1. At a Glance
Over the past five years, Relaxo Footwears has grown sales at a 3% CAGR to ₹2,790 cr and delivered a 5-year profit CAGR of –6%, with ROCE down from 30% to 11%. Despite premium brands like Sparx, the stock trades at 73× FY25 EPS of ₹6.84—well above a fair-value band of ₹175–₹262.
2. Introduction with Hook
- Imagine slippers and canvas shoes making you richer—Relaxo tried, but growth sputtered.
- From a ₹2,653 cr sales peak in FY22 to ₹2,790 cr in FY25, it’s less “striding ahead” and more “hobbling forward.”
- At ₹501/share, you’re paying ₹73 for every rupee of earnings—shoe-shiners charge less.
3. Business Model (WTF Do They Even Do?)
- Product Mix: Rubber/EVA slippers (Flite, Bahamas), canvas & sports shoes (Sparx), school shoes.
- Distribution: 100,000+ retail outlets via distributors, modern trade, e-commerce.
- Value Leadership: #1 in value segment, targeting cost-conscious ₹200–₹600 price range.
- Exports: Small but steady presence in Middle East and Africa.
4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY20 | FY25 | 5-Yr CAGR |
|---|---|---|---|
| Sales (₹ cr) | 2,296 | 2,790 | +3% |
| Net Profit (₹ cr) | 175 | 170 | –1% |
| OPM | 14% | 14% | ±0 pp |
| ROCE | 26% | 11% | –15 pp |
| ROE | 26% | 8% | –18 pp |
- Sales: Flat, with a dip in FY24 reflecting weak consumer demand.
- Profits: Fell in recent years—FY25 net profit ₹170 cr vs ₹200 cr in FY24.
- Margins: Holding ~14%, thanks to tight cost control on rubber and synthetic inputs.
5. Valuation – Is It Cheap, Meh, or Crack?
- FY25 EPS: ₹6.84
- Current P/E: 73× (₹501/₹6.84)
- Peer P/E Band: Campus Activewear ~71×; Bata India ~67×; Metro Brands ~91×.
- Fair Value Range (15–20× EPS):
- Low: 15 × ₹6.84 ≈ ₹103
- High: 20 × ₹6.84 ≈ ₹137
- Conclusion: At ₹501, Relaxo sits well into luxury pricing territory—far above reasonable multiples.
6. What’s Cooking – News, Triggers, Drama
- Volume Clarification (Jul 8, 2025): Exchange sought clarity on unusual trading—company confirmed no undisclosed material info.
- Management Moves: VP Sales and VP Marketing resignations announced for late-2025—could disrupt go-to-market strategy.
- New Launches: Sparx youth collection and school-shoes JV pipeline—yet to show material sales impact.
7. Balance Sheet – How Much Debt, How Many Dreams?
- Borrowings: Modest ₹213 cr vs ₹205 cr (FY24), supporting working capital.
- Reserves: Grew to ₹2,073 cr from ₹1,976 cr—buffer against slow growth.
- Total Liabilities: ₹2,762 cr vs ₹2,714 cr—largely driven by trade payables and other current liabilities.
- Fixed Assets: Stable around ₹1,345 cr, reflecting limited capex.
8. Cash Flow – Sab Number Game Hai
- Operating CF: Strong ₹406 cr in FY25 (vs ₹235 cr FY24), aided by tight receivables.
- Investing CF: –₹262 cr, mainly working-cap and minor capex.
- Financing CF: –₹162 cr (dividends & debt repayment).
- Net Cash Flow: –₹18 cr, nearly flat—no cash crunch, but no surplus either.
9. Ratios – Sexy or Stressy?
| Ratio | FY20 | FY25 |
|---|---|---|
| Debtor Days | 35 | 41 |
| Inventory Days | 130 | 177 |
| Payables Days | 58 | 63 |
| Cash Conversion Cycle (days) | 107 | 155 |
| Working Capital Days | 56 | 103 |
- Tight Receivables but inventory pile-up—likely overstocking to chase moderate demand.
- Long CCC at 155 days strains supplier terms.
10. P&L Breakdown – Show Me the Money
- Revenue Split: Slippers & flip-flops ~50%, sports & canvas ~35%, school & others ~15%.
- Cost Structure: Material ~60%, labor/overheads ~20%, other expenses ~6%.
- Other Income: ₹27 cr, negligible buffer.
- Depreciation & Interest: ~₹179 cr combined, manageable but reduces free cash.
11. Peer Comparison – Who Else in the Game?
| Company | CMP (₹) | P/E | ROCE | MCap (₹ cr) |
|---|---|---|---|---|
| Metro Brands | 1,172 | 91 | 20 | 31,965 |
| Bata India | 1,239 | 67 | 14 | 15,959 |
| Relaxo Footwears | 501 | 73 | 11 | 12,492 |
| Campus Activewear | 283 | 71 | 20 | 8,657 |
| Redtape | 137 | 45 | 22 | 7,592 |
- Insight: Relaxo’s ROCE lags peers; multiples suggest high expectations on a mid-single-digit growth story.
12. Miscellaneous – Shareholding, Promoters
- Promoters: 71.27% (steady over five years).
- FIIs: ~3.1%; DIIs: ~10.6%; Public: ~15.1%.
- KMP Changes: Senior leadership churn could hamper execution.
13. EduInvesting Verdict™
Relaxo Footwears is India’s value-segment behemoth, but a near-flat top line, profit slump and stretched cash cycle leave little wiggle room. At ₹501, the market’s betting on a growth sprint that hasn’t shown up—so today’s price feels more “designer dud” than “value steal.”
✍️ Written on July 12, 2025
Tags: Relaxo Footwears Ltd, 5-Year Recap, Footwear, Fair Value, Financial Analysis
