Can this market leader reclaim its past glory in the ₹1 trillion sector?

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Subscribe to enjoy similar stories. Once a budget brand, this company is now focusing on premiumization. It's also expanding its store network and e-commerce presence.

While the journey has started, the benefits will be seen in the future. If the plan works out, the opportunity could be potentially lucrative. Saurabh Mukherjea of ​​Marcellus Investment Managers, once holding a pair of slippers worth ₹103 in his hand, said, “This slipper is a monopoly" and added, “This chappal is an instrument of enormous wealth creation." The slippers he mentioned were manufactured by Relaxo Footwear, a company Marcellus owned shares in.

Saurabh is known to be very vocal and promotional for his company. However, he ended his love affair with Relaxo at the beginning of 2023. Rising raw material prices, increasing competition, and declining profits due to a loss of market share were cited as reasons for the exit.

Valuation at 112x that time didn’t leave much comfort for investors either. But, in over 18 years, Relaxo delivered a whopping 900x returns before topping out in late 2021. Not surprisingly, it has delivered no returns since and is down a little over 50% from the peak.

Relaxo is not the only footwear company that made its all-time high (ATH) three years ago. Campus Activewear also crashed over 50% from ATH. Bata also topped out simultaneously and is down 33% from ATH.

One thing common among them is that they all cater to the mid-range and affordable segment, which is witnessing a slowdown. This is evident because Metro Brands, which caters to the premium segment, has not been affected much. Its stock price, which is trading near ATH levels, has returned 163% since its initial public offering in 2021.