Sell

Relaxo Footwears’ (RLXF) 1QFY26 results reflect persistent volume pressure amid restructuring of distribution, muted demand and heightened competition.

Relaxo Footwears (RLXF) reported another weak quarter with EBITDA declining 7% YoY (6% miss) as volume (-10% YoY) was impacted by overall muted demand and restructuring of its distribution model.

Relaxo Footwears (RLXF) reported another weak quarter with revenue declining 6% YoY due to a 15% YoY dip in volume.

Relaxo Footwears Ltd.'s (Relaxo) Q4FY21 result was marginally above estimates on key parameters. Strong demand traction for mass product supported sales volume in Q4, while better product mix and savings in promotional expenses as well as prudent cost management led to EBITDA margin improvement. Net sales increased by 38.3% YoY to Rs7,477mn, while EBITDA was higher by 69.3% YoY to Rs1,629mn. The company reported net profit of Rs1,022mn, higher by 97.2% over Q4FY20. After a robust Q4FY21, near term business may get impacted due to second wave of Covid-19 and statewide lockdown, however, we believe that Relaxo will continue to outperform the organized...

Volumes Picking Up Gradually, but We Expect Stress to Remain in FY22E: Recovery is clearly visible from the latest two quarterly numbers, with YoY revenues in Q2FY21 and Q3FY21 coming in at 51% and 74% of the numbers seen in the corresponding quarters in the previous year.

A changing business model - BATA in the process of re inventing itself: BATA over the last few years has focused on higher value products and re-inventing itself to cater to the younger and urban population with the aggressive addition of stores and the introduction of red collection and increased focus on women footwear.

A changing business model - BATA in the process of re inventing itself: BATA over the last few years has focused on higher value products and re-inventing itself to cater to the younger and urban population with the aggressive addition of stores and the introduction of red collection and increased focus on women footwear.

Valuation and Risks: Good brand recognition, market share and being amongst the very few companiesin the listed space in footwear, the company would continue to hold premiumvaluations.

Bata's Q1FY21 was largely impacted by extended lockdowns across the country till the first week of May and significant disturbances during the remaining period led to the contraction of revenue and Gross Margins for Bata India. Revenue for Q1FY21 declined by 85% YoY to Rs 135 cr

We recommend a SELL on Bata India with a Target Price of Rs 1116 downside of 10% from CMP of Rs. 1240 and Stop Loss Rs 1302.

Q1FY21 revenue de-grew sharply by ~85% YoY owing to lock-down in April & May, and nil production due to Covid-19 pandemic. Usually Q1 is the strongest quarter on account of high demand due to school openings. However, the schools are now closed due to lock-down. Despite gradual relaxation in lockdowns, prevailing uncertainties are impacting the discretionary demand. Currently BIL's ~85% stores are open and the company has achieved ~35-40% of the pre-Covid business levels as per management. To generate demand in the current scenario, BIL has launched two new products to suit work at home, strengthening E-commerce channel, rolled out two new...

Bata generates ~50% of the revenues from premium category footwears (MRP> Rs 1000+) and largely operates through its wide retail network contributing ~84% to the revenues. We, Initiate coverage with SELL rating on the stock with a target price of Rs 1150 as we value the stock at 40x P/E on its FY23

Valuation and Risks:A cash rich and clean balance sheet, management with excellent track record and high brand recognition will help sustain valuations.

Though significant negative impact is expected on sales; costs like rent, other operation related costs would not decline in the same proportion. Hence Bata would take abnormally longer time to restore...

Khadim's results were below our estimate in Q4FY19. The revenue grew 5.2% - below the management expectation, due to (1) 4% decline in retail business (2) a deceleration in SSSG, and (3) absence of price hikes in the quarter. COCO stores SSG stood at +2.5% while franchise business exhibited -5% de-growth in Q4FY19 due to decline in footfalls. We have reduced our EPS estimates from `26.7 and `30.1 for FY20E and FY21E, to `14.6 and `17.2, respectively. We believe the company will take more time to recover from the deceleration in volume growth. Consequently, we...

Hiccups in wholesale business: The transition to GST has had an industry-wide impact, with destocking at the wholesale level. BATA too witnessed subdued offtake in 1HFY18 on account of non-compliant wholesalers, which resulted in a ~12% YoY decline in wholesale business in 1HFY18. However, the retail business grew ~9% YoY and since retail contributes over 80% of overall revenue, BATA managed to post an overall growth of 6% YoY in 1HFY18. Growth was also aided by an early festive season. With GST netted off from the topline, we expect similar growth of 6% YoY in 2HFY18....

Results below estimates: Revenue declined 1.5% YoY to INR6.7b (our estimate: INR7.8b). EBITDA margin was flat at 12.2% (our estimate: 13.7%). Gross margin expanded 210bp YoY to 50.1%, but the gains were partly offset by increase of 190bp in other expenses. EBITDA declined 1.7% YoY to INR820m, but adjusted PAT grew 6.3% YoY to INR503m (our estimate: INR627m) due to lower depreciation (INR162m v/s INR194m) and higher other income (INR110m v/s INR78m).Motilal Oswal value the stock at INR446 (30x FY18E EPS), implying 19% downside. They downgrade stock rating to Sell.

Revenues and margins disappoint: Revenues at Rs 4.96bn fell 1% yoy. EBITDA margins at 9.6% (490bps yoy) were300bps below expectations; gross margins improved by 26bps (would include positive impact of excise duty reduction in the July 2014 budget). Margins...

bn and will only grow rapidly as the user base grows from the existing 30 mn online shoppers. Footwear as a segment appeals to buyers as it gives access to the brands and especially foreign brands which hitherto they didn't have much access to. Moreover, the...