Geojit's research report on Bata India
Bata India Ltd (BIL) is the largest retailer and leading manufacturer of footwear in India with ~1,700 retail stores as of June 2022. We upgrade our rating to Buy with a revised Target of Rs. 2,151 factoring strong sales recovery in the quarter. Strong recovery in demand along with price growth (+19% YoY) resulted in revenue growth of 253%YoY (+42%QoQ). On a 3yr CAGR basis, revenue grew by +2% from Q1FY20. Higher volumes led to recovery in EBITDA margin to 25.9% Vs loss YoY while gross margin improved by 40bps YoY to 56.6%, supported by changes in mix and price growth. BIL’s cost-saving measures across operations & manufacturing will drive sustainable margin expansion in future while the demand outlook is positive given normalization of the economy. Given its strong brand recall & reach, we believe, BIL is capable of reviving its revenue growth trajectory as the economy is back to normal. We value BIL at 53x on FY24 EPS.
Outlook
We believe, BIL has capability to revive its revenue growth trajectory as the economy is back to normal. The demand outlook is positive given normalisation of markets and the strong thrust of the GoI to revive the economy. BIL has a strong brand recall & distribution reach and strong balance sheet. We upgrade to Buy rating with a revised Target of Rs. 2,151 by valuing at 53x on FY24E EPS, factoring strong sales recovery in the quarter.
More Info
At 15:31 hrs Bata India was quoting at Rs 1,877.20, up Rs 9.25, or 0.50 percent.
It has touched an intraday high of Rs 1,899.00 and an intraday low of Rs 1,867.35.
It was trading with volumes of 6,059 shares, compared to its thirty day average of 22,189 shares, a decrease of -72.69 percent.
In the previous trading session, the share closed up 0.48 percent or Rs 8.95 at Rs 1,867.95.
The share touched its 52-week high Rs 2,261.65 and 52-week low Rs 1,608.00 on 16 November, 2021 and 17 June, 2022, respectively.
Currently, it is trading 17 percent below its 52-week high and 16.74 percent above its 52-week low.
Market capitalisation stands at Rs 24,127.19 crore.
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