Mar 27, 2024

Price Action Analysis:The stock gave a fresh breakout above 410 in the last week. The volume was greater than average which reflects a strong momentum. A strong bounce was seen around the 375-380 zone which indicates a buy-on-dips momentum.‍‍‍‍‍‍Moving Average:The stock has been trading above the 50 for the last 4 months. A buy trade can be initiated as the stock breaks the 20-EMA level.‍‍‍‍‍‍‍Bollinger Bands:The stock successfully broke the band with huge volume which reflects a fresh breakout. The middle band is at 380-385 zone which will act as a strong support in the upcoming weeks. Mool’s Outlook:We anticipate a target of 470 in the stock in the next 6 months, which reflects a 14% upside in the stock. Stop Loss should be maintained at INR 387. ‍Disclaimer:Mool Capital Limited is a SEBI Registered Research Analyst having registration no. INH000012449. This report has been prepared by Mool Capital Pvt. Ltd. and is solely for information of the recipient only. The report must not be used as a singular basis of any investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor; readers are requested to take professional advice before investing. This document is not, and should not, be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report should not be construed as an invitation or solicitation to do business with Mool Capital. Mool Capital and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.

Industry Overview

The Indian footwear industry is poised for significant growth in the coming years. According to industry estimates, revenue in FY2022 was INR 64,800 Cr., with expectations of an 8% annual growth rate, reaching INR 1,05,000 Cr. by FY2025.

This growth is driven by several factors, including:

  • Increasing consumer aspirations in Tier-2, Tier-3, and Tier-4 markets

  • Growth in domestic private consumption and disposable incomes

  • Footwear's increasing share of the total retail basket, expected to reach 4.4% of the $1.07 Tn consumer market

Market Segmentation and Trends

The open footwear segment currently dominates the market, holding a 70-80% market share by volume. However, there is a significant opportunity for closed footwear as consumer preferences shift with higher per capita consumption growth. The organized sector is expected to reach INR 39,900 cr. by FY2025, driven by an 11% CAGR in branded footwear sales.

The introduction of international brands and a shift towards premium products is particularly evident in the women's footwear category. This segment is projected to experience a 7% CAGR in Average Selling Price (ASP) from FY2020 to FY25, compared to an overall ASP increase of 5% per year for the last 5 years.

Global Market Positioning and Government Support

India currently holds a modest 2% market share in the global footwear industry but aims to capture 10% by 2030. To achieve this goal, the industry is focusing on enhancing the quality and exports of Indian footwear, establishing Indian brands as global contenders. The government has also implemented supportive measures, such as imposing a custom duty of 35% on imported footwear and 20% on parts, to balance domestic production and boost the profitability of footwear companies, enabling them to invest in production facilities to cater to the global market.

Key Listed Players

Metro Brands Ltd (MBL)

MBL is a large brand house with Metro shoes, Mochi, and Walkway, with in-house brands accounting for 74% of the revenue as of FY23. The company has established itself as a self-sustaining business, with 87% of invested capital sourced from internal accruals. MBL's focus on the mid-to-premium segment and strategic partnerships, such as the one with 'Crocs', positions it for significant growth.

Relaxo Footwear Ltd

Relaxo Footwear Ltd reported a 5% YoY revenue growth in Q3FY24, reaching INR 713 Cr. The company's core strengths lie in manufacturing excellence and brand investment. With a targeted expansion in its Sparx brand, Relaxo aims for a revenue growth potential of over 32% per year in the coming years, leveraging its high distributor loyalty and ability to navigate market dynamics effectively.

Bata India Ltd

Bata India Ltd, the world's second-largest shoemaker by volume, sells more than 180 mn pairs of shoes annually across 5,800 stores. To address its recent volume growth challenge, the company is revamping its distribution strategy and embracing premiumization. This focus on premium products has allowed Bata to increase its ASP by 12% between FY2010 and FY23. Premiumization has also been supported by innovations like the Red Label concept and international collaborations. Investments in ERP and high-performance merchandising aim to enhance store productivity and customer experience.

With key players like Metro Brands, Relaxo Footwear, and Bata India leading the charge, the future of Indian footwear looks promising, both domestically and on the global stage. Driven by consumer demand, strategic market positioning, and government support, the sector is well-positioned to meet its targets.

Disclaimer:

Mool Capital Limited is a SEBI Registered Research Analyst having registration no. INH000012449. This report has been prepared by Mool Capital Pvt. Ltd. and is solely for information of the recipient only. The report must not be used as a singular basis of any investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor; readers are requested to take professional advice before investing. This document is not, and should not, be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report should not be construed as an invitation or solicitation to do business with Mool Capital. Mool Capital and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.

Copyright © 2024 Townhall Technologies
All Rights Reserved

SEBI Registered Research Analyst
INH000012449

Copyright © 2024 Townhall Technologies
All Rights Reserved

Copyright © 2024 Townhall Technologies
All Rights Reserved