Broker’s call: Relaxo Footwears (Sell)

Target: ₹718

CMP: ₹797.35

Relaxo Footwears (RLXF), a Fortune 500 (India) company, has established itself as a pioneer in the mass segment (50 per cent+ share of total footwear industry), open footwear category, offering quality products at affordable prices. The company’s product portfolio includes rubber-based hawai slippers, EVA slippers, PU slippers, casual shoes, sports shoes, sandals, and school shoes across all customer segments in the mass & economy price categories.

Being the market leader in the open footwear category and deriving around 80 per cent revenues from the same has enabled RLXF to capture a volume share of about 7-8 per cent (about 20 per cent share in organised, non-leather footwear). A resurgence in open footwear demand over the last 15-18 months (grown faster than closed footwear) has seen RLXF’s volumes grow by 14 per cent YoY in FY24.

RLXF has built a robust position in the mass open footwear segment with a vast presence covering both trade & D2C channels. Notably, RLXF is the only company among its peers to manufacture 100% of its products in-house. We reckon RLXF should benefit from the premiumization trend with increasing penetration of the “Sparx” & “Flite” brands.

We initiate coverage on Relaxo Footwears Ltd however, owing to premium valuations we assign a Sell rating to the stock.