Bata India or Relaxo Footwear – What Comforts You?

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Anyone who is interested in the story of India’s footwear industry looks up to Bata India or Relaxo footwear to participate in the growth journey. Both these companies have a strong foothold in the footwear market.

Both of them hold a similar market share of 25% in organized footwear. However, if anyone has to invest in any one of these stocks, they would look at all the disclosed numbers of these companies.

Let us look at key stock indicators for the two stocks to get a little more information:

Bata India vs Relaxo
Bata India vs Relaxo

As we can see, both companies have a market capitalization of around Rs. 17,000 Cr and have delivered a similar level of return over the last 5 years of around 19% to 20%.

Also, both of them are placed on the same grounds in terms of profitability and ROE.

Let us look at a few other parameters to gauge which one is a better investment idea.

Few Financial Ratios – Bata India vs Relaxo

Both companies are operating at a similar Gross profit ratio, working capital days, and net profit margin level.

Looking at all the above ratios would make anyone think that both these companies are operating in the same way.

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But before we conclude let us look at few more numbers-

If an investor digs deeper, he/she will come to know the above ratios reveal much more about the different business models that the two companies are operating with.

Key Differentiators:

  1. Fixed Turnover ratio: – Bata India has a very high fixed asset turnover ratio. This indicates that the company has outsourced most of its manufacturing operations. The same can be further corroborated from the proportion of plant & machinery in their total fixed asset (Plant & Machinery as a % of total fixed asset which stands at 12% for Bata vs. 28% for Relaxo). Bata India operates as a Trading company whereas Relaxo footwear is a manufacturing company.
  2. Debtors Days: Bata India has very low debtor days which indicates that the company is directly selling goods to customers. The same can be checked from the distribution model of these two companies. Bata is having close to 1,500 own stores whereas Relaxo is having 800 distributors.
  3. Rental Expenses – Bata has to spend 10% to 12% of sales as rental expenses as they focus on a direct reach with customers and so have to own stores.
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To Summarize:


A business model is how a business operates a business and delivers and creates value for all of its stakeholders.

However, any business model is sustainable over a long period of time only when it is making money for the company. Most of the investors focus on the qualitative aspects of the business model.

But investors should see how qualitative aspects are translating into numbers by reading and understanding financial information.

As can be seen above, though both companies are in the footwear industry and have been very successful in creating wealth for their shareholders, their business models are totally different.

As an investor, the key here is to predict which of these business models will sustain over a long period of time.

As each of these models have their pros and cons, the investor should decide shoes (business model) of which company comforts them well.

Also Watch: Bata India vs Relaxo

Read more research reports on Indian Companies here.

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Vivek Chitale

Vivek Chitale

Life long learner | Passionate about investing in the stock market | Trying to bring differential insights
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