Buy Relaxo Footwears, target price Rs 1350: Axis Securities

Axis Securities has buy call on Relaxo Footwears with a target price of Rs 1350. The current market price of Relaxo Footwears is Rs 1314.15. Time period given by analyst is one year when Relaxo Footwears Ltd. price can reach defined target.

Relaxo Footwears Ltd., incorporated in the year 1984, is a Mid Cap company (having a market cap of Rs 32662.83 Crore) operating in Leather sector.

Relaxo Footwears Ltd. key Products/Revenue Segments include Footwear, Scrap, Others, Wind Power, Export Incentives and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Standalone Total Income of Rs 748.99 Crore, up 3.81 % from last quarter Total Income of Rs 721.50 Crore and up 10.80 % from last year same quarter Total Income of Rs 675.98 Crore. Company reported net profit after tax of Rs 70.10 Crore in latest quarter.

Investment Rationale
Relaxo has maintained healthy operating cashflows and asset turns (~3x) while robust EBITDA Margins have made it a capital-efficient business over the years. The brokerage believes a strong balance sheet with zero net debt and efficient working capital should help Relaxo prosper in the long run. We expect the company to be the beneficiary of market share gains as most unorganized players, mainly dominant in the mass and value category, would be facing liquidity constraints. It maintains a positive stance on the stock from a long-term perspective in light of immense growth potential, as it maintains BUY rating with revised TP of Rs 1,350/share assigning a target multiple of 57x PE to FY24E EPS.

Promoter/FII Holdings
Promoters held 70.78 per cent stake in the company as of 31-Dec-2021, while FIIs owned 3.81 per cent, DIIs 7.08 per cent.