RELAXO

Relaxo Footwears’ (RLXF) 1QFY26 results reflect persistent volume pressure amid restructuring of distribution, muted demand and heightened competition. However, margins remained resilient, with EBITDA margin expanding ~200bp to 15.2% on the back of robust cost controls. Management remains cautious on near-term revenue recovery but expects profitability to improve through the streamlining of backend process and operational efficiencies. We cut our FY26-28 revenue estimates by ~5% each, though EBITDA margin assumptions are raised by 60-80bp, driven by cost controls, resulting in broadly unchanged EBITDA estimates over ***** recent ~10% run-up in RLXF’s stock price over the past month appears to fully price in the near-term margin optimization. At ~56x 1-year forward P/E, valuations remain rich for modest growth.