Relaxo Footwears shares have made investors crorepati in last 10 years. An investment of Rs 1 lakh in Relaxo Footwears share price on September 9, 2009 would have grown to Rs 1.13 crore today. It hit all-time high of Rs 512.45 in trade today. However, the stock could not maintain its initial gain and closed 1.62% higher at Rs 491.25 on BSE. The mid cap firm's share price has risen from Rs 4.31 on September 9, 2009 to Rs 491 today.
Relaxo Footwears has outperformed its closest competitor Bata India by a huge margin over the years. While Relaxo logged a gain of nearly 11,304% in last 10 years, Bata India's share price could manage a rise of 1,790% during the same period. Gurugram-based Bata is among leading manufacturers of footwears in the country. Another footwear firm Liberty Shoes could gain only 19.96% during last 10 years. Mirza International, the manufacturer of popular shoe brand Red Tape could clock only 278.37% gain during the period.
Relaxo Footwears stock has gained 15.98% in the last one year and risen 33.35% since the beginning of this year. The footwear firm's strong earnings performance has helped the stock rise during the period. The company logged Rs 175.44 crore in net profit in last fiscal compared to a profit of Rs 37.69 crore for the fiscal ended March 2010.
In May this year, Relaxo announced bonus issue of shares in a ratio of 1:1. This meant one bonus equity share would be issued for one equity share held. The company fixed June 27, 2019 as the record date for bonus share issue. Those who owned shares on or before the record date were eligible to receive bonus shares. The firm had previously issued bonus shares in ratio of 1:1 in 2000 and 2015.
The ongoing economic slowdown does not seem to affect prospects of the firm in near term. Brokerage Sharekhan sees rise in volumes during festive season despite a slowdown in the discretionary environment.
"Relaxo posted a good set of numbers in Q1FY2020 with revenue and operating profit growing in double digits. We expect steady volume growth momentum in the near term and a gradual pick in the festive season, " the brokerage said.
The firm is also creating additional capacity to push revenue growth.
"The company is expected to enhance its current capacity of 7.5 lakh pairs per day to 8.5 lakh pairs per day which will add to revenue growth. Improving product mix and benign input costs as well as price revision measures would help the company expand its margins. We expect revenue and earnings to report a CAGR of 18% and 28%, respectively, over FY 2019-FY 2021. Proposed capacity expansion will help boost the volumes, thus, driving revenue growth," Sharekhan said.
The Delhi-based firm sells brands such as Hawaii, Flite, Sparx, Schoolmate, Elena, Casualz and Bahamas. The firm has manufacturing facilities at Bahadurgarh in Haryana, Bhiwadi in Rajasthan and Haridwar in Uttarakhand.