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Relaxo Rises in Q1 with ₹489 Million Profit—Margins Kick Back Into Gear

Swarnadwip Nath Published Jul 30, 2025, 05:59 PM Updated Sep 17, 2026, 07:15 PM

Relaxo Footwears Ltd., one of India’s leading footwear brands, has reported a steady financial performance for the quarter ended June 2025. The company posted a consolidated revenue from operations of ₹6.54 billion and a net profit of ₹489 million, reflecting resilience in consumer demand and disciplined cost management. Despite macroeconomic headwinds and competitive pressures, Relaxo has managed to maintain its profitability and operational efficiency.

Key Highlights from Q1 FY26:

- Revenue from operations: ₹6.54 billion

- Net profit after tax: ₹489 million

- EBITDA margin: 13.7 percent

- Gross margin: 58.1 percent

- PAT margin: 7.5 percent

- Inventory turnover improved to 4.9x

- Cash flow from operations: ₹406 million

Revenue and Profitability Trends:

- Revenue declined marginally year-on-year due to subdued rural demand and delayed monsoon impact on discretionary spending.

- Net profit of ₹489 million reflects strong cost controls and stable input prices, especially in EVA and rubber compounds.

- Operating profit margin held at 13.7 percent, supported by optimized product mix and reduced promotional expenses.

- Other income rose 26 percent sequentially, contributing to bottom-line stability.

Segment Performance and Product Strategy:

Relaxo’s portfolio includes brands like Sparx, Flite, Bahamas, and Schoolmate, catering to diverse price points and demographics.

- Sparx continued to lead in the athleisure category, with double-digit growth in Tier-1 cities.

- Flite and Bahamas saw volume recovery in semi-urban markets, aided by festive and school reopening demand.

- Schoolmate volumes rose 8.3 percent YoY, driven by institutional orders and back-to-school campaigns.

- Premium sandals and closed footwear segments gained traction through e-commerce channels.

Distribution and Channel Dynamics:

- E-commerce contributed 18 percent of total sales, up from 14 percent last year.

- Relaxo added 42 new exclusive brand outlets (EBOs), taking the total count to 650 across India.

- General trade and multi-brand outlets remained stable, with improved billing efficiency and digital order management.

- Export volumes rose 6.2 percent, led by demand from GCC and East African markets.

Operational Efficiency and Cost Management:

- Raw material costs declined 3.4 percent YoY due to favorable sourcing contracts and lower freight charges.

- Employee expenses remained flat, while advertising spend was rationalized by 12 percent.

- Inventory days reduced to 68, indicating better demand forecasting and supply chain agility.

- Capex for the quarter stood at ₹114 million, focused on automation and warehouse upgrades.

Strategic Initiatives and Future Outlook:

- Relaxo is investing ₹500 million in a new manufacturing unit in Rajasthan, expected to be operational by FY27.

- The company is piloting AI-based demand prediction tools to optimize SKU planning and reduce stock-outs.

- A new sustainability roadmap has been unveiled, targeting 30 percent recycled material usage by FY28.

- Management remains cautiously optimistic, projecting mid-single-digit volume growth for FY26 amid inflationary pressures.

Investor Sentiment and Market Reaction:

- Relaxo’s stock closed at ₹449.00 on July 30, 2025, up 3.2 percent post-results.

- Promoter holding remains stable at 70.9 percent.

- FIIs hold 4.8 percent, while domestic mutual funds increased their stake to 2.3 percent.

- Analysts maintain a neutral outlook, citing margin stability but flagging volume recovery risks.

Conclusion:

Relaxo Footwears has delivered a balanced Q1 FY26 performance, navigating demand volatility with operational discipline and strategic clarity. As consumer sentiment gradually revives and digital channels expand, the company’s focus on brand equity, cost control, and channel diversification positions it well for sustainable growth in the competitive footwear landscape.

Sources: Moneycontrol, Tijori Finance, TopStockResearch, Relaxo Footwears Investor Updates

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