Buzzing Stock: Relaxo Footwear

Relaxo footware has been buzzing on bourses for more than 3 years now. The returns are above average and indeed the stock has had dream run.

Relaxo footwear is one of India’s large footwear company. Relaxo Footwear Ltd has presence in the lucrative and fast-growing footwear category, which is expected to grow in line with the Indian consumption industry (a combination of both staple as well as discretionary spending). The Indian footwear industry is expected to grow at a compounded annual growth rate (CAGR) of 12-15% over the next five years. Low penetration, favourable demographics and rising per capita income has helped boost the demand for footwear, thereby fuelling the growth of the footwear market.

Relaxo was incorporated in 1984 and is the largest maker of slippers in India with its flagship brand Hawaii. The company caters to customers from across socio-economic and demographic strata with its four top-of-the-mind-recall brands, viz, Hawaii, Sparx, Flite and Schoolmate. Its flagship brand, Hawaii, is the leader in the rubber slipper market, particularly in the north, while its other brands also command a significant share of their respective markets.Relaxo Footwears Ltd (Relaxo) headquartered in Delhi, is one of India's most quality conscious and progressive footwear company. It maintains a fine combination of comfort, style and workmanship and is embarking upon appreciable growth plans for the future. The Company is engaged in production and trading of footwear. Its collection includes formal shoes, sports shoes, canvas shoes, sandals, floaters, slippers, school shoes, fashionable sandals and shoes for ladies.

Rich experience of over 3 decades:-

Relaxo stepped into the footwear industry in 1976. It started off with the manufacture of Hawaii slippers and subsequently diversified into manufacturing casuals, joggers, school and leather shoes.. The company has seen a spurt in revenue recently due to establishment of SPARX/FLITE BRANDS in the market and visibility of full range of Relaxo Products through its increasing Retail outlets. This shows clear intent of company to expand its reach and grow using its 3 decades of its rich experience.

The past performance of the stock is extraordinary. For past 1 year the stock has delivered a return of 155 percent. The stock is trading at 56.63 multiple. On YTD basis the stock has given 75 percent returns. On a 3 year basis the stock has given an annualized return of 112 percent. The stock is trading at a premium to its peer company BATA which is trading at a PE multiple of 36. Investors are well advised to track this counter which is showing good growth.