Relaxo Footwears Q2FY17: Firstcall are overweight for medium to long term investment

Firstcall India Equity | May 11, 2016, midnight


SYNOPSIS:

  • Relaxo Footwears Ltd is the largest footwear manufacturing company in India.

  • The company achieved a turnover of Rs. 4180.60 mn for Q2 FY17 as against Rs. 3863.30 mn in Q2 FY16, up by 8.21%.

  • During the 2nd quarter, net profit stood at Rs. 273.30 mn from Rs. 270.70 mn in the corresponding quarter ending of previous year.

  • During the 2nd quarter, EBIDTA stood at Rs. 559.10 mn as against Rs. 520.60 mn in the corresponding period of the previous year, up by 7.40%.

  • Profit before tax (PBT) stood at Rs. 392.00 mn in Q2 FY17 as against Rs. 390.70 mn in the corresponding quarter of the previous year.

  • EPS of the company stood at Rs. 2.28 in Q2 FY17 against Rs. 2.26 in the corresponding quarter of the previous year.

  • For 6 month period of F Y17, net profit stood at Rs.635.70 mn as compared to Rs. 630.44 mn for the Six month ended of previous year.

  • In H1 FY17, Net sales stood at Rs. 8518.10 mn as compared to Rs. 8399.20 mn in H1 FY16.

  • Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 23% over 2015 to 2018E, respectively.

 

OUTLOOK AND CONCLUSION:

  • At the current market price of Rs. 404.15, the stock P/E ratio is at 36.70 x FY17E and 31.96 x F Y18E respectively.

  • Earning per share (EPS) of the company for the earnings for F Y17E and FY18E is seen at Rs. 11.01 and Rs. 12.64 respectively.

  • Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 23% over 2015 to 2018B respectively.

  • On the basis of EV/EBITDA, the stock trades at 19.00 X for FY17E and 16.80 X for FY18E.

  • Price to Book Value of the stock is expected to be at 8.11 x and 6.59 x for FY17E and FY18E respectively.

  • Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.

 

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