Relaxo Footwears Ltd Q1 FY27 Results Analysis: PAT Jumps 12.4%, Revenue Misses Goal

Relaxo Footwears Ltd's Q1 FY27 numbers came in strong, with revenue of Rs. 705.05 Cr (+7.73% YoY) and PAT growth of +12.35% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Relaxo delivered 7.7% revenue growth and 12.4% PAT growth despite severe polymer cost pressure, aided by pricing power and a temporary inventory buffer that boosted margins. The GST cut and renewable energy SPV are structural tailwinds, but margin reversal from inventory normalization and elevated employee costs are near-term risks. Management's FY27 targets are on track, albeit with revenue slightly below the ~10% goal.

Key Investment Insights

Key Positives

• Revenue grew 7.73% YoY to Rs.705.05 Cr despite severe raw material headwinds.
• EBITDA margin expanded 15 bps YoY to 15.35%, defying expectations of compression.
• PAT grew 12.35% YoY to Rs.54.94 Cr.
• Price hikes of 15-18% were sustained without volume collapse, demonstrating pricing power.
• GST rate reduction (12% to 5%) improved competitive positioning versus unorganised sector.
• Renewable energy SPV incorporated to lower power costs for Haryana plants.
• Management strengthened with 10 new senior appointments across key functions.

Risk Factors

• Direct material consumption surged to 44.18% of revenue (+6.3pp YoY) due to polymer price spike from West Asia tensions.
• Employee benefits expense rose to 17.52% of revenue (+1.4pp YoY) due to permanent wage hike.
• Other expenses grew 19.26% YoY, faster than revenue, indicating cost pressure.
• Inventory build of Rs.99.25 Cr provided temporary margin benefit; reversal in Q2/Q3 could compress reported margins.
• Revenue growth of 7.73% is below management's ~10% FY27 target.