Relaxo Footwears Limited has announced its unaudited financial results for the quarter and nine months ended December 31, 2025, revealing a mixed performance with revenue growth offset by margin pressures. The leading footwear manufacturer demonstrated resilience in top-line growth while facing challenges in maintaining profitability levels.

Financial Performance Overview

The company's quarterly performance showed marginal improvement in revenue but significant pressure on profitability metrics. Total income for Q3FY26 reached ₹678.99 crore, representing a modest growth of 0.79% compared to ₹673.70 crore in the corresponding quarter of the previous year. The latest data shows EBITDA at 690 million rupees compared to 780 million rupees in the previous year, with EBITDA margin compressing to 10.33% from 11.69%.

Nine-Month Performance Analysis

For the nine-month period ending December 31, 2025, the company faced headwinds with revenue from operations declining 6.85% to ₹1,951.06 crore compared to ₹2,094.46 crore in the previous year. Despite the revenue decline, the company managed to maintain relatively stable margins.

Operational Metrics and Cost Structure

The company's cost structure showed mixed trends during the quarter. Employee benefits expense increased to ₹110.24 crore from ₹96.00 crore in Q3FY25, reflecting the company's continued investment in human resources. Other expenses remained relatively stable at ₹204.75 crore compared to ₹201.42 crore in the previous year.

Total operating expenses for Q3FY26 stood at ₹598.64 crore, representing a 2.59% increase from ₹583.51 crore in Q3FY25. The company maintained its finance costs at manageable levels, with quarterly finance costs at ₹5.29 crore compared to ₹5.38 crore in the previous year.

Balance Sheet Strength

The company's financial position remained robust with total assets of ₹2,870.15 crore as of H1FY26, compared to ₹2,762.47 crore in FY25. The equity base strengthened to ₹2,109.49 crore from ₹2,098.07 crore, reflecting the company's solid financial foundation.

Market Position and Distribution Network

Relaxo Footwears continues to maintain its strong market position with an extensive distribution network comprising approximately 550 active pan-India distributors, over 70,000 retailers and multi-brand outlets, and 412 exclusive brand outlets. The company exports to around 37 countries and operates an overseas office in Dubai, demonstrating its global reach in the footwear industry.

Relaxo Footwears , a leading footwear manufacturer in India, reported a 7.5% year-on-year decline in revenue for the second quarter of fiscal year 2026, amid challenges in the mass market segment and GST-related transitions. The company, however, maintained stable margins and expressed optimism about future recovery.

Key Financial Highlights

Revenue Decline and Market Challenges

The company's revenue dropped to ₹629.00 crores in Q2 FY26 from ₹679.00 crores in the same quarter last year. This decline was primarily attributed to:

• Demand softness in the mass market segment
• Delayed purchases ahead of GST 2.0 implementation
• Transition period as the market adjusts to new tax rates

GST Impact and Future Outlook

The implementation of GST 2.0, which reduced tax rates on footwear priced below ₹2,500 from 12% to 5%, is expected to have a positive impact on Relaxo's competitiveness. Management anticipates a gradual recovery starting from Q4 FY26, as:

• Channel inventory normalizes
• The new GST framework enhances competitiveness against unorganized players

Margin Performance

Despite the revenue decline, Relaxo Footwears demonstrated resilience in its profitability:

• EBITDA margin remained stable at 12.9%
• PAT margin improved to 5.8%, up from 5.4% in Q2 FY25

This improvement in profit margins reflects the company's focus on operational efficiencies and cost management during challenging market conditions.

Product Mix and Strategy

Relaxo's management highlighted during the earnings call that:

• Open footwear continues to dominate the product mix, accounting for 80% of sales
• The company is focusing on athleisure and sneakers segments
• Plans are in place to launch premium PU products under the Flite brand

Channel Inventory and Market Dynamics

The company noted that channel partners are currently focused on liquidating old inventory with higher MRPs. Management expects this process to be largely complete by December end or mid-December, after which the full impact of new pricing should be visible in the market.

Conclusion

While Relaxo Footwears faced headwinds in Q2 FY26, the company's ability to maintain margins and its strategic focus on product innovation and market expansion suggest potential for recovery. The implementation of GST 2.0 is expected to level the playing field against unorganized players, potentially driving volume growth in the coming quarters. Investors and market watchers will be keen to observe how these factors translate into performance in the second half of FY26 and beyond.