Bata India Ltd. share price target

We trim our FY22/23E estimates given subdued discretionary demand due to extended lockdown in Q1FY22 and continue to maintain HOLD rating with a revised TP of Rs. 1500/share (Rs. 1600 earlier) we roll forward our target PE multiple of 45x to its FY23E EPS.

Volumes Picking Up Gradually, but We Expect Stress to Remain in FY22E: Recovery is clearly visible from the latest two quarterly numbers, with YoY revenues in Q2FY21 and Q3FY21 coming in at 51% and 74% of the numbers seen in the corresponding quarters in the previous year.

Q3FY21 revenue de-grew by ~26% YoY owing to Covid-19 led disruption, but on a sequential basis, growth was strong at +67% supported by festival demand and company's channel expansion initiatives. The overall volumes reached 88% of preCovid levels. Sales through digitally enabled platforms now contributes ~15% of total revenue (10% in Q2FY21). For strengthening E-commerce channel, BIL rolled out Bata ChatShop', Bata Home Delivery' & Bata Stores on Wheels'. To reach smaller towns, the company opens new stores via franchise route and ensures availability in multi-brand outlets via distribution channels. BIL opened 45 new franchise stores in the quarter taking the total franchisee to 221 and targets to open 500 in smaller towns...

Bata continues to penetrate newer towns through franchise operated stores (opened 45 stores taking total store count to 221 franchise stores). Some of the new towns include Itanagar, Varkala, Sivakasi, Pali and Ratnagiri (all having population between 50,000 and 3 lakh). It has reiterated its vision of opening 500 franchise stores by 2023 and reaching towns with population of less than 2 lakh. Furthermore, in a bid to strengthen its wholesale distribution channel (~12% of revenues), Bata has significantly ramped up its touch-points with Bata now servicing ~30,000 multi-branded outlets. This...

We trim our FY21E estimates and continue to maintain HOLD rating with a revised TP of Rs. 1600 (Rs. 1308 earlier) we roll forward our target PE multiple of 45x to its FY23E EPS.

Bata India's (Bata) Q3FY21 result was a beat to our and consensus estimates on key parameters. Though quarterly performance was subdued compared to Q3FY20, the company's sequential net sales growth and EBITDA margin expansion was commendable given challenging business environment. Net sales declined by 25.9% YoY to Rs6,156mn, while EBITDA came in at Rs1,178mn, down by 55.3% YoY. The company reported net profit of Rs264mn, lower by 77.6% YoY. The management guided that healthy demand led by festive season resulted in strong volume growth in Q3FY21 and Bata's overall demand has reached 88% of pre-Covid level. To factor in beat,...

A changing business model - BATA in the process of re inventing itself: BATA over the last few years has focused on higher value products and re-inventing itself to cater to the younger and urban population with the aggressive addition of stores and the introduction of red collection and increased focus on women footwear.

A changing business model - BATA in the process of re inventing itself: BATA over the last few years has focused on higher value products and re-inventing itself to cater to the younger and urban population with the aggressive addition of stores and the introduction of red collection and increased focus on women footwear.

We believe, BIL will be able to revive its revenue growth trajectory when the economy is back to normal. We value BIL at 42x on FY23 EPS. Gradual recovery led by channel expansion initiatives Q2FY21 revenue de-grew by ~49% YoY owing to Covid-19 led disruption, but the growth was robust on a sequential basis (+173% QoQ). Currently, all of the stores are open (Vs.85% in Q1FY21) and the company's channel expansion initiatives supported the growth. To generate demand in the current scenario, BIL has launched two new products to suit work at home. For strengthening E-commerce channel, the company...

Bata India's (Bata) Q2FY21 result was below our estimates on key parameters. Though net sales had a robust growth over Q1FY21, negative operating leverage weighed on EBITDA margin in Q2FY21. Net sales declined by 49% YoY to Rs3,679mn, while EBITDA came in at Rs182mn, down by 90% YoY. The company reported net loss of Rs443mn compared to net profit of Rs713mn in Q2FY20. The management guided that gradual opening up of all the stores and healthy demand in Tier-II and smaller towns led to higher sales volume. We believe Bata is well positioned to rebound to its earlier growth trajectory as metros and Tier-I cities are showing demand traction. We have cut our net sales/PAT...