Relaxo Footwears - Q4FY21 First Cut - ICICI Direct

(CMP: Rs. 1014, MCap: Rs. 25209 crore)

Relaxo Footwears reported yet another healthy quarter with sustained demand for slippers/open sandals (80% of product portfolio).

Q4FY21 Earnings Summary

- Revenue for the quarter increased by 38% YoY to Rs. 747.7 crore (up 17% QoQ, 2-year CAGR: 8%). Owing to its strong distribution reach encompassing mainly tier II/III cities, Relaxo has witnessed better traction in revenue recovery. Also, demand for low ticket size products such as slippers/open sandals (~80% of product portfolio) has been more profound

- Gross margins contracted 300 bps YoY to 56.8% on account of increase in RM prices. However, on account of positive operating leverage and tight leash on operating overheads (employee and other expense as a % to sales declined by 171 bps and 525 bps YoY), EBITDA margins expanded significantly by 400 bps YoY to 21.8% (Q3FY21: 22.1%). Absolute EBITDA grew by 46% YoY (10% QoQ) to Rs. 162.9 crore

- On account of healthy operational performance and higher other income (up 73% YoY to Rs. 6.9 crore) PAT nearly doubled YoY (up 13% QoQ) to Rs. 102. 2 crore

- Company has declared dividend Rs. 2.5/share

Despite a tough start to the financial year (Q1 revenues declining by 44%), company has displayed a resilient performance in FY21 with PAT growth of ~29% YoY. Company's balance sheet too has strengthened significantly with cash & investments at an all-time high of Rs. 345 crore vs. Rs. 4 crore in FY20 (FCF generation: Rs. 348 crore vs. Rs. 154 crore). Resilient performance during challenging times builds our confidence in the business model and ability to gain market share.

We would be revisiting our estimates and coming out with a detailed update.

Shares of RELAXO FOOTWEARS LTD. was last trading in BSE at Rs.1027.65 as compared to the previous close of Rs. 1013.15. The total number of shares traded during the day was 130076 in over 9586 trades.

The stock hit an intraday high of Rs. 1079 and intraday low of 984.7. The net turnover during the day was Rs. 133701575.

Source : Equity Bulls

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