I am sharing with you a few links that will make your day. Prof. Sanjay Bakshi (who blogs at Fundoo Professor) has uploaded some great analytical work on Relaxo Footwears. He conducts a behavioural finance and investing course at MDI, Gurgaon every year.
Source: Joe Hastings
Prof. Bakshi gave an exercise to his students where he asked them to analyze various facets of Relaxo Footwears. Relaxo Footwears is a listed company. Take a look at the price chart. The stock is on fire. Today it trades at a price to earnings ratio of around 17 times.
Source: Google Finance
At a personal level, when I wanted to buy sandals (or “floaters” as I and most others in India also call them) I couldn’t help but notice the Sparx brand. They looked impressive in terms of make and their price point was very compelling. You could buy a pair for around Rs. 600. This compared to the Nike, Reebok, and Adidas sandals which cost at least Rs. 1100. A friend confirmed that he found them to be of good quality and has been using them for more than a year. Most would not know this, but Spark is owned by Relaxo.
Incidentally, I was in Manali last year, when I bought a pair of sandals for Rs. 300. This was a Vietnamese brand called Vento. It has given me no problems at all.
Call me cheap but I think that as an investor who looks for compelling value, it should extend to other spheres of life. I always look for bargains.
Prof. Bakshi’s work on Relaxo Footwears
Download Prof. Bakshi’s exercise on Relaxo Footwears. The list of questions that he asks his students is simply great. This is the kind of investigation one needs to do for long-term investing.
If you wish to attempt the study yourself, take some time to do so. It will surely not be possible in a day or two. It requires hard work. But it will be worth the effort.
If you want to skip and directly read his views on Relaxo, download Prof. Bakshi’s lecture on Relaxo Footwears. He talks about the strength of the company, their branding efforts, their economies of scale, their true economic earnings.