Liberty Shoes hits multi-yr high on strong outlook; stock up 104% in 1-mnth

Shares of Liberty Shoes continued its northward movement, as they gained 3 per cent to hit multi-year high of Rs 341.90  per share, in Tuesday’s intra-day trade on healthy outlook.

In the past one month, the stock price of footwear company more-than-doubled or zoomed 104 per cent, as compared to 1.7 per cent decline in the S&P BSE Sensex. The stock traded close to its record high of Rs 351 apiece, which it had hit on July 22, 2014.

Currently, Liberty Shoes has a manufacturing capacity of over 50,000 pairs a day. It caters to all sections of the society and makes ten different brands to market in the domestic and international markets. In-house brands like Leap 7X, Healers, Lucy & Luke and Aha have performed well in the market, with rise in overall share sales of the company going ahead too.

On September 24, the company said that it was confident of achieving pre-covid numbers in terms of revenue and profitability.

Going ahead, the company aims to grow by 30 per cent in the year 2022-23 and is confident enough to achieve the highest ever top line and Profit before tax (PBT) in the year 2022-23, with PST margin of over 5 per cent to correspond with the industry benchmark in near future.

"The focus is shifted to the company-owned brands, which would improve operating profit/margin of the company and in turn it would enhance value of the company in the larger interest of the stakeholders," Liberty Shoes said.

The rising discretionary income, improvement in living standards, increased brand consciousness, and growing work force has resulted in shift from the unorganized sector to the organized sector market in India. The demand for high fashion products is also pushing revenues, higher trade volumes, and increased employment avenues.

Meanwhile, analysts at CARE Ratings reaffirmed the ratings assigned to the bank facilities of Liberty Shoes with a 'stable' outlook. The ratings factor in improved operational performance in FY22 and first quarter of FY23 (Q1FY23), marked by improved capacity utilisation, better absorption of overheads, wide distribution network, comfortable capital structure and geographically diversified revenue stream.

"These strengths are however, partially offset by working capital intensive nature of operations, highly fragmented and competitive nature of the footwear industry and susceptibility of margins to volatility in raw material prices," the rating agency said in a recent note.