**Relaxo - Q4 FY20 (Audited –Cons)**
Total revenue from operations 540.5 Cr
635.7 Cr (-14.96%) YoY | 599.8 Cr (-9.82%) QoQ
Year ending revenue: 2,410 Cr Vs. 2,292 Cr (5.10%)
Net Profit of 51.8 Cr
54.4 Cr (-4.77%) YoY 54.1 Cr (-4.23%) QoQ
Year ending Net profit: 226 Cr Vs. 175 Cr (29.11%)
EPS (in Rs.) 2.08
2.19 YoY | 2.18 QoQ
Year ending EPS: 9.10 Vs. 7.06
View: Result is slightly below expectation. YoY and QoQ revenue and profit both have declined. Although margin improved in this quarter and also improved in full financial year.
**Business Updates & Highlights**:
Q4FY20 EBITDA is around INR 100.1 Cr Vs. 96.5 Cr in Q4FY19 Vs. 103.7 Cr in Q3FY20 therefore up by 3.7% in YoY and declined by 3.5% in QoQ. FY20 EBITDA is around INR 417.9 Cr Vs. 337.2 Cr in FY19 therefor up by at 23.9%.
Q4FY20 EBITDA margin is around 18.2% Vs. 15.1% in Q4FY19 Vs. 17.3% in Q3FY20. FY20 EBITDA margin is around 17.3% Vs. 14.7% in FY19.
Export sale contributed around 100 Cr or about 4% to company’s sales.
Revenue of the Company has grown @12.89% till Dec 19, however, due to nationwide lockdown in the month of March 2020, growth for the current quarter has been adversely effected.
**Board of Directors has declared Interim dividend for the F.Y. 2019-20 of Re 1.25 per equity share and paid in March 2020 which is final dividend for FY19-20
ROE and ROCE is around 19% and 26% respectively and book value per share is around INR 49 and share is currently trading at 15.7x of its book value. Company is currently trading at annualized PE of around 83 which is very high as per industry benchmark. Promoter holding is around 70.9% in the company which is very strong and stable. FIIs and Mutual fund hold around 2.9% and 6.4% in the company. Cash and cash equivalent from operating activities as of March 2020 is around INR 318.9 Cr Vs. 123.4 Cr as of March 2019.
Position: Share strong support price is INR 650. Long term investor can continue with the company.
**Share View**: Share price high 830 (52 week) and now 756. Relaxo was founded in 1976 and is today the largest manufacturer of footwear in India. It has 9 famous brands Relaxo, Bahamas, Casuals, Schoolmate, Kidsfun, Flite, Sparx, Boston and Mary Jane.
Opportunities: Relaxo has a strategy of mass appeal providing Value for money products. India’s share in global exports of footwear is just 2% as compared to China’s share of 40%. The government is considering proposals for investment of $16-17 billion (around Rs 1.25 lakh crore) to boost domestic production of air conditioners and its components, furniture and **leather footwear** recent announcement, while looking at options, including duty hikes, to reduce import dependence and push exports. Further investment of over $1 billion has been proposed to scale up the leather footwear business to attract global investors and improve the quality and branding exercise so that Indian exports, which have a meagre 3.5% share, can compete with rivals from China, Vietnam and Indonesia. Relaxo with strong brand has capability to scale up its operations and export revenue can surplus and improve the topline and bottomline in near future.
Risk: Despite lockdown started in end of March 2020 revenue has declined by 15% in YoY. Q1FY21 can be more challenging due to lower sale on account of lockdown extended in April and May as well. Expensive valuation as compare to their nearest rival Bata and other footwear brands.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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