Bata India Ltd. share price target

Bata has devised new strategies that would aid in providing thrust to revenue growth. It is tweaking the product portfolio in favour of casual footwear that is experiencing higher demand. It is providing more visibility at stores for younger brands like Hush Puppies, Power and North Star. Channel checks suggest a healthy recovery in August-September with...

Bata's core product portfolio includes formal and fashion footwear category. While open footwear and slippers category witnessed speedy recovery (as witnessed in financials of Relaxo), fewer social gatherings and office/school closures had a material impact on performance of Bata in FY21. ASPs declined ~14% to | 535/pair with gross margin declining 660 bps YoY in FY21. With a gradual opening of economy, we expect premiumisation story...

We believe, BIL will be able to revive its revenue growth trajectory when the economy is back to normal given its strong brand recall & reach. Expect 41%CAGR over FY21-23E. We value BIL at 57x on FY23 EPS. Volumes impacted by the second wave, improved from last year Q1FY22 revenue grew by 98% YoY on a low base (de-growth of 84% in Q1FY21 due to Covid-19), but de-grew by 55% on a sequential basis impacted by second wave related lockdowns. The retail outlets were largely shut, but the other channels like E-Com, Bata Chatshop , Bata Store on Wheels enabled the company to minimize the overall impact....

Net sales rebound on a low base of Q1FY21 Bata reported robust net sales growth on a low base of Q1FY21. The management attributed better performance to preparedness with an agile contingency plan in place which helped the company to navigate adroitly through the changing business landscape amidst infection surge. The management guided that since the ease in lockdown, footfalls in retail outlets have started growing, signaling strong signs of recovery. Prudent cost management narrowed EBITDA loss The company's focus on cost optimization in its retail network, cost savings across...

We introduce FY24 Estimates but continue to maintain HOLD rating with a revised TP of Rs 1675/share (Rs 1500 earlier) given subdued discretionary demand due to extended lockdown. We roll forward our target PE multiple of 40x FY24E EPS.

Business recovery better than expected

Bata India witnessed a revenue recovery rate (adjusted) reaching 80% in Q4FY21 vs. 74% in Q3FY21. Lower revenues from formal & fashion footwear continued to impact gross margin YoY though QoQ gross margins witnessed an improvement. Revenue fell 5% YoY to | 589.9 crore in Q4FY21. Aligning with the current demand scenario, Bata tweaked its product portfolio from formals & fashion categories to casuals, fitness & essential categories. Gross margins contracted ~570 bps YoY to 53.1% mainly owing to unfavourable product mix. Cost control measures led to lower other...

Bata India's (Bata) Q4FY21 result was below our and consensus estimates on key parameters. After a strong recovery in Q3FY21, net sales growth took a pause amid weak demand. Net sales declined by 4.9% YoY to Rs5,899mn, while EBITDA came in at Rs1,121mn, down by 19.7% YoY. The company reported net profit of Rs295mn, lower by 23.2% YoY. Bata resumed its advertising and branding initiatives with a new ad campaign in Q4FY21. The company further strengthened its ecommerce and omnichannel facilities to cover more pin codes across India. It also continued expanding retail network in tier 3-5 towns via franchisee route by opening 10 new franchisee stores and appointing new distributors to serve multi-brand stores. Given second wave...

Slower-than-expected recovery drags financials