Listed entities analysed under footwear sector are :
- Relaxo Footwear
- Mirza International
- Liberty Shoes
- Superhouse
- Lehar Footwears
In this post, I have calculated the economic profit of the companies mentioned above with the help of ROIC i.e Return on Invested capital & WACC i.e Weighted Average Cost of Capital.
- Relaxo Footwear – CMP 750, Market Capitalization – Rs18,351Cr
ROIC= 24.55%, WACC= 12.28% hence the Economic profit of the company is 12.27%
- Mirza International – CMP 57, Market Capitalization – Rs682Cr
ROIC= 32.36%, WACC= 11.62% hence the Economic profit of the company is 20.74%
- Liberty Shoes – CMP135, Market Capitalization – Rs228Cr
ROIC= 10.45%, WACC= 12.41% hence the Economic Profit of the company is -1.96%
- Superhouse – CMP90, Market Capitalization – Rs102Cr
ROIC= 10.11%, WACC= 11.49% hence the Economic Profit of the company is -1.38%
- Lehar Footwears – CMP32, Market Capitalization – Rs43.50
ROIC= 8.81%, WACC= 13.01% hence the Economic profit of the company is -4.20%
Economic profit of the footwear sector is 5.09% which indicated the average profitability of the companies in the industry. Economic profit can surely help to identify growing sector/industry. I consider this as one of the major indicator during Top-down analysis as it gives a overview of the sector & its profitability.
Hippie Investor 