Bata reported 2% YoY growth in revenue (9% miss), led by a 3% increase in ASP and decline in volumes as the low ASP mass segment is yet seeing challenging demand environment. Despite the softening RM costs due to increased market discounts, the GM declined 190bp YoY. Subsequently, EBITDA/PAT declined 2%/10% YoY. Despite the steady network rollout and product revamp in the youth segment, Bata has continued to observe a decline in volumes, particularly in the value segment (<INR1,000 ASP category).
OutlookWe have cut our PAT estimates by 7% to factor in revenue/PAT CAGR of 10%/23% over FY23-25. We reiterate our Neutral stance on the stock with a TP of INR1,540.
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