Thread by @Avnishah1008

Which stock should one prefer in the footwear segment between Bata/Relaxo?

Organized market – 45%; Unorganized market – 55%

Bata operates in the premium category. Generally associated with the older generation. However, it has been rebuilding their portfolio of shoes to cater to the youth and to gain popularity, they have roped in young Bollywood stars;
Relaxo is for the mass population.

•Bata – Brands such as Bata, Hush Puppies, Power are major contributors;
Relaxo – Brands such as Relaxo, Sparx, Flite Bahamas are major contributors;

•Bata plays on the value and makes a profit of almost Rs. 70 per pair; Pairs sold (FY19) – 4.7 crs;
Relaxo on the volume and makes a profit of almost Rs. 10 per pair; Pairs sold (FY19) – 18.4 crs

•Bata – Contribution from the premium products in on the rise. 50% of their revenues are below Rs. 1000 price point;
Relaxo - Approximately 80% of revenues are below Rs. 500 and 90% below Rs. 1000 price point.

•Bata – It works on the model of EBOs – Exclusive Brand Outlets, present in malls, in tier 1 and tier 2 cities;
Relaxo - 80% of its distribution channel is via MBOs – Multi Brand Outlets, which obviously makes more sense as the market it caters to is the mass population.

Understanding a business is a major part when evaluating a company. Both these companies cater to different categories in the same segment and hence unique in its own way. Organized footwear being a low portion in the industry, leaves scope for both of them to gain market share.

The global pandemic has an impact on almost all sectors. Bata being a zero debt company and Relaxo being a low debt company will overcome in the long term