Author: AasthaFinTech

In-Depth Analysis of the Indian Footwear Industry

*Introduction*

The Indian footwear industry is a crucial component of the national economy, significantly impacting industrial development and contributing to global footwear production. With its evolving landscape shaped by fashion trends, technological advancements, and changing consumer preferences, India has established itself as a major player in the global footwear market.

*Current Landscape of the Indian Footwear Industry*

India stands as the world’s second-largest footwear producer, behind China, accounting for approximately 13% of global production. The country’s production volume reaches around 2,209 million units annually, which is substantial though still significantly less than China’s 14,200 million units.

*Market Share and Export Data:*

* *Production*: India produces 2,209 million units of footwear, placing it second globally after China.
* *Exports*: India holds a 2.2% share of global footwear exports, ranking as the ninth-largest exporter. Exports have seen growth, increasing from $1.9 billion in FY21 to $2.5 billion in FY24.
* *Market Composition*: Casual footwear is dominant in the market, representing about two-thirds of the total retail market. Men’s footwear accounts for 58% of the market, with non-leather footwear holding a 56% share.

*Challenges and Issues*

Despite its growth, the industry faces several challenges:

1. *Unorganised Sector*: Approximately 70% of the footwear industry is unorganised, leading to issues in quality control, branding, and overall industry cohesion.

2. *Counterfeit Products*: The proliferation of counterfeit products impacts brand reputation and consumer trust.

3. *Shrinking Margins*: Intense competition and low margins pressure profitability.

4. *Inventory Management*: Complex inventory management remains a significant hurdle.

5. *International Competition*: Competition from low-cost markets like China, which supplies 38.2% of India’s total footwear imports, creates pressure on domestic producers.

*Key Drivers of Growth*

Several factors are fueling growth in the Indian footwear industry:

1. *Urbanisation*: Increasing urbanization drives higher demand for diverse footwear options.

2. *Rising Demand for Premium Footwear*: Higher incomes and changing consumer preferences are shifting demand towards premium products. The premium segment’s market share is anticipated to grow from 47% in FY21 to 49% by FY25.

3. *Population Growth*: India’s population is expected to reach around 1.5 billion by 2030, further boosting demand for footwear.

4. *Technological Advancements*: Innovations in manufacturing and design improve product quality and efficiency.

*Government Initiatives*

The Indian government has implemented several initiatives to support the footwear industry:

1. *Make in India Campaign*: Aims to boost domestic manufacturing and establish India as a global manufacturing hub.

2. *Export Promotion Schemes*: Under the Foreign Trade Policy 2023, initiatives such as the Market Access Initiative (MAI) Scheme, Trade Infrastructure for Export Scheme (TIES), and the Interest Equalisation Scheme (IES) support the industry’s growth and competitiveness.

*Investment Opportunities*

The Indian footwear industry presents numerous investment opportunities:

1. *Relaxo Footwear Limited*: India’s largest footwear manufacturer by volume, with over 350 stores. Known for its innovation and extensive in-house manufacturing.

2. *Bata India Limited*: A long-established player in the industry, Bata has embraced digitalization and e-commerce to expand its reach.

3. *Liberty Shoes Limited*: Renowned for its high-quality products, Liberty Shoes achieved a turnover of Rs 656 crores in 2023 and continues to innovate.

*Future Outlook*

The Indian footwear market, valued at $26 billion currently, is projected to grow to $90 billion by 2030. According to 1lattice, the market could reach Rs 190.9 thousand crores by FY28, with a CAGR of 11% between FY25 and FY28. The future looks promising with:

* Population Growth*: Increased population will drive footwear demand.
* Changing Preferences*: Millennials and Gen Z focusing on comfort and fashion create new market opportunities.

*Conclusion*

The Indian footwear industry is poised for significant growth, driven by domestic consumption, rising incomes, and supportive government policies. Despite challenges, the sector’s robust fundamentals and evolving market dynamics present attractive opportunities for investment and expansion.

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Bullet Train China vs Bharat

> Potential Growth Ahead

🔴 In China

China’s first bullet train, the CRH (China Railway High-speed) train, began operation on April 18, 2007. This marked a significant milestone in China’s transportation history and was a major step in the development of the country’s high-speed rail network.

The initial service was on the line between Beijing and Tianjin, covering a distance of about 117 kilometers (73 miles). The CRH trains could reach speeds of up to 350 km/h (217 mph), showcasing China’s advancements in high-speed rail technology. Since then, China’s high-speed rail network has expanded rapidly, becoming one of the largest and most advanced in the world.

As of 2024, China operates over 3,800 high-speed trains, including both CRH (China Railway High-speed) and CR (China Railway) series. These trains are used across the extensive high-speed rail network that covers more than 42,000 kilometers (about 26,000 miles). This fleet includes various models, such as the CRH380A, CRH380B, and the newer CR series trains, which are designed to accommodate the high-speed travel requirements and varying regional needs across China.

🟢 In Bharat :

As of 2024, India does not yet have a high-speed rail network on the scale of China’s, but it is developing its first high-speed train service. The most notable project is the Mumbai-Ahmedabad High-Speed Rail Corridor, also known as the Bullet Train Project, which is being implemented with the help of Japan’s Shinkansen technology.

The construction of this corridor, which is expected to cover around 508 kilometers (316 miles), is ongoing, with the goal of introducing high-speed trains capable of reaching speeds up to 320 km/h (199 mph). The project aims to commence operations in the next few years, potentially around 2026-2027.

In addition to this, India is planning several more high-speed rail projects to expand its network, but none are yet operational as of 2024.

As of 2024, India’s total railway network spans approximately 68,000 kilometers (about 42,000 miles). This extensive network includes both broad-gauge and narrow-gauge lines, covering various regions across the country. The Indian Railways network is one of the largest in the world and serves as a crucial component of India’s transportation infrastructure, handling millions of passengers and a substantial volume of freight annually.

As of 2024, India has introduced a total of 22 Vande Bharat Express trains. The Vande Bharat Express is a series of high-speed trains designed and manufactured in India, offering enhanced comfort and faster travel times compared to conventional trains. These trains are part of India’s efforts to modernize its rail infrastructure and provide improved passenger experiences on key routes across the country.

The Vande Bharat Express trains are equipped with features such as automatic doors, onboard Wi-Fi, and advanced safety systems. The network of Vande Bharat trains is expected to expand further in the coming years as additional trains and routes are developed.

India’s railway authorities have ambitious plans for the Vande Bharat Express trains. The target is to introduce around 400 Vande Bharat trains over the next several years. This expansion is part of a broader initiative to modernize the Indian Railways network, with the aim of enhancing passenger comfort, speed, and efficiency.

The projected rollout includes new routes connecting various major cities and regions, improving connectivity and reducing travel times across the country. The exact timeline for achieving this goal may vary based on production schedules, infrastructure development, and other logistical considerations.

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Kotak Mahindra Bank Ltd.

CMP 1,790

> YoY Net Profit Market Rate Oct
2024 13,781.58 1800
2023 10,939.30 1770
2022 8,572.69 1900
2021 6,964.84 1740
2020 5,947.18 1400

▶️ Market Cap : ₹3,50,684 Cr.
▶️ Stock P/E : 16.30
▶️ ROCE : 14.06 %
▶️ ROE : 15.88 %
▶️ Profit YoY 3Yrs : 30+ %
▶️ Sales growth 3Years : 23.15 %
▶️ Net Profit Margin : 30 %

▶️ Growth Potential YoY : 25 %

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DMART

Current Price ₹5303.45

About :
Avenue Supermarts Limited, known as D-Mart, is a prominent Mumbai-based supermarket chain established in 2002. It is a leading and profitable Food and Grocery retailer in India, offering a diverse range of products across various categories. With a focus on efficient supply chain management and strategic store locations, the company targets residential areas with a mix of consumer demographics. Operating on an ownership model, Avenue Supermarts prioritizes long-term lease arrangements for its stores and has established distribution and packing centers to bolster its retail network.

> YoY Net Profit Market Rate Oct
2024 2,694.92 5,300
2023 2,556.40 3,800
2022 1,616.17 4,400
2021 1,165.31 4,000
2020 1,349.89 2,200

▶️ Market Cap : ₹3,45,386 Cr.
▶️ Stock P/E : 130
▶️ ROCE : 18.34 %
▶️ ROE : 13.56 %
▶️ Profit Var 3Yrs : 36 %
▶️ Sales growth 3Years : 18 %

Growth Potential YoY : 18 %

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Gillette India Ltd.

Current Price : ₹ 9,036.05

About :
Gillette India Limited is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. The company is engaged in manufacturing and selling of branded packaged fast moving consumer goods in the grooming and oral care businesses. The company’s products are sold through retail operations including mass merchandisers, grocery stores, membership club stores, drug stores, department stores and high frequency stores.

▶️ Market Cap : ₹ 29,435 Cr.
▶️ Current Price : ₹ 9,036.05
▶️ Stock P/E : 71
▶️ ROCE : 45.58 %
▶️ ROE : 35.97 %
▶️ Profit Var 3Yrs : 27 %
▶️ Sales growth 3Years : 9 %

✅ Total Shares holder : 57,000

▶️ Dividend Declared (₹)

> EX Date Amount (₹)
08 Feb 2024 45.0000
08 Feb 2024 40.0000
21 Nov 2023 50.0000
09 Feb 2023 35.0000
10 Nov 2022 36.0000

> Growth Potential : 35%

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EKI Energy Services Ltd.

> CMP ₹ 328.8

Market Cap ₹905 Cr.
P/E: Negative
Sales Growth : 182 % QTY YoY

> ✅ Upside Potential : 80 % Down Side Risk 30% ( STOP LOSS )

> About:
EKI Energy Services Limited provides a range of services including Carbon Credits Trading, Climate Change Advisory, Business Excellence Advisory, and Electrical Safety Audits to clients in government and private sectors. The ISO 9001:2015 certified company specializes in carbon offsets generation projects, management standards implementation, consulting, audit, and training to meet the needs of various stakeholders and regulatory requirements.

> Promoter Holding : 73%
> All time High : 3100
> Total Shares Holder : 65,812 ( Compare higher Side as per Market Cap)

> Current Position :
EKI Energy Services Ltd. (EKI), erstwhile EnKing International in the climate sector globally, is a leading Carbon Credit Developer & Supplier across the globe. The Indore headquartered company is listed on the Bombay Stock Exchange (BSE).

EKI is 15+ years old and is a global market leader with deep expertise in the realm of climate change, carbon offset solutions, and carbon asset management. The company is today present in 16+ countries and has 3500+ clients across 40+ countries worldwide. As on date, EKI has supplied over 200+ million offsets.

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Cummins India Ltd

Current Price : ₹ 3,831

✅ About :
Cummins India Limited is a leading manufacturer and seller of engines and related products. It is a part of the Cummins Group in India and operates in three main business units – Engine, Power Systems, and Distribution. The Engine Business focuses on engines for various vehicle and equipment markets, while the Power Systems Business specializes in high horsepower engines for different applications. The Distribution Business caters to the maintenance and uptime of Cummins equipment

➡️ Key metrics

⚡Market Cap : ₹ 1,04,195 Cr.

⚡Stock P/E : 59.0
⚡ROCE : 35.2 %
⚡ROE : 28.1 %
⚡Debt to equity : 0.02
⚡Profit Var 3Yrs : 36.8 %
⚡Sales growth 3Years : 27.4 %

> ⬆️ Up Side Potential : 30%

> Electrolyzers: Cummins is a leading manufacturer of proton exchange which are used to produce green hydrogen by splitting water using renewable electricity

> Hydrogen Storage: Cummins is developing solutions for storing hydrogen, including high-pressure

➡️ Growth opportunities

> ⚡Electrolyzer Technology: Cummins can leverage its existing capabilities in power generation to develop and manufacture efficient electrolyzers

> ⚡Fuel Cell Systems: The company can also focus on developing and commercializing fuel cell systems

Disclaimer: The above data should not be considered as a Buy or Sell recommendation. The analysis has been done for educational and learning purpose only.

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