Buy Relaxo Footwears, target price Rs 1120: Axis Securities

Axis Securities has buy call on Relaxo Footwears with a target price of Rs 1120. The current market price of Relaxo Footwears is Rs 1012.6. Time period given by analyst is 9 months when Relaxo Footwears Ltd. price can reach defined target.

Relaxo Footwears Ltd., incorporated in the year 1984, is a Mid Cap company (having a market cap of Rs 25191.32 Crore) operating in Leather sector.

Relaxo Footwears Ltd. key Products/Revenue Segments include Footwear, Scrap, Others, Wind Power, Export Incentives and Other Operating Revenue for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Standalone Total Income of Rs 671.32 Crore, down -4.66 % from last quarter Total Income of Rs 704.10 Crore and up 33.62 % from last year same quarter Total Income of Rs 502.40 Crore. Company reported net profit after tax of Rs 38.67 Crore in latest quarter.

Investment Rationale
MSIL has a stronghold in the entry-Level segment and with recent launches in the compact (All-New Brezza) & mid SUV (Grand Vitara) segment it seems to be moving towards regaining lost market share by FY25E. It expects a rise in demand from new launches along with upgradation of existing product portfolio, softening commodity inflation and improving ECU shortages to support recovery in the margins. The company would gain further market share, driven by an expected shift towards petrol, CNG and hybrid vehicles. Looking at the existing order book the brokerage expects the company’s volumes to witness strong growth H2FY23 onwards.

Promoter/FII Holdings
Promoters held 70.78 per cent stake in the company as of 30-Jun-2022, while FIIs owned 3.15 per cent, DIIs 7.06 per cent.