Lehar Footwears

The chappal in every Indian household

Look down at what a mechanic wears to work, what a farmer slips on before stepping into the field, what half the wedding guests in a small town are wearing beneath their finery. Somewhere in that vast, unglamorous ocean of everyday footwear sits Lehar. This is not the company that makes the shoe you photograph — it is the company that makes the sandal you actually wear, day after day, until the strap gives way and you buy another. Mass footwear, sold cheap, sold in volume, across a country of a billion feet. Boring. And boring, as Munger liked to remind us, is often where money quietly gets made.

Lehar Footwears has been at this since 1994, manufacturing and distributing budget footwear. There is nothing clever about the product. The interesting story is what has happened to the numbers underneath it.

A business that finally found its stride

For years Lehar was a sleepy affair. Sales sat at ₹84 crore in 2015 and had actually *shrunk* to ₹73 crore by 2017. Profit in those years was a rounding error — ₹1 crore, ₹2 crore, once literally nothing in 2020. This was a company treading water.

Then something changed. Sales went from ₹95 crore in 2020 to ₹147, then ₹203, then ₹277, and the most recent full year clocked ₹431 crore. That is a genuine acceleration — a five-year compounded sales growth of 24 percent, and a three-year figure nearer 29 percent. Profit followed with a vengeance, compounding at that eye-catching 84 percent over five years, though remember what that headline hides: you are comparing against a base so low it barely registered. Growing a ₹1 crore profit to ₹21 crore looks miraculous in percentage terms; the honest reading is that a tiny profit became a small-but-real one.

The quality signals are encouraging. Debtor days have tightened from 95 to 66, working capital needs from 52 days to 41. A footwear maker that collects its money faster and ties up less cash to run the same show is a footwear maker being run with discipline. Return on capital of 18 percent and return on equity of 17 percent are respectable — though note the three-year average ROE is closer to 12 percent, so this is a business *becoming* good, not one that has always been good.

What you pay, and the dilution footnote

Here is where the short-term case sharpens. Lehar trades at a P/E of about 22.5. Its own five-year median is 31.7 and its ten-year median 28.7. So the market is pricing this share at roughly a 29 percent discount to how it has typically valued itself over five years, and around a 22 percent discount to its ten-year norm. The stock is down 25 percent over the past year and sits at ₹211, well off its ₹285 high. A company growing faster than ever, priced *cheaper* than its own history — that tension is precisely what a short-horizon strategy exists to exploit.

But be clear-eyed about two things. First, at 2.8 times book value, "cheap versus its own P/E history" does not mean "cheap in absolute terms." You are paying nearly three rupees for every rupee of net worth. Second — and this must be said — the equity capital has *not* stayed flat. It rose from ₹14 crore, where it sat unchanged for eight straight years, to ₹16 crore and then ₹18 crore between 2023 and 2024. That is dilution of roughly a quarter. Lehar issued shares to fund its growth spurt. It is modest, it appears to have been put to productive use, but you own a slightly smaller slice than a 2022 shareholder did. Never wave that away.

Promoters, for their part, have added to their stake — from 71 percent to nearly 73 percent. People who see the accounts up close buying more is a signal worth more than most.

The catch in the fine print

The most recent trailing-twelve-month sales growth is just 2 percent. After years of sprinting, the top line has cooled sharply. For a stock whose entire appeal rests on momentum in the business, that flat patch is the single number that could puncture the thesis. A mass-market maker has no pricing power — it lives on volume, and volume that stops growing is a warning light, not a footnote.

This is a small company — ₹373 crore — in a brutally competitive, low-margin trade, with a dividend yield (0.24 percent) that is effectively a formality. It is not a business to marry.

The Omaha verdict

For a one-to-six-month view, the logic is honest and narrow: a genuinely improved operator, trading below its own long-run valuation, with an owner adding shares. That is a reasonable short-term wager. But treat it as a *rented* position, not an owned one — the TTM stall and the dilution mean the margin of safety is thin. Watch the next sales print like a hawk. If growth doesn't reawaken, walk out the same door you came in.