Relaxo Footwear skids despite 54.5% surge in Q1 net profit

Shares of Relaxo Footwear dropped 1.50 percent in early trade on July 25, even as the footwear company posted robust Q1 numbers. At 9:24am, the Relaxo Footwear stock was trading 1.38 percent lower at Rs 932 on the NSE.

Relaxo Footwears Ltd on Monday, July 24, reported a 54.5 percent year-on-year (YoY) jump in net profit at Rs 56.3 crore for the June quarter.

Quarterly revenues rose 10.7 percent YoY to Rs 738.8 crore. The growth was driven by the strong recovery in volumes across open footwear, the company said. At the operating level, EBITDA increased 24.8 percent to Rs 107.6 crore in the first quarter of this fiscal over Rs 86.2 crore in the year-ago period.

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The EBITDA margin stood at 14.6 percent compared to 12.9 percent in the previous fiscal. EBITDA is earnings before interest, tax, depreciation, and amortization.

Management Commentary

Relaxo MD Ramesh Kumar Dua said, there was significant growth in both open and closed footwear categories. “The decline in raw material prices, coupled with the relentless efforts of our team to ensure the company’s adaptability and resilience in challenging market conditions, has led to improved operating efficiency and profitability during the quarter,” Relaxo MD Ramesh Kumar Dua said.

“Our effective business strategies have enabled us to capitalise on market trends, maintaining a robust position with well-received brands like Sparx, Bahamas, and Flite. Furthermore, all our channels have seen encouraging progress, which will help us deliver positive results consistently.”

Brokerage Views

Sharekhan is bullish on Relaxo Footwear. The firm has recommended a ‘buy’ rating on the stock with a target price of Rs 1,005 in its May 12 research report.

Stock Performance

Relaxo Footwear stock has given a return of 12.93 percent over the last six months, compared to a 20.16 percent return in the NSE Midcap index.

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