Sharekhan's research report on Relaxo Footwears
Revenue grew by ~9% y-o-y, led by premiumisation, a favourable product mix and good growth across the brand portfolio. Benign input costs and a better product mix drove up gross margins by 504 bps, while comparable OPM rose by ~180 bps to 15%, owing to operating efficiencies; effect of Ind AS 116 on PBT stood at Rs. 2.2 crore. Sustained volume growth, premiumisation, cost efficiencies and wider presence in untapped markets and a higher duty on imported footwear will drive operating performance in the coming quarters.
Outlook
We broadly maintain our estimates for FY2020, FY2021 and FY2022 and maintain a Buy rating on the stock with a revised PT of Rs. 845.
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