Motilal Oswal has maintained a 'Sell' rating on Relaxo Footwears with a target price of Rs 290, citing demanding valuations. The brokerage noted that the company's 8% revenue growth in the June quarter was driven by price hikes rather than volume, which actually declined by 2%.
Motilal Oswal has reiterated its 'Sell' recommendation on Relaxo Footwears, setting a target price of Rs 290. As of August 14, 2026, the company's share price was trading in the range of Rs 398–401, reflecting the market's reaction to the brokerage's cautious outlook.
The core of the brokerage's concern lies in the company's valuation. Motilal Oswal highlighted that the stock is currently trading at approximately 45 times its estimated earnings for the fiscal year 2028. In the brokerage's view, this valuation is expensive when weighed against the company's recent operational performance and growth metrics.
Volume Growth Remains a Key Concern
In its financial results for the first quarter of fiscal year 2027, Relaxo Footwears reported revenue of approximately Rs 705–718 crore, marking an 8% increase compared to the same period last year. However, a deeper look into these numbers reveals that the growth was not driven by higher demand or increased sales volume. Instead, the rise in revenue was primarily the result of higher product prices.
During the quarter, the company actually experienced a 2% decline in sales volume. For investors, this creates a challenge, as growth dependent on price increases alone may not be sustainable if it leads to lower customer demand in a highly competitive market. The footwear industry is currently seeing intense competition, particularly in the mass and mid-market segments, where pricing power can be limited by consumer choices.
Operational Pressure and Future Outlook
While the company reported an EBITDA margin of 15.4% for the quarter, it continues to face pressure from input cost inflation. Management has expressed a cautious stance, noting that geopolitical uncertainties and rising raw material costs could impact future operations.
Investors may monitor whether the company can shift its focus back to volume-led growth in the coming quarters. The primary challenge remains balancing the need to pass on costs to customers without hurting sales volume. Future updates to watch include the company's ability to defend its market share against peers and whether management can improve efficiency to offset the impact of elevated input costs.