rs 163 per share. According to moneycontrol SWOT analysis, the company has more strengths than weaknesses.
Relaxo Footwears | In last 1 year, the stock has risen 85 percent to Rs 1159 per share. According to moneycontrol SWOT analysis, the company has more strengths than weaknesses.
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Liberty Shoes | In last 1 year, the stock has risen 31 percent to Rs 182 per share. According to moneycontrol SWOT analysis, the company has more strengths than weaknesses.
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Mirza International | In last 1 year, the stock has risen 18 percent to Rs 56 per share. According to moneycontrol SWOT analysis, the company has more weaknesses than strengths.
![Long-term growth prospects of the footwear industry are intact, Sharekhan said in last month's research report. "India is the second-largest footwear manufacturer after China, accounting for 9% of the world’s market with 22 billion pairs. The domestic production contributes ~90% to the overall footwear market in India. The domestic footwear market was badly affected by the lockdown during the pandemic (Q1 FY21 was the worst affected). Closure of retail stores and restriction to out-of-home mobility affected sales in Q1. However, with easing of lockdown norms and gradual opening of retail stores/malls, footwear sales gained some momentum in Q2 and Q3 of FY21. The beginning of FY22 was once again marred by lockdown-like restrictions, but with vaccination gaining pace a strong recovery is expected prior to the festive season," said Sharekhan.](https://images.moneycontrol.com/static-mcnews/2021/07/Stocks.jpg "Long-term growth prospects of the footwear industry are intact, Sharekhan said in last month's research report. "India is the second-largest footwear manufacturer after China, accounting for 9% of the world’s market with 22 billion pairs. The domestic production contributes ~90% to the overall footwear market in India. The domestic footwear market was badly affected by the lockdown during the pandemic (Q1 FY21 was the worst affected). Closure of retail stores and restriction to out-of-home mobility affected sales in Q1. However, with easing of lockdown norms and gradual opening of retail stores/malls, footwear sales gained some momentum in Q2 and Q3 of FY21. The beginning of FY22 was once again marred by lockdown-like restrictions, but with vaccination gaining pace a strong recovery is expected prior to the festive season," said Sharekhan.")
![Atish Matlawala, Sr Analyst, SSJ Finance & Securities says, "Buying behaviour of Indian consumer is changing rapidly with increasing urbanisation and penetration of internet. Consumer is becoming more brand centric even in smaller towns and rural markets as a result of which we are witnessing a shift from unorganised segment to organised segment. Strict implementation of GST is also helped in reducing price gap between organised and un-organised players. Also valuation catch up with other retail sectors like clothing, gold, etc is also helping the footwear sector. Our top pick in the sector remains Relaxo footwear." "Relaxo has strong presence in the mass and value segment, accounting for more than 65% of the revenue. Over the years the company has focused on growing its presence in this category by producing affordable footwear “value for money” in the range of Rs. 100 – Rs.1000. Currently it has ~6000+ SKU’s catering to every segment and continues to add and churn the portfolio annually in order to make it more attractive for the consumers. Relaxo has maintained healthy operating cash flows, asset turnover (~3x) and EBITDA margins over the years making it a capital efficient business. In the short term earnings of the company are likely to be negatively impacted on account of COVID-19 led slowdown. However, over longer term Relaxo through its strong balance sheet, efficient working capital cycle (~60 days), RoCE of 20%+ and D/E ratio of 0.1x would sail through current situation comfortably."](https://images.moneycontrol.com/static-mcnews/2019/06/Relaxo.jpg "Atish Matlawala, Sr Analyst, SSJ Finance & Securities says, "Buying behaviour of Indian consumer is changing rapidly with increasing urbanisation and penetration of internet. Consumer is becoming more brand centric even in smaller towns and rural markets as a result of which we are witnessing a shift from unorganised segment to organised segment. Strict implementation of GST is also helped in reducing price gap between organised and un-organised players. Also valuation catch up with other retail sectors like clothing, gold, etc is also helping the footwear sector. Our top pick in the sector remains Relaxo footwear." "Relaxo has strong presence in the mass and value segment, accounting for more than 65% of the revenue. Over the years the company has focused on growing its presence in this category by producing affordable footwear “value for money” in the range of Rs. 100 – Rs.1000. Currently it has ~6000+ SKU’s catering to every segment and continues to add and churn the portfolio annually in order to make it more attractive for the consumers. Relaxo has maintained healthy operating cash flows, asset turnover (~3x) and EBITDA margins over the years making it a capital efficient business. In the short term earnings of the company are likely to be negatively impacted on account of COVID-19 led slowdown. However, over longer term Relaxo through its strong balance sheet, efficient working capital cycle (~60 days), RoCE of 20%+ and D/E ratio of 0.1x would sail through current situation comfortably."")
