Bata India Q1 PAT seen down 70% at Rs 32 cr

It had reported a PAT of Rs 109 crore in a year ago period, wherein company added other income of Rs 112 crore related to restructuring of agreements and sale of stake in the JV at Batanagar project (township). After removing this amount, adjusted profit after tax of the company is likely to grow by 28% YoY.

EBITDA is seen going up by 35% to Rs 55 crore from Rs 41 crore and EBITDA margin is likely to be improved by 140 basis points at 14.5% versus 13.1% during the same period.

Net sales is expected to go up by 22% to Rs 378 crore for the January-March quarter of 2011 versus Rs 311 crore in the corresponding quarter of last fiscal.

Things to watch out for

-          Q1 generally a weak quarter for the company

-          Volume growth (driven by space addition) in strong double digits (around 18-20%) likely to continue the growth momentum

-          Store addition in Q4CY11 --- 35 outlets + in CY11 --- approximately 145 new outlets

-          With higher sales coming from K-stores --- Employee cost as a percentage of sales has been consistently declining for Bata --- Expenditure at around 11.3% for Q1CY12 versus 12% for Q4CY11

-          With gross margin expected to be stable at around 46% (due to higher outsourcing & improvement in product mix) and declining employee cost as a percentage of sales ---- Bata is likely to see a operating margin expansion