Hold Bata India: target of Rs 1560: Sharekhan

Sharekhan's research report on Bata India

Bata India’s (Bata’s) Q1FY2025 numbers were weak, with revenues declining by 1.4% y-o-y, and EBITDA margin falling by 393 bps y-o-y to 21.2%, dragging down adjusted PAT by 27.5% y-o-y. Same-store sales growth (SSSG) declined by low-mid single digits in Q1, the company is aiming for mid-high single digit SSSG in the coming quarters with a focus on portfolio evolution, expanding digital footprint, marketing initiatives and innovation across brands. It plans to add 40-50 exclusive brand outlets (EBOs) every quarter and 120-140 MBOs annually with a focus on expanding in tier-3 to tier-5 towns. It targets 15 Power EBOs (from 2 currently) and 30 Floatz Kiosks (from 16 at present) by December 2024.

Outlook

Stock trades at 60x/52x its FY2025E/26E EPS, respectively. Given near-term growth headwinds and premium valuations, we maintain Hold with a revised PT of Rs. 1,560.