Geojit Financial Services research report on Bata India
Bata India Ltd. (BIL) is the largest retailer and leading manufacturer of footwear in India, with 1,916 retail store presence in 1,548 towns. We maintain our rating as Accumulate with a target price of Rs.1,689, considering the expected gradual improvement in demand. Volumes declined in Q1FY25 resulting in a revenue de-growth of 1.4% YoY driven by factors like heat wave and elections. However premium segments continued to perform well. EBITDA margin declined by 540 bps YoY due to higher ad and IT spend in which the major ERP spending has been completed this quarter which will normalise margins going forward. BIL adopts asset-light expansion, adding 33 franchisees in Q1FY25, totaling 566 and has a strong focus on E-commerce, store renovation with a thrust on portfolio newness. BIL has a strong focus on premium brands (40% mix) like Hush Puppies, Power, Nine West etc. will give better margins. BIL has launched its second Power EBO (exclusive brand outlets) in NCR and plans to expand to 15 stores by Dec’24. Given its strong brand recall & reach, we believe, BIL can revive its revenue growth trajectory. Expect revenue/PAT to grow at 9%/21% CAGR over FY24-26E. We value BIL at 52x on Sept 2026 EPS.
Outlook
The enhanced investments in premiumization, technology, marketing, cost optimization, along with strong store additions are likely to bear fruits in the long run. We believe BIL has the capability to revive its revenue growth trajectory given its strong brand recall & distribution reach, and strong balance sheet. We maintain our Accumulate rating with a revised target price of Rs. 1,689, valuing BIL at 52x on Sept 2026 EPS.
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