Relaxo Footwears share price has delivered 7, 694% to investors during last 10 years. An investment of Rs 1 lakh in Relaxo Footwears share price on October 4, 2019 would have grown to Rs 77.91 lakh today. The mid cap firm's share price has risen from Rs 7.24 on October 4, 2019 to Rs 564.10 today. Relaxo Footwears share price hit its all-time high today after the firm logged strong earnings for the quarter ended September 2019. Relaxo Footwears share price rose up to 15.06% to an all-time high of Rs 625 compared to the previous close of Rs 543.20. The stock opened with a gain of 14.23% at Rs 620.50 on BSE.
The mid cap stock has risen 82% to its intra day high today since February 21 this year when it hit a 52-week low of Rs 343.50 on BSE. However, the stock could not maintain its initial gain and closed 3.85% higher at Rs 564.10 on BSE.
The footwear firm reported a 78.76% rise in Q2 net profit to Rs 70.54 crore compared to Rs 39.46 crore in the corresponding quarter of previous fiscal. Earnings per share (EPS) rose 74% to Rs 2.84 in Q2 compared to Rs 1.63 EPS in corresponding quarter of previous fiscal. Relaxo reported net sales of Rs 621.77 crore during the quarter ended September 30, 2019 as compared to Rs 545.19 crore during the quarter ended September 30, 2018.
Relaxo Footwears has outperformed its closest competitor Bata India by a huge margin over the years. While Relaxo logged a gain of nearly 7,694% in last 10 years, Bata India's share price could manage a rise of 1,946% during the same period.
Gurugram-based Bata is among leading manufacturers of footwears in the country. Another footwear firm Liberty Shoes could gain only 43.96% during the last 10 years. Mirza International, the manufacturer of popular shoe brand Red Tape could clock only 303.32% gain during the period.
The stock has gained 42.86% in last one year and gained 53.64% since the beginning of this year. In last one month, the stock has risen 14.55%. 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. It clocked sales of 18.39 crore footwears in 2018-19 compared to 8.42 crore pairs in 2009-10 fiscal. Total revenue rose to Rs 2,305 crore in last fiscal compared to Rs 557.76 crore in 2009-10 fiscal. Return on capital employed rose to 23% in 2018-19 fiscal compared to Rs 557.76 crore in 2009-10 fiscal. Debt to equity ratio fell to 0.8 in last fiscal compared to 1.31 in 2009-10 fiscal.
The firm has reduced its long-term borrowings to zero in last fiscal compared to Rs 102.95 crore in 2009-10 fiscal.
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.
Relaxo announced a bonus issue in 2015 in the ratio of 1:1. The share has been quoting ex-bonus from July 1, 2015. The bonus issue was announced on May 11, 2015. On August 23, 2000, the company announced a bonus issue of 1:1 and the stock turned ex bonus on February 9, 2001. It announced a stock split on July 27, 2013 from Rs 5 to Rs 1 and quoted an ex split basis from November 22, 2013.
The ongoing economic slowdown does not seem to affect prospects of the firm in near term. After the firm announced its Q1 earnings in current fiscal, brokerage Sharekhan projected 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.
By Aseem Thapliyal