Bata India Ltd. share price target

Recommendation With a 8% upside potential from the CMP, we downgrade the stock to HOLD

BATA’s revenue performance has been decent on SSSG front (-9% our estimate vs -12% for Metro) while retail expansion (at 11%) continues to be modest. Revenue growth at 2% YoY is un-exciting. Improvement in ASP (3%YoY) instills confidence in the execution of casualisation and premiumisation initiatives.

Recommendation With a 12% upside potential from the CMP, we maintain our BUY rating on the stock.

Revenue growth of 3.5% on 4-year CAGR basis appears weak vs peers. However, this needs to be seen in the context of rationalisation in COCO store footprint (net closure of ~100 COCO stores between March’20 and March’23). Overall retail expansion at ~6-7% 4Y CAGR is modest.

Recommendation With a 12% upside potential from the CMP, we maintain our BUY rating on the stock.

Bata reported a revenue print of Rs9bn (+7% YoY; below our estimates). Revenue growth of 2.8% on 3-year CAGR basis also appears weak. However, this needs to be seen in the context of rationalisation in COCO store footprint (net closure of ~120 COCO stores between March’20 and March’22).

Steady growth; full volume and margin recovery awaited

We remain positive on the stock from a long-term perspective given its immense growth potential. Maintain a BUY with a revised TP of Rs 1,950/share and assign a PE of 43x sept'24E EPS.