1QFY2013 Result Update | Footwear

August 7, 2012

Relaxo Footwear
All about brand show
Y/E March (` cr) Total Income EBITDA EBITDA margin (%) Reported PAT 1QFY2013 248 30 12.1 15 4QFY2012 242 33 13.7 19 % chg (qoq) 2.7 (9.4) (162) (19.8) 1QFY2012 215 23 10.7 11 % chg (yoy) 15.6 30.6 138 39.6

BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta Net debt (` cr) 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

`514 `684
12 Months

Source: Company, Angel Research

Relaxo Footwear (Relaxo) reported a decent set of numbers for 1QFY2013. The companys revenue grew by 15.6% yoy to `248cr, which was in-line with our estimate of `250cr. On the operating margin front, it saw an improvement of 138bp yoy to 12.1% mainly due to softening of raw material prices. However, the margin contracted on qoq basis by 162bp on account of substantial rise in the employee cost and other expenses. Subsequently, the profit for the company grew by 39.6% yoy but declined by 19.8% on a qoq basis to `15cr. Expansion plans and celebrity endorsement to drive volume: The company is in an expansion mode and plans to incur a capex of `60cr for building up a PU (Polyurethane) footwear plant (expected to get completed by FY2013) and `25cr for building a warehouse (to be completed by FY2014E). In addition, the company plans to open 25-30 retail stores each year. It recently signed up leading celebrities for endorsement of its brands - Salman Khan for Hawaii, Katrina Kaif for Flite and Akshay Kumar for Sparx. We expect capacity expansion and aggressive marketing to complement each other and drive volume. Outlook and valuation: We expect Relaxo to post a revenue CAGR of 18.5% over FY2012-14E to `1,208cr with an operating margin of 13.0% in FY2014E. The PAT is expected to grow at a CAGR of 43.4% to `82cr for the same period. At the current market price, Relaxo is trading at 7.5x FY2014E earnings. We maintain our Buy recommendation on the stock with a target price of `684, based on a target PE of 10x for FY2014E.

Footwear 616 0.6 144 560 / 235 2,189 5 17,602 5,337 RLXO.BO RLXF IN

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 75.0 15.5 1.7 7.7

Abs.(%) Sensex Relaxo

3m 4.1 66.4

1yr 3.6 94.0

3yr 16.1 749

Key financials
Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2010 554 35.9 38 160.2 13.8 31.4 16.3 5.6 41.0 21.8 1.4 10.0

FY2011 686 23.9 27 (28.8) 9.6 22.4 22.9 4.6 22.0 14.3 1.1 11.6

FY2012 860 25.4 40 48.6 10.5 33.3 15.4 3.6 26.0 19.5 0.9 8.5

FY2013E 1,019 18.5 61 53.3 12.3 51.0 10.1 2.7 30.3 24.0 0.8 6.2

FY2014E 1,208 18.5 82 34.1 13.0 68.4 7.5 2.0 30.2 26.3 0.6 4.8

Tejashwini Kumari
30940000 ext: 6856 tejashwini.kumari@angelbroking.com

Please refer to important disclosures at the end of this report

1QFY2013 Result Update | Relaxo Footwear

Exhibit 1: 2QFY2012 performance

Y/E March (` cr) Net Sales Net raw material (% of Sales) Staff Costs (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income PBT (% of Sales) Tax (% of PBT) Reported PAT PATM Equity capital (` cr) EPS (`)
Source: Company, Angel Research

1QFY2013 248 120 48.3 37 15.0 61 24.6 218 30 12.1 4 6 2 22 8.9 7 31.8 15 6.1 6 25.1

4QFY2012 242 125 51.6 29 12.1 55 22.6 209 33 13.7 4 6 1 25 10.2 6 23.8 19 7.8 6 31.3

% chg (qoq) 2.7 (3.9) 27.4 12.0 4.7 (9.4) (162)bp (11.4) 6.7 27.0 (10.4) 19.6 (19.8)

1QFY2012 215 117 54.5 26 11.9 49 22.8 192 23 10.7 5 6 2 14 6.6 3 23.8 11 5.0 6

% chg (yoy) 15.6 2.3 45.3 24.9 13.8 30.6 138bp (16.5) 3.7 20.4 55.9 108.0 39.6

FY2012 860 459 53.4 106 12.3 205 23.8 770 90 10.5 19 23 5 54 6.2 14 25.4 40 4.6 6

FY2011 686 375 43.6 74 8.7 170 19.7 620 66 9.6 16 21 6 36 4.1 9 24.7 27 3.1 6 44.8

% chg 25.4 22.3 42.6 20.7 24.3 35.9 81bp 19.2 10.3 (12.9) 49.9 53.8 48.6

(19.8)

18.0

39.6

66.6

48.6

In-line revenue with better operating performance

Relaxos revenue came at `248cr, 15.6% higher yoy, in-line with our estimate of `250cr. The raw material cost as a percentage of net sales for the quarter declined by 332bp qoq to 48.3% due to softening of ethyl vinyl acetate (EVA) and rubber prices. At the same time, the employee cost and other expenses witnessed a substantial jump in 1QFY2013, which led the operating margin to contract by 162bp on a qoq basis to 12.1%. The tax outgo for the quarter increased to 31.8% of PBT, which was 23.8% in 4QFY2012. The profit for the quarter witnessed a jump of 39.6% yoy to `15cr, 10.8% higher than our estimate of `14cr. Also, during the quarter, the company signed up Salman Khan and Katrina Kaif for the endorsement of its brands Hawaii and Flite respectively.

Exhibit 2: Actual vs. Estimate

Y/E March (` cr) Net sales EBITDA EBITDA margin (%) Reported PAT
Source: Company, Angel Research

1QFY13 248 30 12.1 15

Angel est. 250 29 11.4 14

% diff (0.6) 5.5 69bp 10.8

August 7, 2012

1QFY2013 Result Update | Relaxo Footwear

Exhibit 3: Revenue trend

300 250 200 37.4 39.5 33.5 25.6 19.2 13.3 10.3 21.8 15.6 45 40 35 30

Exhibit 4: Margin declined due to high employee & ad expense

35 30 25 13.6 11.0 9.1 8.5 10.7 7.9 8.6 13.7 12.1 16 14 12 10 6 4 2 0 8

(` cr)

20 15 10 5 0

(%)

15 10

100

155

182

154

201

215

199

204

242

248

21

20

14

17

23

16

18

33

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Revenue (LHS)

yoy growth (RHS)

1QFY13

EBITDA (LHS)

EBITDA margin (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Investment rationale
Aggressive expansion plans
The company is planning to incur a capex of `60cr for the construction of a PU (Polyurethane) footwear plant which is expected to be completed by the end of FY2013E. With this plant getting operational, the companys total capacity will go up by ~30,000 pairs per day which is currently 3.70 lakh pairs per day. In addition, it is planning to construct a warehouse, expected to be completed by FY2014E with a capex of `25cr. Further, it has aggressive retail expansion plans to open 25-30 retail stores every year. As of July 2012, the number of exclusive stores stands at 158, which was 149 at the end of FY2012.

Declining raw material prices to boost operating margin

The prices of key raw materials EVA and rubber had reached their peak in the last financial year to ~`149/kg and ~`243/kg respectively, which impacted the operating margin. However, the prices of both the raw materials have started declining, with current prices at ~119/kg for EVA and ~180/kg for rubber. We expect the operating margin to improve to 12.3% and 13.0% for FY2013E and FY2014E respectively due to cooling-off of raw material prices.

Exhibit 5: Rubber price trend (`/kg)

200 190 180 170 160 150 April 2012 May 2012 June 2012 July 2012

Exhibit 6: EVA price trend (`/kg)

150 145 140 135 130 125 120 115 110 105 100 April 2012 May 2012 June 2012 July 2012

Source: Company presentation

Source: Company presentation

August 7, 2012

1QFY13

30

50

(%)

150

(` cr)

25

20

1QFY2013 Result Update | Relaxo Footwear

Exhibit 7: Declining raw material prices to boost operating margin

60.0 50.0 40.0 52.3 53.5 55.4 55.6 54.5 54.1 53.7 51.6 48.3

(%)

30.0 20.0 10.0 0.0 13.6 11.0 9.1 8.5 10.7 7.9 8.6 13.7 12.1

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Raw material/ sales

Source: Company, Angel Research

EBITDA margin

Brand Show all the way

The company is promoting its brands aggressively to increase their visibility. For that, it has signed up Salman Khan to endorse Hawaii, Katrina Kaif to endorse Flite and Akshay Kumar for endorsing Sparx. This is expected to help the company to maintain its market share in the mass segment through Hawaii brand and further penetrate the lower and upper-middle class segment through existing products and upcoming launches of Flite and Sparx brands. Also, as a part of aggressive branding initiatives, the company has scheduled ads of Hawaii during July-August12 in print media (9 newspapers and 10 magazines) as well as television media (general entertainment, news, movies and regional channels).

Exhibit 8: Brand show all the way

Brand Hawaii Flite Sparx
Source: Company, Angel Research

Celebrity Salman Khan Katrina Kaif Akshay Kumar

Changing revenue mix to drive profit

With the changing revenue mix, the profitability is expected to improve in the coming years. Sparx has increased its contribution from a mere 4.2% in FY2008 to 24.3% in FY2011; on the other hand, Flite has maintained its contribution at ~2530%. Hawaii, being a mass brand, adds to the volume, however, Sparx and Flite help in improving the companys profitability. Going forward we expect the mix to further improve with the new ads and celebrity endorsements, which will help in increasing brand visibility. The company is also planning to launch new products in the high margin segment.

August 7, 2012

1QFY13

1QFY2013 Result Update | Relaxo Footwear

Exhibit 9: Sales break up Brand-wise

100.0 14.7 80.0 60.0 40.0 20.0 0.0 FY2008 FY2009 Hawaii Flite Sparx FY2010 Others* FY2011 49.2 44.4 40.8 35.5 4.2 31.9 18.9 7.5 29.1 15.1 15.3 28.9 14.5 24.3

(%)

25.8

Source: Company, Note: * Others includes - Other brands, outsourced, & traded goods

Financial performance
Assumptions
Exhibit 10: Key assumptions
FY2013E Volume Growth (%) Realisation Growth (%) Change in raw material prices (%) Ethyl Vinyl Acetate (EVA) Rubber
Source: Angel Research

FY2014E 15.2 3.0 0.0 0.0

15.2 3.0 (4.0) (8.0)

Exhibit 11: Change in estimates

Y/E March (` cr) Net sales OPM (%) Adj. PAT
Source: Angel Research

Earlier estimates FY2013E 1,019 11.2 53 FY2014E 1,220 12.2 74

Revised estimates 1,019 12.3 61 1,208 13.0 82 0.0

% chg FY2014E (1.0) 78bp 10.6

FY2013E FY2014E FY2013E 108bp 15.5

We expect the companys revenue to grow at a CAGR of 18.5% over FY2012-14E, from `860cr in FY2012 to `1,208cr in FY2014E, mainly on the back of volume growth. With the cooling off of raw material prices, we expect the raw material cost as a percentage of sales to decline from 54.4% in FY2012 to 47.6% in FY2014E. However, we expect only a 255bp expansion in the operating margin to 13.0% in FY2014E due to simultaneous increases in employee cost and other expenses. The companys profit is expected to grow at a CAGR of 43.4% over FY2012-14E, from `40cr in FY2012 to `82cr in FY2014E.

August 7, 2012

1QFY2013 Result Update | Relaxo Footwear

Exhibit 12: Revenue to be driven by volume growth

1,400 1,200 1,000 800
(`cr)

Exhibit 13: Margin to rebound with decreasing RM price

180 160 140 120 100 80 60 40 10.3 10.1 13.8 12.3 9.6 10.5 13.0 16 14 12 10 8 6 4

33.3 29.6

35.9 25.4 18.5 18.5

40 30 20 10 0

23.9

(` cr)

(%)

(%)

600
1,019 306 407 554 686 860 1,208

400 200 0
FY2008 FY2009 FY2010 FY2011 FY2012

125

157

31

41

76

66

90

20 0

2 0

FY2013E

FY2014E

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013E

Revenue (LHS)

Revenue growth (RHS)

EBITDA (LHS)

EBITDA margin (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Outlook and valuation

We expect Relaxo to post revenue CAGR of 18.5% over FY2012-14 to `1,208cr with an operating margin of 13.0% in FY2014. The PAT is expected to grow at a CAGR of 43.4% to `82cr for the same period. At the current market price, Relaxo is trading at 7.5x FY2014E earnings. We maintain our Buy recommendation on the stock with a target price of `684, based on a target PE of 10x for FY2014E.

Exhibit 14: One-year forward PE

1000 800 600

(`)

400 200 0

Feb-09

Sep-08

May-10

Oct-10

FY2014E

Dec-09

Apr-08

Price (`)

4x

8x

Mar-11

12x

Aug-11

16x

Source: Company, Angel Research

Exhibit 15: Comparative analysis

Company Relaxo footwear Bata India Year end FY2013E FY2014E CY2012E CY2013E Mcap (` cr) 616 616 5,906 5,906 Sales (` cr) 1,019 1,208 1,945 2,298 OPM (%) 12.3 13.0 16.7 17.7 PAT (` cr) 61 82 185 234 EPS (`) 51.0 68.4 28.7 36.4 RoE (%) 30.3 30.2 28.9 29.7 P/E (x) 10.1 7.5 32.2 25.4 P/BV (x) 2.7 2.0 8.4 6.8 EV/EBITDA (x) 6.2 4.8 17.9 14.4 EV/Sales (x) 0.8 0.6 3.0 2.5

Source: Company, Angel Research, Bloomberg

August 7, 2012

Jan-12

Jun-12

Jul-09

1QFY2013 Result Update | Relaxo Footwear

Risks
Rise in raw material prices and depreciating rupee
The prices of key raw materials EVA and rubber had reached their peak in the last financial year to ~`149/kg and ~`243/kg respectively, which impacted the operating margin. However, the prices of both the raw materials have started declining, with current prices at ~119/kg for EVA and ~180/kg for rubber. Any rise in the prices can put margins under pressure. Also, Relaxo imports its entire EVA requirement, so any further depreciation in the rupee can pose a risk to the operating margin and thereby impact the profitability of the company.

Exhibit 16: Depreciating rupee a concern for EVA cost

58 56 54 55.5

(USD/INR)

52 50 48 46 44 42 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 44.2

Source: Angel Research, Bloomberg

Footwear industry in India

According to a report titled Indian Footwear Industry: An Analysis by ASSOCHAM, the Indian footwear industry is expected to grow at a CAGR of 15% to `38,700cr in FY2015 from the current level of `22,000cr. India produces nearly 300cr pairs of footwear annually, of which 10% are exported. India accounts for about 15% of annual global footwear production which is over 2,000cr. The per capita consumption of shoes in India (number of footwear worn by an individual) is currently about 2.5 shoes per year, said the study. Globally, the footwear market is growing at a CAGR of ~5% and is currently estimated at ~`10.2 lakh cr. The same is likely to reach `12.34 lakh cr by 2015, said the ASSOCHAM study.

The company
Relaxo is a key player in the retail footwear industry, with a strong foothold in the slippers market and a strong distribution channel of 700 distributors and more than 46,000 retailers. The company currently has 158 company-owned outlets across India as of July 2012, with a concentrated presence in Delhi, Rajasthan, Gujarat, Haryana, Punjab, Uttar Pradesh and Uttarakhand. Currently, the company sells its products under three major brands Hawaii, Flite and Sparx.

August 7, 2012

1QFY2013 Result Update | Relaxo Footwear

Standalone Profit & Loss Statement

Y/E March (` cr)
Gross sales Less: Excise duty Net Sales Other operating income Total operating income % chg Net Raw Materials % chg Other Mfg costs % chg Personnel % chg Other % chg Total Expenditure EBITDA % chg (% of Net Sales) Depreciation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of sales) Recurring PBT % chg Extraordinary Expense/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg Dividend Retained Earning FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E 407 0 407 407 33.3 218 33.1 50 19.3 33 38.6 65 45.9 366 41 31.3 10.1 10 31 39.5 7.5 9 3 0.6 21 42.1 (0.3) 24 10 40.7 14 14 33.2 3.6 12.1 12.1 33.2 1 14 554 0 554 554 35.9 290 33.0 33 (34.3) 55 65.7 99 52.8 477 76 85.2 13.8 15 61 98.0 11.0 11 4 0.7 50 132.0 (0.0) 54 16 30.0 38 38 160.2 6.8 31.4 31.4 160.2 2 36 687 1 686 686 23.9 375 29.4 43 31.8 74 34.5 127 27.6 620 66 (13.2) 9.6 21 45 (25.5) 6.6 16 6 0.9 30 (40.5) 0.0 36 9 24.7 27 27 (28.8) 3.9 22.4 22.4 (28.8) 2 25 861 1 860 860 25.4 459 22.3 52 19.6 106 42.6 153 21.1 770 90 35.9 10.5 23 67 47.8 7.8 19 5 0.6 48 62.9 0.0 54 14 25.4 40 40 48.6 4.6 33.3 33.3 48.6 2 38 1,020 1 1,019 1,019 18.5 490 6.8 63 22.4 150 41.1 191 24.2 894 125 39.3 12.3 24 102 52.2 10.0 20 6 0.6 82 69.5 0.0 88 27 30.3 61 61 53.3 6.0 51.0 51.0 53.3 2 59 1,209 1 1,208 1,208 18.5 560 14.2 78 23.1 180 20.4 233 22.1 1051 157 25.3 13.0 27 130 27.7 10.8 19 7 0.6 111 36.2 0.0 118 36 30.4 82 82 34.1 6.8 68.4 68.4 34.1 2 80

August 7, 2012

1QFY2013 Result Update | Relaxo Footwear

Balance Sheet (Standalone)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves& Surplus Shareholders Funds Total Loans Other Long Term Liabilities Long Term Provisions Deferred Tax (Net) Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Lease adjustment Goodwill Investments Long Term Loans and adv. Other Non-current asset Current Assets Cash Loans & Advances Inventory Debtors Other current assets Current liabilities Net Current Assets Misc. Exp. not written off Total Assets 194 54 140 19 0 78 3 15 40 20 0 45 33 192 286 64 222 7 353 84 268 1 0 11 0 158 2 16 117 23 1 123 35 316 399 108 292 1 459 131 328 5 0 12 1 227 5 31 162 27 2 148 79 425 528 158 370 5 0 12 1 279 19 40 185 33 2 173 106 493 6 68 74 108 10 192 6 104 110 147 6 129 135 156 0 2 22 316 6 166 172 146 0 3 22 344 6 226 232 167 0 3 22 425 6 306 312 156 0 3 22 493 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

0 18 275

0 116 1 27 67 21 0 69 47 275

0 12 1 169 1 15 128 23 2 131 38 344

August 7, 2012

1QFY2013 Result Update | Relaxo Footwear

Cash Flow (Standalone)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Direct taxes paid Others Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments (Inc.)/Dec. in LT loans & adv. Others Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2009 FY2010 FY2011 FY2012 24 10 (4) (10) 21 41 (59) (0) (59) 37 (1) (19) 17 (1) 4 3 54 15 (16) (16) 34 72 (80) (5) (85) 39 (2) (25) 11 (2) 3 1 36 21 13 (9) 36 97 (62) 11 (12) (63) 10 (2) (41) (33) 1 1 2 54 23 (4) (14) (5) 54 (46) 1 3 (42) (11) (2) (13) (1) 2 1 FY2013E 88 24 (37) (27) (6) 41 (64) 6 (57) 22 (2) 20 4 1 5 FY2014E 118 27 (13) (36) (7) 90 (69) 7 (62) (12) (2) (14) 14 5 19

August 7, 2012

10

1QFY2013 Result Update | Relaxo Footwear

Standalone Key Ratios

Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover Inventory / Sales (days) Receivables (days) Payables (days) WC (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage 1.4 2.6 3.3 1.3 1.9 5.5 1.1 2.3 2.9 0.8 1.6 3.6 0.7 1.3 5.1 0.4 0.9 7.0 2.5 34 16 39 25 2.3 35 13 44 25 2.1 49 12 57 21 2.3 52 10 60 14 2.4 52 10 60 19 2.4 52 10 60 24 15.8 17.8 21.5 21.8 22.4 41.0 14.3 14.5 22.0 19.5 19.6 26.0 24.0 24.5 30.3 26.3 27.7 30.2 7.5 0.6 2.4 10.5 5.1 1.3 18.4 11.0 0.7 2.0 15.7 5.3 1.4 29.6 6.6 0.8 2.2 10.9 7.5 1.2 15.0 7.8 0.7 2.5 14.6 9.6 1.0 19.6 10.0 0.7 2.5 17.1 8.4 0.8 23.8 10.8 0.7 2.6 19.3 8.4 0.6 25.5 12.1 12.1 20.8 0.8 61.6 31.4 31.4 44.3 1.5 91.6 22.4 22.4 39.9 1.5 112.2 33.3 33.3 52.5 1.5 143.7 51.0 51.0 70.7 1.5 193.2 68.4 68.4 91.0 1.5 260.1 42.5 24.7 8.3 0.1 1.8 17.5 3.7 16.3 11.6 5.6 0.3 1.4 10.0 2.7 22.9 12.9 4.6 0.3 1.1 11.6 2.4 15.4 9.8 3.6 0.3 0.9 8.5 2.2 10.1 7.3 2.7 0.3 0.8 6.2 1.8 7.5 5.6 2.0 0.3 0.6 4.8 1.5 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

August 7, 2012

11

1QFY2013 Result Update | Relaxo Footwear

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Relaxo Footwear No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

August 7, 2012

12