Buy Bata India; target of Rs 1775: Sharekhan

Sharekhan's research report on Bata India

Bata India Limited’s (Bata’s) Q4FY2023 numbers beat ours as well as the street’s expectation with revenue growth coming better than expectation at 17% to Rs. 778.6 crore; EBIDTA margins came at 23.4%; PAT at Rs. 65.6 crore beat ours as well as street expectation of Rs. 54-57 crore. Casualisation is gaining strong traction with Sneakers category growing 1.6x y-o-y, while Floatz achieved highest ever quarterly turnover after the launch. Premiumsation aided Average Selling Price (ASP) to grow by ~13% y-o-y. Revenues to grow in double digits in the near term with drivers in place. Increased contribution from premium products, change in channel mix and cost efficiencies will help margins to improve in the coming years.

Outlook

The stock is currently trading at 43.1x and 33.8x its FY2024E and FY2025E earnings, respectively. Considering long-term growth prospects with premiumisation in focus, we maintain our Buy rating on the stock with an unchanged PT of Rs. 1,775.

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