Bata India Ltd. share price target

Bata generates ~50% of the revenues from premium category footwears (MRP> Rs 1000+) and largely operates through its wide retail network contributing ~84% to the revenues. We, Initiate coverage with SELL rating on the stock with a target price of Rs 1150 as we value the stock at 40x P/E on its FY23

Valuation and Risks:A cash rich and clean balance sheet, management with excellent track record and high brand recognition will help sustain valuations.

In view of the current situation, management stated that the company is expanding its e-commerce presence with enhancing online channels, allowing delivery in more than 1300 cities and rolling out home delivery. Additionally, the company is focused on several cost management efforts including rental negotiations, closure of unviable stores and thrust on digitization across the organization to boost...

Bata India posted a 8.6% degrowth in Q4FY20 revenue, 20.5% below our estimates

Covid-19 is expected to dramatically shift more customer traffic to digital channel. Bata has, over the past two years, focused on strengthening online presence by leveraging strong partnerships with e-commerce leaders like Myntra, Amazon & Flipkart as well as improving assortment on its own website. The company has rolled out a full suite of omni-channel solutions, allowing home delivery across 900+ stores (vs. 400 stores in FY19) in 1300 cites. Furthermore, it has provided customers an option to shop via WhatsApp chat with neighboured stores. Currently e-commerce contributes...

Though significant negative impact is expected on sales; costs like rent, other operation related costs would not decline in the same proportion. Hence Bata would take abnormally longer time to restore...

Bata India Ltd (BIL) is the largest retailer and leading manufacturer of footwear in India with ~1400 retail stores as on Dec 2019. We revise our Target to Rs.1,400 (earlier Rs1,850) factoring the demand weakness due to COVID-19 epidemic, but upgrade to Accumulate rating considering the recent sharp fall in stock price....

Macro Issues Limit Topline Growth:BATA's Q3FY20 failed to impress as the impact of slowdown continues to be visible.

Bata has constantly undertaken efforts for transforming its brand image from a mass brand to a premium one with launch of new trendy collections. The management indicated that premium products (50% of sales) was growing at a faster pace than the mass product portfolio providing an uptick in the average retail selling price, which was up 4.5% during Q3FY20. Enhanced share of premium products has led gross margins to improve significantly by 290 bps to 56% in FY17-19. The management has the long term aim to enhance the share of premium products by ~500 bps in the next two to...

Bata posted a moderate Q3FY20 and slightly missed our estimates. Revenue grew 6.7% y-o-y to INR 831 cr, slightly below the estimate of a 10% YoY growth.