ICICI Direct's research report on Bata India
Bata India witnessed a revenue recovery rate (adjusted) reaching 80% in Q4FY21 vs. 74% in Q3FY21. Lower revenues from formal & fashion footwear continued to impact gross margin YoY though QoQ gross margins witnessed an improvement. Revenue fell 5% YoY to Rs 589.9 crore in Q4FY21. Aligning with the current demand scenario, Bata tweaked its product portfolio from formals & fashion categories to casuals, fitness & essential categories. Gross margins contracted ~570 bps YoY to 53.1% mainly owing to unfavourable product mix. Cost control measures led to lower other expenses. Subsequently, EBITDA margins declined 340 bps YoY to 19%. Absolute EBITDA declined 19% YoY to Rs 112 crore. Ensuing PAT came in at Rs 29 crore (down 22%).
We upgrade the stock from HOLD to BUY with a revised target price of Rs 1925 (48x FY23E EPS, earlier TP: Rs 1680).
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