Nov 14, 2011, 10.34 AM | Source: CNBC-TV18
Bata India can test Rs 840 in the next 12 months, says PN Vijay, Portfolio Manager.
PN Vijay (more)
Portfolio Manager, askpnvijay.com | Capital Expertise: Equity - Fundamental ,IPO
Vijay told CNBC-TV18, "Bata India will continue its wining run. It has reported some very strong numbers; 7% up on the bottomline and the EBITDA was strong. The EBITDA margins improved, which is quite rare for an FMCG these days because FMCG are seeing profitless growth."
He further added, "They have been aggressive in their retail expansion. They have added more than 100 stores and they have also been adding to their same store sales. The issue with these shoe company is that high working capital. Bata because of its traditional strong balance sheet it is cash rich and does not pay any interest unless like the others. So Bata is attractive."
"It has been an outperformer to the index for quite some time and it is trading around 22 times expected calendar year earnings but we are expecting a CAGR of 35% for the next two years given both the volume and EBITDA expansion."
"One issue of Bata is of course if retail rentals keep going up – retail rentals in India has been sluggish, which indirectly benefited Bata but the risk factor is suddenly if commercial space starts getting more expensive then their cost would go up. But on the whole in this trouble time Bata though slightly expensive will take higher gains than looking at something like Rs 840 for Bata in the next 12 months."
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