Relaxo Footwears Limited (RELAXO) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Relaxo Footwear Limited Q4 FY26 Financial Results hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Samir Gupta from IIFL Services Limited. Thank you, and over to you, sir.

Thanks, Gitesh. Good evening, everyone. At AFL Capital, it's our pleasure to host the management of Relaxo Footless. From the management, we have Mr. Ramesh Kumar Dua, Chairman and MD, Mr. Gaurav Kumar Dua, Co-CEO and Whole Time Director, Mr. Ritesh Dua, Co-CEO, and Mr. Sushil Batra, Executive Director. We also have Mr. Ankit Jain, Company Secretary and Compliance Officer. Without taking more time, let me hand it over to Mr. Ankit Jain for the opening remarks. Over to you, Mr. Ankit.

Thank you, Samir, for the introduction. So, myself, Anki Jan, company's equipment compliance officer of the company. So, good evening, everyone, and thank you for joining us on Q4 and FY26 earning course. We appreciate your continued interest in our company, and we are pleased to walk you through our operation and financial performance for the quarter-end financial year, N-0, 31st March, 2026. The earnings release and investor presentation are already available on the Stock Exchange website and our website for your deficit. Before we move into Q&A session, I would like to highlight some of the key performance metrics for Q4 and F526. Revenue from operations stood at Rs. 751 crore in Q4 and F526, as again 695 crore in Q4 and F525, an 8.1% year-on-year growth. Revenue growth was driven by a strong volume growth amidst a recovery in general trade channels, alongside continued growth in retail, e-commerce, and large-format retail channels. EBITDA for the quarter stood at 124 crores, registering a growth of 10.6% year-on-year. EBITDA margin was at 16.5% in Q4 FY26, as compared to 16.1% in Q4 FY25. The growth was supported by continued focus on operational efficiency, back-end optimization initiatives, and prudent cost management measures undertaken by the company despite the dynamic industry environment. Profit after tax for Q4 FY26 stood at Rs. 68 crore compared to Rs. 56 crore in Q4 FY25, registering a growth of 20.4% year-on-year. Thank you. We have it year-on-year to 9. Sofit after tax for F526 stood at Rs. 174 crore, while EBITDA margin stood at 13.8% in F526. Sofit after tax for F526 stood at Rs. 179 crore as compared to 170 crore in F525, with an increase of 5.3% year-on-year growth. Best margin in FY26 stood at 6.6% in FY26 as compared to 6.1% in FY25. Now, going forward, while the momentum exiting FY26 is encouraging, we must spread with caution due to the uncertain external environment amidst the ongoing geopolitical situation causing inflationary pressure which could affect consumer sentiment. While the company has recently taken some calibrated price increases to offset input cost inflation, a full impact on demand and consumption pattern is still evolving and requires close monitoring. To conclude, while we are cautious about the near-term environment, we We are committed to deliver a sustainable performance. Now, thank you. You may please open the floor for questions now. Over to you, Samir.

Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen will wait for a moment while the question queue assembles. The first question is from the line of Archana Gude from IDBI Capital. Please go ahead.

Hi, sir. Thank you, sir.

Sorry to interrupt. Ma'am, your voice is not audible.

Can you hear me?

Sorry, members, the line has got disconnected. I'll take the next participant. The next question is from the line of Avinash Karumanji from MOFSL. Please go ahead. I'm sorry, the line got disconnected. The next question is from the line of Samir Gupta. Please go ahead.

Hi, and thanks for taking my question. Firstly, sir, how should one read this result? So, there has been a GST rate reduction wherein there was downstocking in the previous quarter. There would have been some upstocking this quarter. Also, distributor count, if I see your presentation, has gone up from 550 last quarter to 630 this quarter. So, if you adjust for these impacts, or let me put it this way, if you can give any indication on growth at the retail level, it would be helpful for us to understand the exact quantum of growth which is going on.

Hi, Samit. This is Gaurav Dua, and you have correctly said that there was quite optimism in the market in quarter four. As you have mentioned, the GST from 12% became 5%, and distributors were carrying the stocks. Now, more or less stock has been liquidated through the pipeline, and we are seeing a good recovery in quarter four.

So, let's say the retail, you have reported an 8% growth, but this would also include distributor taking stock, filling their inventory. Last quarter was zero. So, suffice to say that the actual normal growth rate is somewhere in between like 4%?

Actually, the full impact we started seeing after December onwards. So, you can definitely say that 5% to 6% we were able to grow.

Quartet, sir. That explains. Second, sir, and I think Ankit mentioned this in his opening remarks. So, West Asia impact. First of all, input cost inflation, if you could quantify what kind of input cost inflation you are facing in your cost basket.

Input cost is on both sides. One is, I think, material which is impacting everyone, and then in North, few states, labor cost has also increased by government. So we are working on that. So, Rantyil prices are, again, I think, settling down and coming down also. So we are working with the overall impact, how much it will impact, but definitely it's a substantial impact which we are foreseeing. But we have shown this to the... Price increase majorly, so things should be, I think, more or less at par with the cost increase, and let's see how it works.

Sir, one, if you could quantify the inflation, so let's say if your cost was 100 in the previous quarter in 3Q or 4Q, where is it trending today? Is it 110? Is it 105? Labor cost, I can understand. And second is that what kind of quantum of price hikes have you passed on?

Samir, we have taken two to three price increase in the market, and it was a gradual increase. Some were because of raw material, and one was because of the labor, which increased in Haryana. So roughly around 15 to 18 percent is the increase. In some categories, it is lesser, and in some categories, it is more. So we have calibrated what can be passed on in the market and took the call.

So on a blended level, you have taken a 15% to 18% price increase at a consumer level.

Correct, correct. You're right.

And your cost increase would be roughly similar?

Around 12% to 15% I think will be the price increase, including I think all states and all material on the cost of goods manufactured. That's what we are expecting.

So, you have taken a higher price increase versus the cost of inflation?

No, no. It says the price increase on the FG at the blended rate. Cost of goods which we are manufacturing, there is a price increase on both sides. One is the labor side, which is almost around 25 to 30 percent price increase on the labor. In one state, in another state, it's around 10 percent, 10 to 15 percent. So, it's a mix of all these things. That is the one part increase in the cost, then material cost which went up like anything. So, 120 went up to 240, 250 like that. Now, things are settling and coming down. So, overall, we have to review everything, but price increased as on date because we had inventory so that material effect was not much in first place. So we can see around 50 to 20% increase will be there overall on the post side as of date.

Okay, got it. So, 15 to 20 percent is the increase in cost side, and you have passed it on to the consumer entirely. So, your margin is protected in a way.

Yes, that is the intent, and we are trying to. Yes.

Got it, sir. I will come back in the queue for follow-ups. Thanks a lot.

Thank you. The next question is from the line of Arjuna Gude from IDBI Capital. Please go ahead.

Hi, sir. Thank you once again, and apologies for network issues. So I've got three questions. Firstly, sir, can you give us some understanding on what has really changed for this GST 2.0 in terms of computer intensity and demand front?

So, Achana, we have mentioned before that the GST came from 12% to 5%. So, branded and layers, we became more competitive in the market. You know that the taxes came down, so it helped the organized players. And secondly, there was good demand recovery in quarter four at consumer level. So, because of these two factors, we could see the growth level coming back.

And so has the demand continued for the first two months for Q1, or do you see some subdued parties here and there?

It's too early to say, but definitely April and May were better. May is still going on. Let us see how June goes.

Okay, okay. Sir, earlier we spoke about product premiumization by getting into sneakers and maybe, you know, high-value flight portfolio. So, how is that going on, sir? How has been the response and any new products which can aid to margin expansion on the card?

Definitely, we are widening our premium playbook and through sneakers and offering lifestyle-led products. So, our main objective is that we do not have to lose the relevance in mass category, and plus we have to premiumize. So, we are making our product mix accordingly.

Uh-huh. But, like, anything planned for FY27, or it's still in the progress?

See, this is a continuous process, you know, of premiumization. So, like, we have all... It's because before also that we are coming up with the at-leisure range, and we are coming up with more price point. For example, in Sparks, it was huge in 999 to 1700. Now we are thinking how we can offer more product at 2500 also. So the price range and the premium price will be increasing.

Right, right. And lastly, any guidance on CapEx for this year and next year?

Pax, we incurred around 130 crore last year. Last year, we incurred around 130 crore. Next year, we have planned around 180 to 200 crore. So, that's up for next year.

Okay, and that will be used for particularly the existing capacity and not for any new capacity addition, right?

It will be a mix of both because it's a big amount we spent upon the mold. It's not an increase of capacity, and then we are making one, I think, administrative office also. Some money will go there, and some weird here, and some... Changes in the machine, so there is no big capacity expansion definitely, but good amount will be spent on the mold side also.

Sure, sir. Sir, thank you so much, and I'll come back again in the case. Thank you, sir.

Thank you. A reminder to all the participants that you may press star and want to ask a question. The next question is from the line of Avinash Karuman Chani from MOFSL. Please go ahead.

Hi, sir. Good evening. Congrats on good set of members. So, if you look at it like the improvement, this is the first quarter of the eight quarters where you have seen an increase in volumes. So, is it only regarding the GST crest that you have seen or how is it? Hello. Can you hear it? Yes, sir. I can hear you now. Sir, your line is audible.

There is a background. Yeah, so it was both things. Like, you know, we are still an open footwear dominant player. So because of the season, Q4 and Q1 is bigger for us. Second thing was definitely GST. And thirdly, you know, there was a good demand in the market.

Okay, okay. And second thing, if I have heard it right, you have taken price size in the range of 18-20%. Is this right?

Correct, correct. 15-18, correct.

Yeah, so we have seen a similar situation in FY22 where we have to take 20% less kind of price size, and that has impacted our volume significantly. Last time also, we argued that the lack of maintenance of 6 months of inventory of raw materials, while other unorganized players have maintained lesser condom.

So this time we are cautious in buying raw material, you know, we have not bought like what we did two years back. So we are very cautious in buying and passing the price to the consumer. So we are very, we are watching the trends, what is happening in the market, and it is across industry, football industry. All the players have taken the increase of prices. So, it's not only relaxed.

But last time, raw till price, last time price, raw till price hike was very steep. So, it went from 100 to 300 rupees. Now, this time it is there, but not that, I think, high level. Now, things are settling also. So, it is, I think, almost coming down every day. We have to be worth full of it. The global scenario is not... But even today, I think things are not... I think things are settling globally also, but it will take time. Let's hope things will be much better, but we don't see the repetition of last time, whatever.

Okay, okay. And if things normalize us, then you'll be rolling back these price hikes, right?

No, I don't think there is any possibility the raw material will soon settle down. So this price increase will remain.

Okay, I'm not asking from the next quarter's perspective or something in that sense, but if you look at the next two years or three years, how should we look at the gross margins? Hello.

Gross margin definitely we will try to improve overall, but we have to be very cautious about passing the course to the consumer. We have to be competitive, we have to see the competition also. Gross margin definitely intended to improve and overall operating margin should also improve. That's what we are trying. So it will be just a journey on the betterment side.

I mean, what would be the levers of that improvement?

So, like we have discussed before, we are going to open 100 new outlets this year, and we are going to change our product mix. Plus, there will be some more addition in terms of distributor and retailers. A lot of action we are going to take to at least grow the market and margin.

Okay, congrats on the way ahead. I'll join the team.

Thank you. The next question is from the line of Shraddha Kapadia from SMIFS. Please go ahead.

Hello, am I audible?

Yes, ma'am. Yes, ma'am.

Yeah, congratulations on a good set of numbers. So, recently and right now also you mentioned that there is an increase in focus on the women and the kids category. So, if you could let us know the current contribution and the medium-term target which the management has for the same.

Can you repeat the question?

Also, there is more focus on women and the kids category, current contribution and the medium-term target.

So, like, for us, men's contribution is 70%, 25% is ladies, and 5% is kids. So, our more focus will be on ladies and kids to improve this percentage. Right now, it is quite low, but definitely it is going to improve.

Sure, sure. Thank you so much. Also, similarly, for the premium products also, if you could help with the current contribution.

So, we were playing at 999 in sports shoe till 1800. Now, this time, we have rearranged our portfolio, and we are going to launch more products, starting from 999 without leaving that base, till 2800 rupees MRP. So, it's quite, it's not, I mean, to say, can't say exactly what number contribution we'll get from the premium portfolio. Okay, okay.

Okay, okay, sure. Thank you so much. I'll join back in that.

Thank you. The next question. Sorry, the line got disconnected of the participants. Samir sir, can you hear me?

I can hear you.

Yeah. The next participant is from the line of Samir Gupta from IIFL. Please go ahead.

Hi, sir. Just a follow-up. So, 15% price hike. Just wanted to understand the thought process. Now, when I look at our inventory, we have 75 days on sale. So, that will translate to around 150 days on COGS. And aren't we a little early in taking sharp price hikes? Because if I look at the competitors, let's say Bata and Red Tape and Metro, we haven't seen any major price hikes announced over there so far. So, one, do you foresee a volume impact in the near term? Let's say volume growth momentum will moderate substantially, might even decline in the coming quarters. Do you foresee that? And two, I just wanted to understand the urgency in taking price hike, sir.

There were two reasons what we have mentioned before. One was the raw material which shot up like anything in the month of April itself. And secondly was the wages. The increase in Haryana, the wages were more than 30% increase in the wages. So there were the two reasons that we had to take the price increase. So regarding the raw material, definitely we are seeing that raw material is now softening. But the wage increase, we don't think it will come down. So the cost pressure will be there in terms of the price hike cannot be taken back. And secondly, it depends upon the other place which state they are operating from. So we cannot comment upon that, what impact of wages they had. But raw material is across.

Got it. And let's say when you think RM will soften, unless, right, you are like, the wage cost is still much higher, and if you, like, do you foresee taking, like, price cuts or increasing trade discounts if the raw material were to come down significantly, else you will see a margin expansion, right?

So, we are closely monitoring the market, you know, how the uptake will be in the market. So, do you give any guidance on this?

Fair, sir. Got it.

That's all from me.

Thank you. A reminder to all the participants that you may press star and zero, star and one to ask a question. A reminder to all the participants that you may press star and 1 to ask a question. A reminder to all the participants that you may place a star and want to ask a question. The next question is from the line of Shraddha Kapadia from SMIFS. Please go ahead.

Thank you so much for the opportunity again. So if you could help us with any future guidance for modern purpose, revenue as well as the margins, considering this is the quarter in many times that the company has reported such a good number of growth.

So, yeah.

Thank you.

Can you repeat the question, please, Shrata?

Any future guidance?

Outlook, we are confident. Definitely we will sustain what we performed in Q4, but definitely geopolitical situations are so uncertain. It's tough to give a very solid statement, but still we are very confident. We will maintain and definitely intend to improve our margins. Growth will come and there is a price increase. Volume, we have to maintain that also. So, we are watching all the, I think, competitors, internally, geopolitical, and we are confident that definitely last quarter, if you see, Q4 is much better. So, I think we have started coming up, and consumer sentiments are also, you know, that down, GST is helping us. And overall, our treasury and overall balance sheet and so many factors are favoring us. So, we are very confident that near future should be, I think, a good one.

Any numbers, if you could help us to quantify?

Last year, we maintained the operating margin of around 13.8%. That is a full year. Q4 was much better. So we don't expect Q4 will be repeated, definitely. But we intend to do better than last year. Overall operating margin, which is 13.8%. So it should be better, maybe 1%. That is the intent, definitely. We are trying to.

Thank you so much. Anything if you could highlight majorly on the GP since you have mentioned that the GP has helped, you know, grow. So any changes or anything which you have witnessed?

In GT, what we have seen is that there is recovery of demand in quarter four, and it is going to continue what we are seeing. But we are closely monitoring after the price increase how the consumer reacts. So we are keeping a close watch, and let's see. We have seen some product mix also. We launched some products in different categories, not to leave the earlier price point also.

Okay, so the newer would be the higher price points like you already mentioned.

We have planned for expansion in our own EBO model. We intend to open 100 stores. That is, I think, plan, and we are doing some new format and new redesigning of the shops with new good experience. So we have done one trial, so getting good response. So, after that, we are very confident ki good footfall and good return, profitable return should come from that segment. So, and on the e-commerce side also, we are working. Lot of things we have done. So, lot of growth, we expect ki that will come from that channel. So, these are the, I think, new initiatives will add, lot of growth. So, we are confident ki things should be better.

Yes. Also, since you mentioned the EB also, is there any target like Tire 1 cities, Tire 2, and 3 cities? If you have any plans or if you could help us understand more about the same?

So now we are going to open outlet across India. Like earlier, it was basically north and east base. Now we have identified some gaps in west, and going forward, definitely we will enter south-southern market also. Seeing the, and understanding the consumer preferences, yeah.

Okay, okay. Sure, that was quite helpful. Thank you so much, and all the best for you, sir.

Thank you. A reminder to all the participants that you may press star and want to ask a question. The next question is from the line of Yogesh Bhatia from Sequin Investments. Please go ahead.

Hello. Sir, congratulations on good set of numbers. I have a couple of questions. So, I joined the call late. Can you explain the reason why margins were higher in this quarter? Is it some specific inventory gain or we've taken price hike and that's why we don't expect this to sustain? What is the reason?

Your question is, why the margin was higher in quarter four? Yes, sir. There are two, three reasons for that. One was that a lot of back-end work is done in the plant to reduce the cost. Secondly, our volume has grown a lot. So the fixed cost remains the same. The contribution has increased because of the volume and value. And plus, we have curtailed or reduced the discount given in the market also.

So, there is no inventory gain or anything of that sort.

We have taken a small increase in quarter four. That is also one of the reasons of improvement in margins.

Okay. And, sir, my second question was, we mentioned somewhere in the call that we plan to set up, you know, 100 new EBOs. So, can you explain us then what is the timeline to do this network expansion? As of now, how many EBOs do we operate?

As of now, we have around 400 plus CBOs, but with new designs and new format, we have started, we did one trial, so we are very aggressive. In first half, we will be able to open at least 30-40% of the 100. So, by December, most of the should be ready. By December, that is the intent.

Okay, so this 400, in this 400 we will add 100, or this 400 maybe we will redesign, and the number will remain still 400?

We will add new 100, we will add new 100, and 400 will continue with the same format, and we will change some, but all the 100 will be newer.

Okay, and sir, my last question is, you know, last, our volume has been more or less applied, you know.

I'm sorry to interrupt, sir. Your voice is echoing a lot, sir.

Sir, can I repeat the question now? Yeah. So, sir, I was saying that, you know, last year to this year, our volumes have more or less remained flat, but this quarter we've seen a significant jump in the volumes. So, I wanted to know what do you feel about the volumes for the next two years? How do you see that, you know, happening? Not very guidance, but qualitatively, what do you feel about volumes? And secondly, do you think that the mix will change significantly for… Relaxo, or the price range will remain at 155, 160 rupees per pair going ahead.

So, Yogesh, it's a journey, like, for increasing ASP is going to take time, but definitely we are focused towards immunization. We are changing our product mix, but it's going to take time to see the impact in ASP. It's not a short-term, it's a long-term phenomenon. Every year, we are going to increase our ASP.

But with the EBO expansion and e-commerce growth, which we are cousing, so ASP will improve definitely, because I think GT, there will be a pressure, but on these two-channel, lot of premonition is going to happen, and it will increase overall ASP at complete level.

Right, right. And, sir, what do you feel about volumes for the next two years?

Sir, I think we have to be cautious. Intent is there again, around 4 to 5 percent. Definitely we want to grow our volume. Price increase we have already taken. So let's see how it impacts. But overall we want to grow at least 4 to 5 percent in volume.

Because our EU expansion is 25%. Right now, then, you know, I don't think volume expansion can only be 4-5% because, you know, our network is only expanding 20-25%.

Agree, but EVO business is not that great. In our overall kitty, it's around 10%. If we increase the 25%, it's a high value item, so volume will increase definitely, but not with that degree. So overall at company level, when you're talking 4.5, it's a 17, 18 crore pair we saw last time. That's easy, but definitely we intend to.

If I may ask one last question?

Yeah, please.

Sir, can you please give me the breakup of our network? Like how many EBOs, how many, you know, NBOs, touch points we have? What is the breakup for that?

So, we have mentioned in our investor report also that we are currently supplying to 70,000 outlets. That's NBO outlets. And we are, our own outlet EBOs are 420 outlets. These are our own. Plus, we are available in e-commerce platform. We started with, now, BigCommerce also being present in Blinkit and Zepto. We are getting a good response. Plus, we are exporting to 30,000 countries.

Thank you, sir. Thanks. That will be all.

Thank you. A reminder to all the participants that you may press star and want to ask a question. The next question is from the line of Arjuna Gude from IDBI Capital. Please go ahead.

Hi, sir. Thank you for the follow-up. Sir, I have two bookkeeping questions. Can you help me with the revenue contribution from Sparks, Bahamas, Relax and Flight in FI26?

So we have three major branch, so our contribution is around 40%, Hawaii is around 25%, and not only the flight, it's 35%, yes. This is the ratio among all the three major branch.

Thanks. So, how has been this past journey in the last four or five years? Like, you know, any major category which you feel, you know, is really supporting the margin expansion more than the, you know, top line can be looked at? Any other thoughts on which has been really helping us at margin?

So, uh, this, uh... So, there is a good demand coming from sneakers and sports shoe category, which we think has a great future ahead. We are going to focus more on ladies and kids category, which currently is contributing less, but has a good future.

We are focused more on those. Sorry. It's like this, in terms of ad expenses, what was the amount in per 2016, how do we see for coming year?

The amount of, sorry, can you come again?

Add expenses.

Add, add.

Yeah, could you ask?

Our expenditure is roughly around 4 to 5 percent, and it varies between brand to brand, whatever the requirement is. And secondly, a major, not major, I may say big expenditure is also on performance marketing on platforms like Amazon and Flipkart.

Correct.

So that is different upon, again, brand to brand.

And we'll continue to see the same kind of ratio, 4 to 5% of net sales, what, 20%?

Yes, yes, correct. We try to maintain what we are going to spend on AdoT spend.

Spend will be like this, but we are changing, I think, overall digital strategy and so many things.

Sir, that is there that the focus will be now more on digital front. Right. As you have seen, the customer is moving from television to digital. So, the spend is also accordingly going to shift towards those medium where consumer is present.

Right, sir. So, thank you and all the best, sir. We look forward to seeing good numbers like what we delivered in 2-4 going forward.

Thank you.

Thank you. The next question is from the line of Samir Gupta from IIFL. Please go ahead.

Sir, just one follow-up. So, this 100 EBOs that you plan to do, are 180 to 200 crore KPEX guidance, does it include the KPEX for these EBOs?

In our case, spend is not that great. In case of that is inclusive, by large inclusive. So, each store, we are going to spend around 30 to 35 lakhs per store, not more than that. So, if you go for 100, it will be 30-30 by CR. That's all. Not a big spend. So, that's part of 200.

Got it. And given there will be retailing costs in the first few years, there will be a margin dilutive impact also. So, given that you have also guided for 100 basis points expansion, this is despite the retail expansion, right?

Yes, definitely. Because we have done trial also, there is a good footfall, good response, high-value product we are able to sell, and we have gone with exclusive article for EBO in addition to our GT. So margins, we have already expanded our margin in these stores. So we don't see much pressure will come on the overall margin, and we are expecting 1%, which I refer, will be maintained at company level.

Sure, sir. Thanks and all the best.

Thank you. A reminder to all the participants that you may press star and want to ask a question. A reminder to all the participants that you may press star and 1 to ask a question. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you, Samir. This is all from our side, and we thank you, all of you, for joining the call. Looking forward to speaking with all of you again in the next call. Thank you.

Thank you very much, members. On behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.