💰 Financial Performance

Revenue Growth by Segment

Revenue from operations for H1 FY26 stood at INR 1,283.03 Cr, a decline of 10.12% compared to INR 1,427.56 Cr in H1 FY25. Q2 FY26 revenue was INR 628.54 Cr, down 7.48% YoY from INR 679.37 Cr, primarily due to demand softness in the mass market segment.

Geographic Revenue Split

Not disclosed in available documents, though the company mentions operations in North, South, East, and West markets with a focus on clearing old inventory in non-North regions by December 2025.

Profitability Margins

Net Profit Margin for H1 FY26 improved to 6.63% from 5.68% in H1 FY25, an increase of 95 basis points. For FY25, the Net Profit Margin was 6.14% compared to 6.93% in FY24, reflecting a decline of 11.40% due to lower profits.

EBITDA Margin

EBITDA margin for H1 FY26 expanded by 101 basis points to 14.08% from 13.07% in H1 FY25. This improvement was driven by cost rationalization and operational efficiency despite a 3.19% decline in absolute EBITDA to INR 180.61 Cr.

Capital Expenditure

The company incurred capital expenditure of INR 200-250 Cr in FY25. Planned capex focuses on retrofitting DGs for hybrid operation, converting biomass boilers to PNG, and upgrading STPs with ultrafiltration technology.

Credit Rating & Borrowing

The company maintains a strong credit profile with a Total Debt/OPBDITA of 0.5 times in FY24. It has a conservative capital structure with a Debt-Equity ratio of 0.00 as of March 31, 2025, due to nil utilization of working capital limits.

⚙️ Operational Drivers

Raw Materials

Specific raw materials include PU (Polyurethane) and biomass for boilers. The company is targeting a reduction in PU waste as part of its sustainability goals.

Capacity Expansion

Not disclosed in absolute units, but the company is investing INR 200-250 Cr in FY25 for operational improvements and sustainability upgrades.

Raw Material Costs

Raw material costs are managed through cost control and operational efficiency. The company passed on the full benefit of the GST cut (from 12% to 5%) to customers to maintain competitiveness.

Manufacturing Efficiency

EBITDA margin expansion of 101 bps in H1 FY26 reflects successful cost rationalization and back-end optimization despite a challenging demand environment.

Logistics & Distribution

Not disclosed as a specific percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

0%

Growth Strategy

Growth is expected to return in Q4 FY26 (January-March) following a recovery trend from -12% in Q1 to -8% in Q2 and an expected -3% to 0% in Q3. Strategy includes leveraging the GST reduction to 5% to gain market share from the unorganized sector and focusing on products priced below INR 1,000 (90% of portfolio).

Products & Services

Hawai slippers, high-value slippers, casual shoes, and sports shoes.

Brand Portfolio

Relaxo, Sparx, Flite, and Bahaman.

New Products/Services

Not disclosed as a specific percentage of revenue, but the company continuously focuses on innovation in slippers and sports shoes.

Market Expansion

Focusing on increasing penetration in Eastern, Southern, and Western Indian markets where distributors are currently clearing old inventory.

Market Share & Ranking

Not disclosed in absolute percentage, but the company is a leader in the organized footwear segment.

🌍 External Factors

Industry Trends

The reduction of GST to 5% for footwear priced below INR 2,500 (covering 98% of Relaxo's portfolio) is a major trend strengthening organized players against the unorganized sector.

Competitive Landscape

Key competition comes from the unorganized sector, which benefits from tax non-compliance, and other organized players in the mass-to-mid footwear segment.

Competitive Moat

Moat is built on brand recognition (Relaxo, Sparx), cost leadership, and a massive distribution network. The sustainability of this moat is supported by a conservative debt-free balance sheet and strong cash equivalents of ~INR 150 Cr.

Macro Economic Sensitivity

Highly sensitive to consumer demand in the mass and mid-market segments, which was soft in H1 FY26, leading to a 7.48% YoY revenue drop in Q2.

Consumer Behavior

Shift toward higher-value slippers and casual/sports shoes from traditional Hawai slippers is a noted trend.

Geopolitical Risks

Subject to global political or economic developments and legislative changes as noted in the Management Discussion & Analysis.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with BIS standards and environmental norms for PU waste and water management is mandatory and monitored by the Senior Leadership Team.

Environmental Compliance

ESG initiatives include retrofitting DGs, converting diesel vehicles to CNG, and upgrading STPs. The company holds ISO 14001:2015 certification.

Taxation Policy Impact

The company is navigating the transition to GST 2.0 and the inverted duty structure. The GST rate for 98% of its products is now 5%.

⚠️ Risk Analysis

Key Uncertainties

Uncertainty regarding the implementation of GST 2.0 and its impact on the inverted duty structure and margin refunds. Potential impact on Q3 FY26 results is expected.

Geographic Concentration Risk

Not disclosed, but the company has a significant presence in Northern India and is expanding in other regions.

Third Party Dependencies

Reliance on specific suppliers for raw materials is noted as a risk in the MDA.

Technology Obsolescence Risk

The company is mitigating technology risks through ISO 27001:2022 (Information Security) and investments in efficient manufacturing technologies like PNG-based boilers.

Credit & Counterparty Risk

Receivables quality is reflected in a Debtors Turnover of 7.44 times in FY25.