"Bata (BATA) reported net sales of INR5.54b (v/s est. INR5.78b) in 4QCY13, marking a revenue growth of 9 percent, primarily driven by SSSG of ~5 percent. SSSG was muted at 5 percent due to peers advancing their season sales to December, compared to January, and due to higher base effect (15-20 net stores addition in CY13 against 129 in CY12). Company expects CY14 growth to be faster than CY13 driven by ~40 net store openings, compared to 15-20 in CY13. BATA also plans to target untapped segments like Sports within kids category and wedding footwear. It plans to take Hush Puppies exclusive stores to other towns and launch its own mobile application in next two months. It also expects to launch its media campaign soon which should help boost revenue growth."
"We are positively surprised by the margin expansion and believe that levers for further expansion remain strong. We lower the revenue estimate and raise the margin estimate leading to an upgrade in CY14E and CY15E EPS of 1.5 percent and 3.2 percent respectively. At CMP of INR1042, the stock trades at 26.5x and 21.6x CY14 and CY15 EPS respectively. We revise our target price from INR 1,170 to 1,200 on the stock valuing the company at 25x CY15 EPS of INR 48 on the stock," says Motilal Oswal research report.
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