Retail – Footwear Buy Campus (TP: Rs.640), Metro (TP: Rs.1000) and Neutral Bata (TP: Rs.1925), Relaxo (TP: 1020)

The INR960b Indian Footwear market (FY20), is witnessing a unique transformation over the last few years. India’s young populace with high aspirations and an improved fashion quotient is driving demand, especially for Casual, Athleisure, Sneakers, and Women’s footwear. Over 1/3^rd is composed of high-Average Selling Price (ASP) products predominantly catered by organized/branded players growing at 1.5x overall market (15% CAGR over FY15-20).

Many brands (like Metro) have made deeper inroads in this high ASP space through the EBO channel given the huge growth potential. The lower-ASP space (balance 2/3^rd market) too offers high opportunity in organized segments (like Campus), led by customer shift towards the organized market, through product/distribution strength.

We initiate coverage with a BUY rating on Campus (TP: 640) and Metro (TP: 1,000) and a Neutral rating on Bata (TP: 1,925) and Relaxo (TP: 1,020). We like a) Campus – as it has created the right in-house capability to tap the large-scale opportunity in the mass sports footwear market and b) Metro – due to its ability to run an efficient footwear ‘Retail’ network that can drive scale.

Click here to access a detailed report

Source: Motilal Oswal Financial Services