Relaxo Footwears Q1 Results Review - Rich Valuations, Downgrade To 'Reduce': Dolat Capital

Dolat Capital Report

Relaxo Footwears Ltd.'s revenues increased by 10.7% YoY – came in line with our estimate. We believe that the strong growth momentum in Sparx continued during the quarter, which helped the company to post double digit growth.

During the quarter, gross margin expanded by 330 basis points. Lower raw material prices and rationalisation of high cost inventory during the last quarter would have helped the company to expand margins.

We have maintained our FY24/25E earnings per share estimates at Rs 11.8/15.0 as we believe that Relaxo has strength to post double digit revenue growth over a long run. Rich valuations.

Reduce with target price of Rs 980 (65 times FY25 earnings per share).

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