Relaxo Footwear (RELAXO)

FairStock Score: 10/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Low leverage: Debt/Equity of only 0.10 provides a strong financial cushion.
• High promoter holding of 71.27% aligns management interests with minority shareholders.
• Substantial operating scale with latest quarter sales of ₹668 Cr.
• Business remains profitable despite a weak quarter, with net profit of ₹27 Cr.

Concerns

• Highly demanding valuation: P/E of 51.64 with profit growth of -19.60% and PEG of 303.76.
• Mediocre capital efficiency: ROE of 8.35% and ROCE of 11.22% do not justify a P/B of 3.83.
• Stagnant growth: Sales growth of just 0.17% and a Piotroski F-score of 4/9 point to deteriorating fundamentals.
• Thin downside support: Dividend yield of only 0.86% offers negligible compensation while waiting.

AI Analysis

At first glance, Relaxo is the kind of footwear franchise that would appeal to a value investor's instinct—low debt, high promoter skin in the game, and a large operating base. But the numbers force me to pause. The stock trades at ₹309.56, a market cap of ₹8,666 Cr, and a P/E of 51.64. That is no bargain for a company whose sales grew just 0.17% and whose profits fell 19.60%. Graham taught me to use earnings power, not hope. Current trailing earnings justify a P/E of 51 only if growth is strong, yet the PEG ratio sits at 303.76—essentially saying the market is paying for growth that is invisible. The latest quarter's net profit of ₹27 Cr on sales of ₹668 Cr is weak; if that is the new normal, the stock is even more expensive. Return on equity is only 8.35% and ROCE is 11.22%. A P/B of 3.83 for such modest returns means you are paying a big premium over book for mediocre capital allocation. The Piotroski F-score of 4/9 reinforces my concern: financial health is not improving. To be fair, there are strengths: debt/equity of 0.10 means the business is not leveraged to failure, promoter holding of 71.27% aligns interests, and the stock is well below its 52-week high of ₹526. Still, at today's price, I see no margin of safety. This is a slow grower, not a stalwart; it needs either a meaningful earnings recovery or a much lower price before I can get interested. I would rather watch and wait than overpay for a business that is standing still.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer