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18.08.2019

AAKASHAYA PATRA EXCLUSIVE STOCK FOR INVESTMENT:
Relaxo Footwear (CMP Rs. 426.00)
ENTRY LEVEL: 400 to 425 STOP LOSS: 300 TARGET : 650 TIME FRAME: 18-24 MONTHS


Relaxo has reported better Q1 numbers.Its net profit rose 8.3% to Rs 49.75 crore on 15.4% rise in net sales to Rs 648.30 crore in Q1 June 2019 over Q1 June 2018. EBITDA increased 28% to Rs 106 crore in Q1 June 2019 from 83 crore in Q1 June 2018.The EBITDA margin grew to 16.4%. The company reported that it has proposed to increase the capacity of Bhiwadi plant, Rajasthan plant. The company is proposing to add capacity of 1.00 Lakh pairs. The capacity will be added in three years with a total investment of Rs 90 crore for the installation of plant. Relaxo Footwear is one of the leading brand in footwear industry. The company is expanding its reach in southern and western India. Since the product range primarily includes economically priced footwear, a significant chunk of this growth will be led by higher volumes. Celebrity-backed endorsements may gain momentum as advertisement budgets increase and product launches are undertaken periodically. Free cash flows are slated to improve since there will be no significant capital outlays over the next two-to-three years. Existing distribution framework is being consolidated to save costs. By virtue of these steps, margins are expected to move up. Relaxo stock price has limited downside risk from current levels.

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