Relaxo Footwears navigating demand softness, expects GST-led revival

Relaxo Footwears Limited reported Q2 FY '26 revenue from operations at INR629 crores, a decrease from INR679 crores in Q2 FY '25, primarily due to demand softness in the mass market and delayed purchases ahead of GST 2.0 implementation. EBITDA for the quarter stood at INR81 crores, maintaining a stable margin of 12.9%. Profit after tax for Q2 FY '26 was INR36 crores, with PAT margins improving to 5.8% year-on-year due to disciplined cost control.

For the first half of FY '26, revenue from operations was INR1,283 crores, down from INR1,428 crores in H1 FY '25. EBITDA for H1 FY '26 was INR181 crores, with margins expanding by 101 basis points to 14.1%. Profit after tax increased by 4.9% year-on-year to INR85 crores, improving PAT margins to 6.6%. The company expects a gradual demand revival following GST 2.0, which reduced the tax rate on footwear priced below INR2,500 to 5%, enhancing competitiveness against the unorganized sector.

Management anticipates strengthened momentum in coming quarters, supported by festival demand and ongoing sales transformation initiatives. The company's strategic focus remains on volume-led growth and market share expansion, with full-year advertisement spending projected at around 4% of revenue. Capex for the current and next year is expected to be in the INR100 crores to INR150 crores range, primarily for operational efficiencies and modernization.