Relaxo Footwears: Quarter3 FY22 Key Inputs

(A) Last 4 Quarters Performance – Year on Year

(All Amounts in INR Crore)

Relaxo stock update with last 4 quarters performance

Key Margins – Quarterly

Relaxo stock update with margins analysis

(B) Quarter on Quarter Performance

Relaxo stock update with quarter results

(C) 9 Months Trailing Performance

Relaxo stock update with 9 months financial performance analysis

(D) Operating Highlights – Quarter 3 FY22

Relaxo footwears sold during last 5 quarters
Relaxo footwears average realisation during last 5 quarters

(E) Concall Highlights – November 9, 2021

  • EBITDA decreased mainly due to steep increase in raw material prices, enhancement of marketing, brand promotion and other administrative expenses as compared to corresponding period of last year. Then, the raw material prices were extremely low.
  • During this year, 15% price hike taken (weighted average across portfolio)
  • Demand is being affected because people don’t want to add more stock. They just want to reduce their inventory in the pipeline because there have been two price increases. Third price hike also been done.
  • So, even in the market there are 2-3 MRPs floating. Inventory in the pipeline is reducing. So, for the time being there is some effect on the demand. And in the coming times when the price and stock will reduce then, demand will also improve.
  • 17% stable margin expected by management.
  • Decline in import from China is likely to be advantageous for the company.

Key inputs on Business

  • 90% of the portfolio is of the price upto Rs 1000/-.
  • The current capacity of Relaxo Footwars is 10 Lakh pair per day. This is after commissioning of Bhiwadi manufacturing facility. The unit commissioned in November 2021 with additional capacity of 1.5 Lacs pair per day.
  • Business contribution from retail (EBOs) is 6% and will continue as distribution model only going ahead. The company’s expansion focus is from MBOs.

Outlook on pricing in long term

Prices will increase but it will increase at regular pace in a sustained manner and won’t increase substantially. This is because, the company serves masses and 85% business is for masses. So, the ratio will remain what it is. It will have some effect, some improvement.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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