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IDBI Capital Report
Relaxo Footwears Ltd.’s Q4 FY22 result disappointed us on key parameters. Net sales in Q4 FY22 was impacted due to omicron variant, goods and services tax rate hike on footwear priced below Rs 1,000 and subdued demand due to high inflation, while Ebitda margin deteriorated mainly due to steep increase in raw material prices and extra support to trader towards GST rate differential on inventory.
Net sales declined by 6.6% YoY to Rs 6,982 million, while Ebitda was down by 31.8% YoY to Rs 1,111 million.
Relaxo Footwears reported net profit of Rs 629 million, lower by 38.4% YoY.
The management guided that sharp increase in prices has led to opting for alternate cheaper products. Given inflationary pressure, we have trimmed our Ebitda margin by 180 bps/150 bps over FY23E/FY24E.
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