Motilal Oswal's research report on Bata India
Bata India (BATA) delivered yet another weak quarter with 1% YoY revenue decline (5% miss) and ~230bp YoY gross margin contraction. The weak performance was attributed to the company’s deliberate shift toward valuedriven offerings to boost volume amid subdued demand. Adj. EBITDA margin at 20.7% contracted by ~180bp, impacted by weak GMs and a one-off impact (~100bp) of employee expenses. EBITDA at INR1.6b fell 11% YoY. Reported EBITDA was boosted by a change in licensing terms. Despite muted demand, BATA is seeing early traction in value segment (sub INR1k). Strategic inventory cleanup, curated product refreshes, and franchiseled expansion should help the company improve efficiency and drive margin recovery, though near-term pressures persist.
Outlook
Our FY26-27E estimates are broadly unchanged. We expect FY25-27 CAGR of 8%/12%/22% in revenue/EBITDA/adj. PAT CAGR (albeit on a low base in FY25, -23% vs. FY23 levels). We maintain a Neutral rating with a TP of INR1,200.
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