Current Rating and Its Significance
The Strong Sell rating assigned to Relaxo Footwears Ltd indicates a cautious stance for investors, signalling that the stock is expected to underperform relative to the broader market and its sector peers. This recommendation is based on a detailed evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment, guiding investors on the potential risks and challenges facing the company.
Quality Assessment
As of 05 February 2026, Relaxo Footwears exhibits an average quality grade. This reflects moderate operational efficiency and business fundamentals but highlights concerns over the company’s growth trajectory. Over the past five years, operating profit has declined at an annualised rate of -8.46%, signalling persistent challenges in expanding profitability. Additionally, the latest quarterly results for December 2025 reveal a 19.6% fall in PAT (Profit After Tax) to ₹26.54 crores, underscoring ongoing pressure on earnings.
Valuation Considerations
The stock is currently rated as very expensive based on valuation metrics. Relaxo Footwears trades at a Price to Book (P/B) ratio of 4.4, which is significantly higher than the average valuations of its footwear sector peers. This premium valuation is not supported by commensurate earnings growth or return metrics. The company’s Return on Equity (ROE) stands at a modest 8%, which does not justify the elevated price multiples. Investors should be wary of paying a premium for a stock with declining profitability and subdued growth prospects.
Financial Trend Analysis
The financial trend for Relaxo Footwears is currently negative. The latest half-year data shows cash and cash equivalents at a low ₹25.22 crores, indicating constrained liquidity. Furthermore, PBDIT (Profit Before Depreciation, Interest, and Taxes) for the recent quarter is at a five-quarter low of ₹69.39 crores. These figures suggest weakening operational cash flows and profitability pressures. Over the past year, the stock has delivered a negative return of approximately -30.04%, while profits have declined by -4.4%, reinforcing the deteriorating financial health.
Technical Outlook
From a technical perspective, the stock is rated as mildly bearish. Recent price movements show a 1-day decline of -0.36%, with a 1-month drop of -7.88% and a 3-month decline of -13.56%. The downward momentum is consistent with the broader negative sentiment surrounding the stock. The technical indicators suggest limited near-term upside, and investors should exercise caution given the prevailing bearish trend.
Summary of Current Performance
As of 05 February 2026, Relaxo Footwears Ltd is facing multiple headwinds. The combination of average quality, very expensive valuation, negative financial trends, and bearish technical signals underpin the Strong Sell rating. Investors should consider these factors carefully, as the stock’s current profile indicates elevated risk and limited potential for near-term recovery.
Sector and Market Context
Operating within the footwear sector, Relaxo Footwears is classified as a small-cap company. The sector itself has seen mixed performance, with some peers demonstrating stronger growth and more attractive valuations. Compared to these, Relaxo’s premium valuation and declining profitability stand out as key concerns. The stock’s underperformance relative to the sector and broader market benchmarks further emphasises the challenges it faces.
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What This Rating Means for Investors
The Strong Sell rating serves as a clear signal for investors to approach Relaxo Footwears Ltd with caution. It suggests that the stock is expected to underperform and may carry heightened risk due to its current financial and operational challenges. Investors seeking capital preservation or growth should carefully evaluate the company’s fundamentals and market position before considering any exposure.
Investment Considerations and Outlook
Given the current data as of 05 February 2026, investors should note that the company’s operating profit has been shrinking over the last five years, and recent quarterly results have shown declines in key profitability metrics. The expensive valuation relative to returns and peers further complicates the investment case. Technical indicators reinforce the cautious stance, with the stock exhibiting bearish tendencies.
While the footwear sector may offer opportunities elsewhere, Relaxo Footwears’ current profile suggests that investors prioritising risk management and capital preservation may prefer to avoid or reduce exposure to this stock at present.
Conclusion
Relaxo Footwears Ltd’s Strong Sell rating by MarketsMOJO, last updated on 30 January 2026, reflects a comprehensive analysis of its quality, valuation, financial trends, and technical outlook. As of 05 February 2026, the company faces significant challenges including declining profitability, stretched valuations, and bearish price momentum. Investors should carefully consider these factors in their portfolio decisions, recognising the elevated risks associated with this stock in the current market environment.
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