Relaxo Footwears Limited has officially announced its unaudited financial results for the quarter and nine months ended December 31, 2025, following board approval on January 30, 2026. The board meeting, which commenced at 13:00 Hrs and concluded at 15:50 Hrs, approved the financial results that reveal a mixed performance with revenue growth offset by margin pressures.

Board Meeting Outcome and Regulatory Compliance

The Board of Directors approved and took on record the unaudited financial results along with the Limited Review Report issued by M/s Gupta & Dua, Chartered Accountants, the company's statutory auditors. The results have been prepared in accordance with Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and are being uploaded on the company's website at relaxofootwear.com.

Q3FY26 Financial Performance

The company's quarterly performance showed marginal improvement in revenue but significant pressure on profitability metrics. Revenue from operations for Q3FY26 reached ₹668.03 crore, representing a modest growth of 0.17% compared to ₹666.90 crore in Q3FY25. Total income stood at ₹678.99 crore compared to ₹673.70 crore in the previous year.

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. Net profit for the nine-month period stood at ₹111.60 crore compared to ₹114.11 crore in the previous year, representing a decline of 2.20%.

Cost Structure and Operational Metrics

The company's cost structure showed mixed trends during the quarter. Employee benefits expense increased significantly to ₹110.24 crore from ₹96.00 crore in Q3FY25, reflecting a 14.83% increase. Cost of materials consumed stood at ₹229.54 crore compared to ₹227.08 crore in the previous year. Other expenses remained relatively stable at ₹204.75 crore compared to ₹201.42 crore in Q3FY25.

Regulatory Updates and Credit Rating

The company has assessed the impact of the Labour Codes notified by the Government of India on November 21, 2025, which consolidate 29 existing labour laws. The resulting increase in employee benefits expense amounting to ₹5.72 crore has been recognised in profit or loss in accordance with Ind AS 19. ICRA has reaffirmed the company's Long term rating at [ICRA] AA with Stable outlook and Short Term rating of [ICRA] A1+.

Corporate Structure and Compliance

The company operates as a single entity without any subsidiary, associate, or joint venture for the period ended December 31, 2025. Based on Ind AS 108 guidance, the company's business activities fall within a single operating segment of "Footwear and Related Products." The results were reviewed by the Audit Committee before board approval, with statutory auditors expressing an unmodified opinion on the limited review.

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.