10 BATAINDIA share price target reports by brokerages below. See what is analyst's view on BATAINDIA share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Covid-19 impact volumes…valuation at 10Yr average 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. Q3FY20 revenue growth moderates to 6.5%YoY, while PAT growth was healthy at 14%YoY. EBITDA margin (ex Ind-AS 116 impact) improved by 30bps YoY to 21.3% due to expansion in gross margin which improved 210bps on account of improving premium mix and reduction in RM cost. BIL’s cost reduction initiatives continue to give results as EBITDA margin BIL’s strong focus to increase footfalls along with acceleration in store additions via franchisee will support revenue growth. We have cut down our volume estimates to factor the impact on Corona virus spread. Expect BIL’s revenue/earnings to grow at 9%/15% CAGR over FY20-22E. BIL’s strong focus on cost control measures will support earnings growth. Currently, BIL is trading at 38x 1Yr Fwd P/E. We value BIL at 37x (10Yr Avg) on FY22 EPS, upgrade to Accumulate.
In the current market, there is a dearth of quality stocks in the consumption space. BATA with strong fundamentals, good brand recall, efficient management, and a dominant market share in the listed space classifies as a quality stock which justifies the high valuations it continues to trade in the current economic scenario. The stock trades at 1 year forward P/E of 62x. We value the stock at 60x, (at 5 year avg + 1sd 1 year fwd P/E valuation) and retain our ‘HOLD’ rating. Key risks to our call are further decline in the macros and increase in raw material prices.
Bata has a debt free balance sheet with surplus cash at ~Rs 800 crore and a capital efficient business model with a negative working capital cycle. The company is focusing on maintaining a balance between volume growth and premiumisation. Furthermore, healthy store expansion plans (through franchise route) in non-metro cities are expected to provide growth impetus. We bake in revenue and PAT CAGR of 11% and 20%, respectively, in FY19- 22E. We maintain our target price of Rs 1955 (44.0x FY22E EPS of | 44.4). However, we revise our rating from BUY to HOLD as the stock has appreciated by 33% over the last six months.
Unlike revenue in last many years, which was driven by average selling price (ASP) growth, we believe from here on, there is going be a better mix of volume and ASP growth. This move has been in line with the strategy of the CEO, Sandeep Kataria, of growing the entire portfolio and not just the premium part – see our note It is more a revenue growth story (2) While individual pieces may have different gross margins, at the EBITDA level, BIL indicated that both retail and wholesale businesses have more or less the same margins (3) Of the 4 parts of its business – franchising, e-commerce, wholesale and retail, the first three have been indicated to have a higher ROCE compared to retail. Also, the first three are likely to grow faster than retail in the foreseeable future. (4) Margin improvement from here on could still come through initiatives on both direct costs and in SGA.
BATAINDIA is one of the best stocks to play on India’s strongconsumption story. Due to its good product mix, we feel BATAINDIA will continue to report 15% CAGR on a top-line over the next two years from FY20-21E. On account of its track record of maintaining stable performance and the introduction of various new product launches, the stock is trading at 38x FY21E PE. We would like to allot a PE multiple of 45x on an FY20E basis to bring it to a target price of Rs. 2000.
Our current estimates do not assume a big turnaround in the wholesale business. After the meeting and post 1QFY20 which surprised on margins, we tweak our revenue and margin estimates for FY20 and FY21. We introduce FY22 estimates. We roll forward the basis of valuation to 1HFY22 EPS and retain the 42x PE multiple. 42x represents +0.5SD higher than its five-year 12-month forward mean P/E multiple. We expect BIL to clock revenue/EBITDA/PAT CAGR of ~13%/18%/16%, respectively, over FY19-FY22E with pre-tax RoIC expanding from ~63% in FY19 to ~80% in FY22E. We believe an Indian consumer story with the kind of financial profile that we described above deserves to trade at a premium to its five-year historical average. We retain our Accumulate rating on the stock.
Steady growth in retail channel; Maintain Accumulate Bata’s Q1FY20 financial performance was in line our estimates. Despite slowdown in most of the consumer categories, the company was able to post strong growth due to new campaigns and attractive product launches during the quarter. The e-com business posted double digit growth, which was encouraging considering its moderate performance in Q4FY19. The retail channel continues to grow steadily aided by premiumization. We have broadly maintained our FY20E and FY21E EPS estimates at ` 27.9 and ` 31.1, respectively. We value Bata at 45x FY21E EPS to arrive at a TP of ` 1,415. We believe that the company has a high growth potential, especially after the recent changes in the stores and strong new brand campaigns.Therefore, the high valuations for the stock is justified. Maintain Accumulate.
We expect SSSG at 6.5% and decent operational performance in FY20. Thenegative impact of Ind AS 116 on PAT in Q1 was around Rs. 20 Mn. Bata has a strong balance sheet with negative working capital, zero debt and asset turnover ratio which is boosted because of rent rationalization meaures and stricter cost controls. We revise our view on the stock to “BUY” with an expected upside of 18% valuing the company at P/E of 52.6 ( 5-Year Average, 1 Year Forward) of the FY21E EPS.
Over the last couple years, revenue growth for Bata has been mainly driven by realisation growth, since volumes have remained constant at ~47 million pieces each year. Having built a strong portfolio of premium brands, the management is now focusing on maintaining a balance between volume growth and premiumisation. Furthermore, healthy store expansion plans (through franchise route) in non-metro cities is expected to provide growth impetus. We bake in revenue and PAT CAGR of 14% and 21%, respectively, in FY19-21E. Scaling up of premium products (currently at ~50%) and controlled operational cost structure are key triggers for steady margin expansion. We are yet to incorporate impact of Ind-AS 116 in our estimates. We have a BUY rating on the stock with a revised target price of Rs 1585 (42.0x FY21E EPS of Rs 37.8).
We expect BIL to report net revenue CAGR of ~15% to ~`3,805cr over FY2019-21E mainly due to increasing brand consciousness among Indian consumers, new product launches, higher number of store additions in tier II/ III cities and focus on high growth women’s segment. Further, on the bottom-line front, we expect CAGR of ~16% to 436cr over the same period on the back of margin improvement (increasing premium product sales). Thus, we maintain our Buy recommendation on Bata India with Target Price of 1,525.
We have toned down our estimates a tad and lower our target price on BIL to Rs1,410 based on 42x March 2021E EPS and retain our Accumulate rating. The 42x represents +0.5SD higher than its five-year 12-month forward mean P/E multiple. We expect BIL to clock revenue/EBITDA/PAT CAGR of around 15%/19%/15%, respectively, over FY19-FY21E with pre-tax RoIC expanding from ~ 63% to ~ 69% during the period. The PAT CAGR looks lower as FY19 PAT is inclusive of tax refunds and interest income on that. We believe the Indian consumer story with the kind of financial profile depicts above deserves to trade at a premium to its five-year historical average.
We anticipate healthy revenue trajectory for Bata will sustain, driven by enhanced focus on fast growing categories such as sports, youth and women and swift pace of store additions. Furthermore, scaling up of premium products (currently at ~30%) and controlled operational cost structure are key triggers for steady margin expansion. We model in revenue and PAT CAGR of 13% and 18%, respectively, in FY19- 21E. Bata is currently quoting at valuation of ~37x P/E on FY21E EPS. We have a HOLD rating on the stock with a revised target price of Rs 1430 (40.0x FY21 EPS of Rs 35.8).
We continue to see some further levers of margin expansion going into the next few years like: (1) Gains in 3QFY19 that were driven by volume discount from vendors of both raw materials and finished goods will continue in 1HCY19 – ceteris paribus. Further gains can be eked out even beyond 1HCY19 on modest concessions from vendors. (2) As explained in our 3QFY19 result update (Margin Surprises, Gains Look Sustainable, PE Expansion Likely), the revenue mix shift in favour of higher-margin retail sales also helped. We see headroom for gross margin expansion in the wholesale business going forward, as it is significantly below industry standards. (3) Modernised manufacturing operations, in our view, will also help BIL to lower costs. (4) Premium footwear also brings in better gross margin (an increase of 200bps- 300bps). (5) Scale benefits from faster revenue expansion. (6) Rationalisation of price points of its footwear. (7) Increasing the upper end of its price range across key products. (8) Fresher and full- priced inventory. Countering the above initiatives on margins would be a slightly adverse shift in product mix towards non-retail , possible peaking of rental gains and higher spending on advertisements. After the meeting, we retain estimates and target price on BIL of Rs1,479 based on 42x March 2021E EPS.
BIL’s strong focus on increasing the footfalls through improving customer expe- rience (spending Rs100 billion towards this) and higher advertisement expendi- ture (targets ~2.5-3% of sales in FY19 compared to ~1.8% in FY18) along with accelerated store additions will boost top-line growth. The strong outlook on earnings will continue to support valuations. Currently, BIL is trading at 43x 1yr Fwd P/E. We value BIL at 40x on FY21 EPS to arrive at a Target of Rs1,404 and upgrade to Accumulate from Hold rating.
We expect BIL to report net revenue CAGR of ~15% to Rs 3,497cr over FY2018-20E mainly due to increasing brand consciousness among Indian consumers, new product launches, higher number of store additions in tier II/ III cities and focus on high growth women’s segment. Further, on the bottom-line front, we expect CAGR of ~28% to `358cr over the same period on the back of margin improvement (increasing premium product sales). Thus, we maintain our Buy recommendation on Bata India with Target Price of Rs 1,479.
We believe there is potential for an upside surprise on the margin front (and therefore on EPS) going forward if the company executes well. Much of the change in fundamentals has come about because of a change in the leadership of Bata - both at global and local level. We believe an Indian consumer story with the kind of financial profile that we described above deserves to trade at a premium to its five-year historical average. We have upgraded our rating on BIL from Accumulate to Buy with a revised target price (TP) of Rs1,479 based on 42x March 2021E EPS. 42x represents +0.5SD higher than its five-year 12-month forward mean P/E multiple.
Moreover, premiumisation, cost saving measures and GST rate change (18% to 5% for Rs 500 – Rs 1,000) are key triggers to accelerate profitability. We have increased our FY19E and FY20E estimates to Rs 24.5 and ` 28.5 to factor in Q3 performance. Valuing Bata at 42x FY21E EPS to arrive at a TP of Rs 1,339. We believe that the company has high growth potential especially post recent changes at the store levels and strong support from the new brand building campaigns. Hence high valuations for the stock is justified. Maintain Accumulate.
Bata has subsequently increased new offerings and investments in branding. Premiumisation and youth connect is expected to enhance footfalls across the retail network and spur overall revenue growth. In the event of premium valuations, we maintain our rating to “HOLD”, assigning 40x of FY21E EPS with a revised target price of Rs. 1407 per share with an upside potential of 12%.
For YTDFY19, Bata registered healthy revenue growth of 13% YoY with EBITDA margins improving significantly by ~340 bps YoY. Efforts towards premiumisation of product portfolio yielded better operating margins. We anticipate healthy revenue trajectory for Bata to sustain, driven by enhanced focus on fast growing categories such as sports, youth and women and swift pace of store additions. Furthermore, scaling up of premium products (currently at ~30%) and controlled operational cost structure are the key triggers for steady margin expansion. Factoring in the robust performance of 9MFY19, we revise our earnings estimate upwards for FY19-21E. We model in revenue and PAT CAGR of 14% and 26%, respectively, in FY18-21E and expect RoCE to improve significantly by 660 bps to ~26% in FY21E. On account of the recent stock price appreciation (~20% since our last result update), it is currently quoting at ~35x P/E on FY21E EPS. Therefore, we have a HOLD rating on the stock with a revised target price of Rs 1300 (37.0x FY21 EPS of Rs 35.1).
Bata is one of the best stocks to play on India’s strong consumption story. Due to its good product mix, we feel BATA will continue to report 15% CAGR on a top-line over the next two years from FY19-20E. On account of its track record of maintaining stable performance and introduction of various new product launches the stock is trading at 37x FY20E PE. We would like to allot a PE multiple of 43x on an FY20E basis to bring it to a target price of Rs. 1221.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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