1. At a Glance – Chappal King with a Valuation Hangover
Relaxo Footwears is India’s undisputed chappal samrat — selling 17.75 crore pairs in FY25, running 9 factories, supplying 70,000+ retailers, and still managing to look tired on the profit line. The stock today sits at ₹391, down ~28% over 1 year, while the market cap of ₹9,765 Cr stubbornly refuses to cheapen. Q3 FY26 revenue came in at ₹668 Cr (flat YoY), but PAT dropped 19.6% YoY to ₹26.5 Cr, reminding investors that footwear may be comfortable, but margins are not.
Operating margins slipped to 10% in Q3, EPS cooled to ₹1.07, and yet the stock trades at ~58x TTM earnings — which is rich enough to wear Italian loafers, not EVA slippers. Add ROE of 8.3%, ROCE of 11.2%, and muted volume growth, and you start wondering: is this a growth story… or a legacy brand stuck in Crocs-era confusion?
2. Introduction – When Market Leadership Doesn’t Translate to Market Love
Relaxo is what every Indian household knows but Dalal Street keeps side-eyeing. From bathroom slippers to school shoes, this company has walked every Indian lane imaginable. It dominates the value footwear segment, owns mass brands like Sparx, Flite, Relaxo, Bahamas, and still controls pricing power — at least theoretically.
But FY23–FY25 told a different story. Raw material inflation hit margins in FY23. Wage hikes slapped Q1 FY25. Volume de-growth followed in FY25 (17.75 Cr pairs vs 19.49 Cr). And management chose absorption over aggression, refusing to pass
costs to customers. Noble? Yes. Profitable? Not immediately.
Meanwhile, newer peers are growing faster, asset-light players are flexing ROCEs, and Relaxo is stuck explaining why India’s largest footwear maker grows sales at just ~3% CAGR over 5 years. That’s not running — that’s limping in bathroom slippers.
So the big question: Is this a cyclical margin reset… or structural slowdown in a mature business?
3. Business Model – WTF Do They Even Do (Besides Making Chappals)?
Relaxo manufactures non-leather footwear — rubber, EVA, canvas, sports and casual footwear — across all price points below premium leather brands.
Brand Strategy (aka Chappal Segmentation 101):
- Sparx (40%) – Youth, sports, aggression, attitude
- Flite (37%) – Semi-formal & daily wear
- Hawai/Bahamas (23%) – Mass slippers, Bollywood vibes
Distribution is old-school but effective:
- 550 distributors
- 70,000+ retailers
- 406 Exclusive Brand Outlets
- Exports to 36 countries
- E-commerce ~10% of revenue
Manufacturing capacity stands at ~10.5 lakh pairs/day, but utilization is just 55% in FY25 — meaning factories are half awake. Fixed costs don’t like naps, and neither do margins.
So
