ICICI Direct is bullish on Bata India has recommended buy rating on the stock with a target price of Rs 1955 in its research report dated November 14, 2019.
ICICI Direct's research report on Bata India
Bata reported moderate revenue growth of 7.3% YoY to Rs 722.0 crore despite a challenging market environment. However, it continues to enhance its spending on new initiatives with enhanced focus on categories like women & youth, refurbishing and redesigning existing store models and higher ad-spends. Gross profit continued to see improvement, with gross margins expanding 60 bps YoY to 54.4%. Constant efforts towards premiumisation of product portfolio have translated into better margins. Furthermore, controlled fixed cost efforts led EBITDA margins to improve 50 bps YoY to 13.5%. Lower tax rate (26.8% vs. 35.0% in Q2FY19) boosted profitability with PAT growing robustly by 27.4% YoY to Rs 71.3 crore.
We roll our estimate forward and bake in revenue and PAT CAGR of 11% and 20%, respectively, in FY19-22E. We have a BUY rating on the stock with a revised target price of Rs 1955 (44.0x FY22E EPS of Rs 44.4).
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