Buy Bata India; target Rs 860: Firstcall Research
Brokerage house Firstcall Research is bullish on Bata India and has recommended buy rating on the stock with a target price of Rs 860 in its September 21, 2013 research report.
September 27, 2013 / 15:05 IST
Firstcall Research report on Bata India
"Bata India, market leader in branded footwear segment reported an increase of 17.64 percent in net profit in Q2 CY13. Net sales rose by 13.7 percent in the current quarter compared to the corresponding quarter in the previous year. EBDITA and Profit before tax both rose by 15 percent approximately. Other income of Bata India has also increased by 15.6 percent in the current June quarter. High inflation and slow economic growth will affect the performance of the company in the coming quarters. High input cost due to high inflation rate coupled with low disposable income has affected all consumer goods companies. Bata India has launched 'Sundrops' in women's segment in 2012 and associated with 'angry birds brand' to launch new collection of casual shoes and accessories for children and teenagers. The company has opened 189 new stores across India in metros and various Tier I and Tier II cities in 2012. The Company has also continued expansion of its Hush Puppies brand with the opening of 15 exclusive new stores and 12 shop-in-shops stores across the country. Even in the present difficult scenario, the company remains debt free and all investments are made through internal accruals. Bata India has been operating in India for the last 80 years and has maintained its quality products and leadership in organized footwear Industry. The company is a sure 'BUY' for long term value investors.""Total income from operations of the company rose by 13.63 percent from Rs.5037.83 mn to Rs. 5724.63 mn in the current June quarter. Net profit jumped by 17.64 percent from Rs. 526.52 mn to Rs. 619.40 mn in Q2 CY13. Net Profit and EBDITA margin rose by 37 and 29 basis points respectively. Other income rose by 15.57 percent in Q2 CY13 compared to the corresponding quarter in the previous year."Outlook and Conclusion: "At the current market price of Rs.830.90, the stock P/E ratio is at 26.56 x CY13E and 23.24 x CY14E respectively. Earning per share (EPS) of the company for the earnings for CY13E and CY14E is seen at Rs.31.28 and Rs.35.75 respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 16 percent and 4 percent over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 14.23 x for CY13E and 12.23 x for CY14E. Price to Book Value of the stock is expected to be at 5.92 x and 4.72 x respectively for CY13E and CY14E. We expect the company to continue its stable performance for the coming quarters. We recommend 'BUY' in this particular scrip with a target price of Rs 860 for Medium to Long term investment," says Firstcall Research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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