Footwear stocks rallied Monday on expectation that their valuations would get re-rated after the forthcoming IPO of Khadim India. The Kolkata-based Khadim plans to raise about Rs 600 crore in October.
Liberty Shoes BSE 11.42 % gained 20 per cent, Mirza International BSE -0.11 % 8 per cent, and Relaxo BSE 0.15 % Footwear and Bata India BSE -0.29 % 3 per cent each. Analysts say footwear stocks will build on their gains this year because of increasing demand for branded shoes, GST benefits and a fall in raw material prices. Investor Porinju Veliyath bought about 4.5 lakh shares of Liberty Shoes Monday. Here is what analysts are saying on footwear stocks:
The stock is trading at 45 times its FY 2018 estimated earnings. While giving a target price of Rs 610, Akhil Parekh, analyst at Nirmal Bang, said that the company could clock revenues, EBITDA and PAT CAGR of 11 per cent, 21 per cent and 21 per cent respectively, over FY 2017-FY19.
Most analysts tracking the company are bullish on the stock, although the management has recently told investors that FY18 exports revenue may be flat or witness a marginal decline.Ankit Kedia, analyst, CentrumBSE 1.37 % said:”We maintain our buy rating on the stock with a target price of Rs 205.”
The company is strengthening its pan-India presence and added 10 new outlets in Q1 FY2017. Akanksha Tripathi, analyst, BOB Capital Market said: “We maintain our BUY rating on the stock, with the target price of Rs 290.”
Despite demonetization and a general economic slowdown, Relaxo has been able to sustain its profits. “New product development is the key driver of its consistent growth,” said Sachin Bobade, analyst, Dolat Capital.