Top Leather Stocks in India 2023

The Indian leather sector stands as a prominent global player in leather production, holding vital significance. The primary leather requisites stem from sectors such as fashion, footwear, interiors, and furniture. Notably, the Indian leather industry has witnessed a convergence of skilled labor, cutting-edge technology, and adherence to international industrial benchmarks.
Constituting approximately 13% of the global leather supply, India plays a substantial role in fulfilling the world’s leather requirements. This contribution stands as a significant component of the overall global leather demand landscape.

The Leather Stocks Industry: An Overview

The leather industry in India holds a significant share, contributing to approximately 13% of global leather production. Annually, India manufactures approximately 3 billion square feet of leather. This robust production is primarily attributed to the steady demand in the export market. Notably, leather exports are among the top ten foreign exchange earners for the nation. India benefits from ample raw materials used in leather production, with about 20% of the global cattle population and 11% of the goat population residing within the country’s borders.

Furthermore, the leather industry is recognized for generating employment opportunities for over 4 million individuals in India, particularly catering to marginalized segments of society with lower literacy rates.Footwear products dominate the central market for Indian leather, with exports reaching an extensive array of countries, encompassing the USA, Germany, UK, Italy, France, Spain, Netherlands, UAE, China, Hong Kong, Belgium, and Poland.

India commands a significant presence in the footwear industry, accounting for 9% of global footwear production and positioning itself as the second-largest producer and consumer of footwear products worldwide. Impressively, the sale of every 1,000 pairs of footwear in India has the potential to generate approximately 425 jobs across manufacturing, related industries, and retail sectors combined.

Anticipating future growth, India is projected to manufacture 3 billion footwear units by 2024, with an expected annual growth rate of 10%. Additionally, the Indian footwear market, valued at $9.70 billion in 2019, is forecasted to expand substantially, potentially reaching a remarkable $80 billion, or eight times its current value, by 2030. As a result of these promising factors, the prices of leather stocks are poised to experience an increase.

Factors considered for the selected Leather Stocks

Given the notable standing of the leather industry in India, it’s crucial to take into account certain factors when deliberating potential investments.

We have curated the following list of top leather stocks in India based on the following factors:

1. Market Cap

We have chosen only those leather companies whose market cap is greater than 100 Crore INR.

2. Price to Earning Ratio

Typically, a leather stock’s price-to-earnings ratio tends to decrease as its performance improves.

3. Sales

We have selected the following leather companies with an Average Sales Growth (3 years) of more than 10%.

4.Profit

The following list consists of leather companies whose Average Profit growth (3 years) > 10%.

Top leather stocks to buy in India

Bhartiya International Ltd

Bhartiya International Ltd is actively involved in the manufacturing and trading of leather and textile products. Notably, the company has also extended its reach into the real estate sector in the North Bangalore Region, encompassing both commercial and retail spaces.The company boasts an extensive operational network, comprising 10 manufacturing units, 6 design and prototyping facilities, 9 business development offices, and 6 showrooms, indicative of its robust presence and infrastructure.

Significantly, Bhartiya International Ltd has successfully cultivated a robust customer base comprising prestigious international entities such as All Saints, Esprit, Levi Strauss, and Okaidi. The company’s ability to secure repeat business from these esteemed clients underscores its reputation and reliability in the industry.

• Market Cap – ₹ 240 Cr.
• Current Price – ₹ 197
• High / Low – ₹ 268 / 145
• Stock P/E – 3.89
• ROE – 17.6 %

The current market valuation of the stock indicates that it is trading at 0.62 times its book value.On a positive note, the company has achieved commendable profit growth, boasting a Compound Annual Growth Rate (CAGR) of 30.3% over the past five years.
However, there are notable drawbacks to consider. The company’s sales growth over the last five years has been lackluster, with a marginal increase of 2.36%, potentially suggesting challenges in expanding its market reach. Additionally, the company’s return on equity has remained relatively low at 3.88% over the last three years, indicating potential inefficiencies in generating profits from shareholders’ equity. It’s worth noting that the company carries contingent liabilities amounting to Rs. 126 crore. Moreover, the reported earnings include other income of Rs. 57.5 crore, contributing to the overall financial picture.

Superhouse Ltd

Superhouse Ltd is actively involved in the production and export of Leather, Leather Goods, and Textile Goods, showcasing a diversified portfolio that encompasses various types of footwear and accessories.The company’s offerings are inclusive of Finished Leather, Men’s Footwear, Women’s Footwear, Children’s Footwear, Safety Footwear, as well as Leather accessories and garments such as belts, Riding Products, and Safety Wear.

Superhouse Ltd prides itself on its integrated manufacturing capabilities, with in-house tanneries and leather product divisions. The company’s production capacity is well-defined, encompassing different types of footwear:Cemented Footwear: 1.8 million pairs per annum (ppa), Goodyear Fashion Footwear: 150,000 ppa, PU Direct-Moulded Footwear: 300,000 ppa, Various constructions including Cemented, Strobel, Stitch-down, and Moccasin: 900,000 ppa

• Market Cap – ₹ 236 Cr.
• Current Price – ₹ 214
• High / Low – ₹ 287 / 178
• Stock P/E – 8.87
• ROE – 6.22 %

The current stock valuation indicates that it is trading at a modest 0.54 times its book value.However, certain concerning aspects deserve attention. The company has demonstrated a lackluster sales growth of 3.35% over the course of the past five years, potentially indicating challenges in expanding its market presence. Additionally, the return on equity over the last three years stands at a relatively low 7.69%, suggesting potential inefficiencies in generating profits in relation to shareholders’ equity. Furthermore, the dividend payout has remained minimal, amounting to only 3.73% of profits over the last three years.

Mirza International Ltd

Established in the year 1979, Mirza International Ltd holds the distinction of being a manufacturer and exporter specializing in finished leather, as well as footwear. Additionally, the company operates as a trader of footwear, apparel, and related products.
The company’s operations are organized into three distinct divisions. Firstly, the Tannery Division is responsible for manufacturing Finished Leather, utilizing Raw Hides, Wet Blue, and Crust as its primary materials. Secondly, the Shoe Division is dedicated to producing Finished Leather Shoes, showcasing the company’s prowess in the footwear sector. Lastly, the Garments/Accessories Division focuses on trading Garments and Accessories, contributing to the company’s diverse product offerings.

Mirza International Ltd boasts a significant production infrastructure, comprising six integrated manufacturing facilities. This infrastructure facilitates a monthly production capacity of approximately 3 million square feet of leather and an annual footwear manufacturing capacity of about 6.4 million pairs. In the fiscal year 2022, the company’s operational efficiency was demonstrated by a capacity utilization rate of around 65.85%.

• Market Cap – ₹ 644 Cr.
• Current Price – ₹ 46.6
• High / Low – ₹ 74.0 / 28.5
• Stock P/E – 15.0
• ROE – 4.33 %

The company has successfully lowered its debt burden, moving towards a nearly debt-free status. Additionally, the company’s efficient management of working capital is evident through a reduction from 90.6 days to 37.2 days, underscoring its improved financial agility.Despite the company consistently achieving profitability, it has chosen not to distribute dividends to its shareholders. Furthermore, the company’s sales growth has been unfavorable, with a decline of -8.39% over the past five years, potentially indicating challenges in maintaining market competitiveness. Moreover, the company’s return on equity for the last three years has been relatively modest, standing at 7.45%, suggesting potential inefficiencies in generating profits from shareholders’ investments.

Sreeleathers Ltd

Established in 1991, Sreeleathers Ltd is a manufacturer and retailer of footwear, as well as related products and accessories. The company’s product range encompasses both Leather and Non-Leather footwear and associated accessories. Their distribution network consists of exclusive stores and 26 authorized dealers.

The company operates through three distinct business units, with two located in Kolkata and one in Jaipur. Their product offerings include a variety of footwear for both men and women, including shoes, sandals, chappals, and nagras. Additionally, they offer footwear for kids, including shoes, chappals, and sandals. Moreover, the company provides a range of accessories such as belts, wallets, bags, special boxes, socks, and masks.

• Market Cap – ₹ 493 Cr.
• Current Price – ₹ 213
• High / Low – ₹ 265 / 159
• Stock P/E – 19.3
• ROE – 7.23 %

The company boasts a commendable debt-free position, a factor that speaks to its financial stability. Moreover, there are promising anticipations for the company’s forthcoming quarter, hinting at potential positive outcomes.Seeing the company’s recurrent profitability, it has chosen not to allocate funds towards dividend payouts, which might raise questions among investors seeking returns on their investments. Furthermore, the company’s sales growth over the last five years has been lacklustre indicating potential challenges in expanding its market presence.Another concern lies in the company’s return on equity (ROE) over the past three years, which has remained at a modest 5.34%. This metric suggests that the company’s ability to generate profits in relation to its shareholders’ equity has been comparatively lower, which could potentially impact investor confidence and valuation perceptions.

Khadim India Ltd

Established in 1981 as S.N. Footwear Industries Private Limited, Khadim’s initially focused on wholesaling and distributing branded essential utility footwear. Beginning in 1993, the company ventured into retailing and swiftly evolved into a sought-after fashion footwear brand. Its core business objective revolves around “Fashion for Everyone,” solidifying its identity as an affordable fashion brand.Khadim’s holds the distinction of being the second-largest footwear retailer in India. Notably, it also boasts the distinction of being India’s largest footwear retail franchise network.

The company’s manufacturing prowess extends to a remarkably diverse spectrum of international-quality footwear. This comprehensive range spans formal, semi-formal, and casual shoes, along with sandals, slippers, sports shoes, and school shoes, catering to men, women, and children alike.In the organized market segment, Khadim’s claims a 5% market share, offering an extensive lineup of approximately 10 brands and 9 sub-brands across various price brackets. This strategic positioning equips the brand to effectively address around 85% of the total potential within the Indian footwear market, a testament to its brand presence and wide-ranging product offerings

• Market Cap – ₹ 417 Cr.
• Current Price – ₹ 232
• High / Low – ₹ 334 / 175
• Stock P/E – 26.4
• ROE – 8.09 %

While the company maintains a consistent record of profitability, it has refrained from distributing dividends to its stakeholders. Additionally, the company exhibits a low interest coverage ratio, signifying potential challenges in meeting its interest obligations. Over the past five years, the company has struggled with a negative sales growth of -2.48%, highlighting potential difficulties in expanding its market presence. Furthermore, its return on equity for the last three years remains notably low at -0.79%, indicating potential inefficiencies in generating profits from shareholders’ investments. Moreover, there has been an increase in debtor days from 85.4 to 104 days, indicating a longer duration for collecting receivables and potentially affecting the company’s cash flow management.

Lehar Footwears Ltd

Lehar Footwears Ltd engages in the production of an assorted range of footwear, encompassing lightweight fancy slippers, PVC and TPR footwear, synthetic leather chappals, Hawai Chappals, and canvas shoes. The company’s offerings comprise Light Weight Hawai Chappals, Canvas Shoes, PVC Shoes, Synthetic Leather Chappals, Fancy Chappals, and EVA Injected Footwear, all marketed under the brand name ‘LEHAR’.

Given the robust demand for Eva and PU products in the market, the company’s management has strategically outlined plans to augment its production capacity within these segments. This expansion is aimed at effectively meeting the escalated demand for these specific products.

• Market Cap – ₹ 210 Cr.
• Current Price – ₹ 140
• High / Low – ₹ 159 / 44.1
• Stock P/E – 29.5
• ROE – 6.42 %

The company is anticipated to yield positive results in the upcoming quarter, building on its track record of delivering impressive profit growth, with a Compound Annual Growth Rate (CAGR) of 21.3% over the past five years. However, certain aspects warrant attention. The company’s return on equity has remained low at 4.18% over the last three years, suggesting potential inefficiencies in utilizing shareholder investments to generate profits. Moreover, the extension of debtor days from 109 to 136 days indicates a prolonged period for collecting receivables, potentially affecting cash flow and liquidity.

Liberty Shoes Ltd

Liberty Shoes Ltd is actively involved in the manufacturing and trading of footwear, accessories, and lifestyle products through an extensive network encompassing both retail and wholesale channels. The company’s diverse product portfolio encompasses an array of footwear categories, spanning fashion footwear, dress shoes, sports shoes, slip-ons, ballerinas, relaxed casuals, and school shoes, among others. Notably, the company’s offerings extend beyond conventional footwear, encompassing safety and industrial footwear, as well as specialized boots for military and paramilitary forces like army, navy, and CRPF, including jungle boots. In addition to footwear, the company offers a wide spectrum of accessories, such as shoe-care products, backpacks, belts, wallets, travel bags, and handbags.

Moreover, Liberty Shoes Ltd has ventured into the luxury segment, introducing a line of perfumes and related skincare products. With a robust presence, the company operates five manufacturing facilities strategically located across Haryana, Himachal Pradesh, and Uttarakhand. Collectively, these facilities contribute to a combined production capacity of 1.06 crore shoes per annum, reinforcing the company’s stature in the footwear and lifestyle industry.

• Market Cap – ₹ 398 Cr.
• Current Price – ₹ 234
• High / Low – ₹ 445 / 157
• Stock P/E – 36.4
• ROE – 6.78 %

Debtor days have demonstrated enhancement, decreasing from 69.1 to 48.8 days.However, certain drawbacks require consideration. The company has encountered lackluster sales growth, amounting to only 3.70% over the last five years, indicating potential challenges in achieving substantial market expansion. Additionally, the company’s return on equity for the past three years remains notably low at 2.79%, suggesting potential inefficiencies in generating profits from shareholders’ investments.

Bata India Ltd

Bata India is primarily involved in the manufacturing and trading of footwear and accessories, strategically distributing its products through an extensive retail and wholesale network.Distinguished as the world’s foremost footwear company, Bata Corporation was founded in 1894 in the Czech Republic. Globally recognized as the leading producer of footwear by volume, the corporation operates an expansive retail network encompassing over 5,300 stores across more than 70 countries, while also boasting production facilities in 18 nations. Its entry into the Indian market dates back to 1931, eventually going public in 1973. As of now, the Bata Corporation holds a controlling 53% ownership stake in the company.

Bata India’s operational strength is bolstered by four advanced manufacturing units situated in strategic locations – Batanagar in Kolkata, Bataganj in Bihar, Peenya near Bangalore, and Hosur in Tamil Nadu. Collectively, these facilities provide the company with a robust manufacturing capacity capable of producing 21 million footwear units annually.

• Market Cap – ₹ 21,203 Cr.
• Current Price – ₹ 1,650
• High / Low – ₹ 1,989 / 1,381
• Stock P/E – 68.3
• ROE – 19.8 %

The company has consistently upheld a robust dividend payout ratio of 225%, indicating a healthy commitment to distributing profits to its shareholders.However, there are certain negative aspects that merit consideration. The stock is currently trading at a relatively high valuation of 14.7 times its book value, possibly indicating an elevated market expectation. In terms of sales growth, the company has faced challenges, reflecting a modest increase of 5.55% over the past five years, potentially signifying limitations in expanding its market presence. Additionally, the company’s return on equity for the last three years remains notably low at 6.53%, suggesting potential inefficiencies in generating profits from shareholders’ equity investments.

Campus Activewear Ltd

Campus Activewear Limited, established on September 24, 2008, has emerged as one of India’s prominent sports and athleisure footwear brands, renowned for its substantial contribution in both value and volume. The company specializes in the production and distribution of a diverse range of footwear, encompassing Running Shoes, Walking Shoes, Casual Shoes, Floaters, Slippers, Flip Flops, and Sandals, presented in an array of colors, styles, and at accessible price points.Campus solidifies its position in the market with a noteworthy 17% market share within the expansive sports and athleisure footwear segment. The brand’s extensive appeal extends to a wide demographic, offering an extensive variety of styles, colors, sizes, and functional options for men, women, kids, and children. Impressively, the company boasts an impressive repertoire of 2,100 active styles.

Campus exhibits a robust operational setup, owning and operating five manufacturing facilities spread across India. These facilities contribute to a significant annual assembly capacity of 28.8 million pairs of footwear. Notably, the company’s internal production capabilities encompass 4.80 million footwear uppers and 10.80 million footwear soles, further bolstered by a third-party annual capacity of 24 million footwear uppers and 18 million footwear soles.

• Market Cap – ₹ 8,822 Cr.
• Current Price – ₹ 289
• High / Low – ₹ 640 / 282
• Stock P/E – 75.2
• ROE – 23.9 %

The company has exhibited commendable profit growth, achieving a Compound Annual Growth Rate (CAGR) of 30.2% over the course of the last five years.However, certain drawbacks necessitate consideration. The current stock valuation reflects a trading multiple of 11.0 times its book value, potentially indicating a relatively higher market expectation. Despite consistently reporting profits, the company has chosen not to distribute dividends to its stakeholders, a factor that potential investors should take into account.

AKI India Ltd

Founded in 1994, AKI Ltd engages in the production and international trade of Leather and Leather Goods. The company’s establishment was facilitated by the technical guidance provided by the Horse Riding Group from Germany, which primarily focused on crafting Leather Saddlery & Harness Goods. In the present day, the company’s manufacturing scope has expanded to encompass a diverse array of offerings, including products for equestrian sports, Horse Covers, Leather Footwear, Leather Bags, Belts, and Finished Leather. Notably, AKI Ltd’s equity shares are publicly listed on the SME portal of the Bombay Stock Exchange (BSE).

The company’s operations are segmented into distinct divisions, each serving a specific focus. The Tannery Division oversees the creation of Upholstery Leather, Bag Leather, Belt Leather, and Footwear Leather. In the Footwear Division, AKI Ltd offers a diverse range of footwear options, including Country Side Boots, Boat Shoes, Riding Shoes, and Casual & Formal Shoes. The Equestrian Division specializes in crafting Saddlery products like Bridles, Halters, Chaps, Boots, Horse Rugs, and Harness Sets. Additionally, the company excels in designing and producing high-quality Leather Accessories such as Bags, Wallets, and Belts. Furthermore, AKI Ltd plays a pivotal role as a distributor of leather chemicals sourced from Balmer Lawrie Company, ensuring the availability of these products in the market.

• Market Cap – ₹ 104 Cr.
• Current Price – ₹ 15.5
• High / Low – ₹ 24.5 / 0.00
• Stock P/E – 96.1
• ROE – 7.45 %

The stock is currently valued at 6.95 times its book value. Despite the company consistently generating profits, it has refrained from distributing dividends. Moreover, the company’s interest coverage ratio is relatively low. There has been a decline in promoter holding over the previous quarter, specifically by -3.87%. The company has demonstrated lackluster sales growth of 5.66% over the last five years. Additionally, the return on equity for the company over the past three years stands at a modest 7.27%. There is a possibility that the company is capitalizing the interest cost. The reported earnings also encompass an other income of Rs. 2.35 Cr.

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What is the future of the leather industry in India ?

The trajectory of Indian leather stocks hinges upon the effective management of the country’s leather industry, particularly in terms of its adeptness at crafting and exporting luxury-focused products. At present, leather manufacturers are vigorously endeavouring to enhance their reputation within specialized markets, employing inventive creations such as handbags and backpacks crafted from unique hides. Remarkably, India holds the noteworthy position of being the second-largest global exporter of leather goods, alongside its distinction as the third-largest exporter of saddlery and harnesses. These endeavours, among others, have contributed to fortifying India’s status as the world’s fifth-largest economy. Notably, the leather sector within India anticipates annual growth ranging from 5% to 10%, a contribution that approximately accounts for 6% of the nation’s Gross Domestic Product (G.D.P.).

List of Best Leather Companies in India (by Marketcap)

Conclusion

India currently ranks among the top 10 exporters of leather globally, and the industry is diligently striving to ascend higher on this list. This endeavour holds the potential to foster enhanced employment opportunities in the forthcoming years. Given the trajectory of urbanisation and the expanding populace, a favourable outlook is anticipated for leather stocks. Nevertheless, prudent caution is advised when considering investments in leather company stocks; conducting thorough due diligence on their background and past performance records is crucial.

It’s essential to clarify that the provided content is intended solely for informational purposes and not as investment advice. Investing in the securities market carries inherent market risks, requiring careful examination of all relevant documents before making any investment decisions. Past performance is not necessarily indicative of future returns.

It’s imperative to tailor your investment choices according to your specific requirements, risk tolerance, goals, timeframes, and cost considerations. The performance and returns of any investment portfolio are inherently unpredictable and can’t be guaranteed.

Author: Vedanti KiranVedanti is a female finance writer, currently pursuing her studies at Hansraj College. She has a passion for writing and travelling, and her articles on the stock market, finance, investment, and cryptocurrency are well-researched and informative. With her unique perspective on the world of finance, Vedanti is a go-to source for those seeking insights into the world of finance.