Relaxo Footwears Q2: Revenue Growth and Margin Pressure

Relaxo Footwears Ltd RELAXO reported a mixed performance in Q2, with healthy revenue growth and a modest improvement in profitability, although operating margins witnessed year-on-year contraction. Revenue Performance: The company reported Q2 revenue of ₹702 crore, compared with ₹629 crore in the corresponding quarter last year, registering 11.61% YoY growth. The improvement indicates stronger topline performance, potentially supported by better sales volumes, improved product mix, or pricing benefits. However, the precise growth drivers remain to be confirmed. EBITDA Performance: EBITDA increased 5.05% YoY to ₹85.26 crore, compared with ₹81.16 crore in the year-ago period. Despite the increase in absolute operating profit, EBITDA growth lagged revenue growth, indicating pressure on operating profitability. Margin Analysis: EBITDA margin contracted by 76 basis points to 12.15%, compared with 12.91% last year. This suggests that higher operating expenses, input costs, competitive pricing, or promotional spending may have affected profitability. The company will need to improve cost efficiencies to restore operating leverage. Net Profit: Standalone net profit increased 2.18% YoY to ₹36.95 crore, against ₹36.16 crore in the corresponding quarter last year. The relatively modest bottom-line growth, despite double-digit revenue expansion, highlights continued pressure on overall profitability. Net profit margin also declined to approximately 5.26% from 5.75%. Overall Assessment: Relaxo delivered encouraging revenue growth, but profitability remained relatively subdued as EBITDA and net profit growth trailed sales expansion. Going forward, investors should monitor demand recovery, raw material costs, product mix, competitive intensity, and management commentary on margin improvement. Sustained revenue momentum alongside recovery in operating margins will be crucial for stronger earnings growth.