At a Glance
Relaxo Footwears reported Q1 FY26 numbers that made investors sigh – revenue fell 12.5% YoY to ₹654 Cr, but PAT managed to grow 10.2% YoY to ₹49 Cr, thanks to cost controls. The stock at ₹483 is still trading at a jaw-dropping 68.6x P/E, as if every pair of slippers is made of gold. ROE and ROCE are stuck in single digits, making this once market darling a case of “value” only in its product segment, not stock price.
Introduction
Relaxo is like that dependable old slipper in your house – always there, but hardly exciting. Despite being India’s largest non-leather footwear maker with brands like Sparx, Flite, and Bahamas, the company’s financial growth is crawling slower than a kid avoiding school on Monday. Sales growth in the last five years? A depressing 2.9% CAGR. Profit growth? Negative. Yet, investors continue to pay luxury valuations. Welcome to the paradox called Relaxo Footwears Ltd.
Business Model (WTF Do They Even Do?)
Relaxo manufactures value segment footwear – slippers, sandals, sports shoes, and school shoes. Its brands dominate Tier-2/3 cities and rural India. Distribution channels include:
- Retailers (through distributors)
- Own retail outlets (Relaxo-exclusive stores)
- E-commerce & modern trade
- Exports
The model is simple: make affordable footwear, sell at volume. But the segment is highly competitive, with Bata, Campus, RedTape, and Metro eating market share. Price wars and rising raw material costs keep margins flat.
Financials Overview
Q1 FY26 Performance:
- Revenue: ₹654 Cr (-12.5% YoY)
- EBITDA: ₹99 Cr (EBITDA Margin 15%)
- PAT: ₹49 Cr (+10.2% YoY)
- EPS: ₹1.96
FY25 Highlights:
- Revenue: ₹2,790 Cr (-4%)
- PAT: ₹170 Cr (-15%)
- Margins: 14% OPM
Revenue decline is concerning, but margin resilience saved the quarter.
Valuation
1. P/E Method
Industry P/E ~40x
EPS (TTM) ₹7
Fair Value = 40 × 7 = ₹280
2. EV/EBITDA
Peer average EV/EBITDA ~20x
EBITDA FY25 ₹382 Cr
Fair Value ≈ ₹350
3. DCF
Assuming 5% growth, 10% discount rate
Intrinsic Value ≈ ₹320
Fair Value Range: ₹300 – ₹350
(Current price ₹483: overpriced by 30-40%)
What’s Cooking – News, Triggers, Drama
- Q1 FY26: PAT saved by cost controls, revenue pressure persists.
- Resignation of Company Secretary – governance stability questioned?
- E-commerce growth potential, but competitors are aggressive.
- Expansion into premium footwear remains slow.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 2,762 |
| Liabilities | 664 |
| Net Worth | 2,098 |
| Borrowings | 213 |
Comment: Balance sheet is solid, low debt, but returns are lackluster.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Ops CF | 400 | 235 | 406 |
| Investing CF | -258 | -99 | -262 |
| Financing CF | -138 | -106 | -162 |
Take: Cash from operations is strong, but heavy reinvestment drags free cash.
Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 8.3% |
| ROCE | 11.1% |
| P/E | 68.6 |
| PAT Margin | 7% |
| D/E | 0.1 |
Verdict: Expensive stock with pedestrian returns – classic market hype.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 2,783 | 2,914 | 2,790 |
| EBITDA | 341 | 411 | 382 |
| PAT | 154 | 200 | 170 |
Comment: Revenue almost flat for years; profits shrinking.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Metro Brands | 2,507 | 351 | 95 |
| Bata India | 3,489 | 242 | 64 |
| Relaxo | 2,696 | 175 | 69 |
| Campus Active | 1,593 | 121 | 68 |
Roast: Investors value Relaxo like a luxury brand, but it sells slippers for ₹200.
Miscellaneous – Shareholding, Promoters
- Promoters: 71.3% (stable)
- FIIs: 2.9% (falling)
- DIIs: 9.9%
- Public: 15.9%
Promoter holding is high, but FIIs exiting shows lack of confidence.
EduInvesting Verdict™
Relaxo’s financials are as flat as its slipper soles. The company has strong branding and distribution, but growth is stagnant, margins are capped, and valuation is absurd. With rising competition, market share risks, and weak ROE, the stock feels like wearing bathroom chappals to a marathon – not ideal.
SWOT Analysis
- Strengths: Strong brand recall, dominant rural presence, debt-free balance sheet.
- Weaknesses: Low growth, poor returns, high valuation.
- Opportunities: E-commerce, premiumization.
- Threats: Competition (Bata, Campus, Metro), raw material inflation.
Final Word: Great products, but the stock is walking barefoot on broken glass. Unless growth revives, valuations are unsustainably high.
Written by EduInvesting Team | 30 July 2025
SEO Tags: Relaxo Footwears, Q1 FY26 Results, Consumer Durables, Footwear Stocks
