Bata India Ltd. share price target

We upgrade the stock to BUY (HOLD earlier) with revised TP of Rs. 2,300/share (Rs. 1,675/share earlier) with an upward revision in target multiple to 45x (40-45x 5 year average PE band

It has a robust b/s with healthy cash and bank balance worth | 865+ crore (as on H1FY22), negative working capital cycle, generating RoCE of 23%+ Q2FY22 Results: Bata India reported strong operational numbers in Q2FY22 with...

On track to full business recovery

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