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�� We expect Relaxo to post an 18% CAGR in its top line over FY2011-13E to `950cr
on the back of a 12% increase in realization and changing revenue mix
(high-value brands Sparx and Flite contributing 60% to the company's revenue).
�� Relaxo has set up a new plant at Bahadurgarh, Haryana, for fashionable footwear
with state-of-the-art PU technology and additional features such as longevity,
skid-resistance and lightweight. The company launched Flite Pu-Fashion in
June 2011, which is expected to add ~`50cr to the company's top line by FY2013E.
�� The company's EBITDA margin is expected to improve by 225bp to 11.9x in FY2013
from 9.6% in FY2011 due to the expected softening of rubber prices. Earnings are
expected to grow at a CAGR of 44% over FY2011-13E, from `27cr in FY2011 to
`56cr in FY2013.
�� At `303, the stock is trading at attractive valuations of 10.8x and 6.5x for FY2012E
and FY2013E earnings, respectively. We recommend a Buy view on the stock with
a target price to `420, based on a target PE of 9x FY2013E earnings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
�� We expect Relaxo to post an 18% CAGR in its top line over FY2011-13E to `950cr
on the back of a 12% increase in realization and changing revenue mix
(high-value brands Sparx and Flite contributing 60% to the company's revenue).
�� Relaxo has set up a new plant at Bahadurgarh, Haryana, for fashionable footwear
with state-of-the-art PU technology and additional features such as longevity,
skid-resistance and lightweight. The company launched Flite Pu-Fashion in
June 2011, which is expected to add ~`50cr to the company's top line by FY2013E.
�� The company's EBITDA margin is expected to improve by 225bp to 11.9x in FY2013
from 9.6% in FY2011 due to the expected softening of rubber prices. Earnings are
expected to grow at a CAGR of 44% over FY2011-13E, from `27cr in FY2011 to
`56cr in FY2013.
�� At `303, the stock is trading at attractive valuations of 10.8x and 6.5x for FY2012E
and FY2013E earnings, respectively. We recommend a Buy view on the stock with
a target price to `420, based on a target PE of 9x FY2013E earnings.
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