Sharekhan's research report on Bata India
Bata India (Bata) delivered mixed performance in Q2FY2023. Revenue grew strongly by (35% y-o-y), while EBITDA margin remained flat y-o-y due to higher input cost inflation and change in channel mix. PAT delivered strong 48% y-o-y growth. The company added 68 stores, including 10 COCO stores, 30 franchisee stores, and 28 Shop-In-Shops, during the quarter, taking the total store count to 1,956 across 1,108 towns at Q2FY2023-end. Bata aims higher contribution from franchisee stores going ahead and targets 500 stores by FY2024 from 353 stores currently. Casualisation of product portfolio, store expansion through the franchisee and MBO route, renovation of existing stores, and digital footprint expansion are some of the key growth levers that will help the revenue growth momentum to sustain in the quarters ahead. Focus remains on regaining volume growth in retail stores.
Outlook
The stock trades at 57.4x and 42.3x its FY2023E and FY2024E earnings, respectively. We maintain a Buy rating on the stock with a revised PT of Rs. 2,055.
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