Dolat Capital Market's research report on Bata India
Bata’s Q3FY21 revenues were broadly in line with our estimate but EBITDA and PAT was a miss. Sequential recovery was encouraging. Continuous addition of stores, new promotional activities and procuring institutional contracts would help Bata to recover. Post re-opening of markets, most of the retail businesses have reached to pre-Covid level. With opening of schools and offices, we believe that Bata would also regain lost momentum. Our recent channel check suggests that the casual and sports category has bounced during the end of Q3FY21. We believe that the growth would continue in this category. Further, addressing supply constraints would help accelerate growth.
We have downward revised our FY21E estimates to factor in Q3 results. However, we have increased our FY22/23E EPS estimates to factor in 1) re-opening of malls, schools, offices in the near term 2) favorable base, 3) New advertising campaigns and 4) increased e-commerce contribution. We value Bata at 60x FY23E EPS to arrive at a TP of Rs 1,697. Upgrade to Accumulate.
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