Relaxo Footwears Q4 Results Review: Dolat Capital Upgrades To 'Reduce' Given Sharp Stock Correction

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Dolat Capital Report

Relaxo Footwears Ltd.’s Q4 FY25 profitability was ahead of our estimates. Revenue de-grew by 7.0% YoY due to a 10% decline in volume amid a challenging demand environment, especially in the mid-range. However, growth is expected to accelerate with improved demand.

Gross margin contracted by 540 bps to 54.9%, aided by higher raw material cost. Nevertheless, better operational efficiencies helped maintain Ebitdam at 16.1%, flat YoY. The company continues to prioritize cost optimization initiatives across its manufacturing facilities and digital initiatives, which are expected to enhance operational efficiencies and drive improved profitability in the ensuing quarters.

Though Q4 profitability was ahead of our estimate, we have downward revised our EPS estimates for FY26/27E by 3.3/4.9% to Rs 8.6/10.0 to factor in demand slowdown and expected gradual improvement by H2 FY26E.

Valuing the stock at 45x FY27E we arrive at a target price of Rs 451. Given a sharp correction in stock price, we upgrade the stock to ‘Reduce’ rating.

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