Reduce Bata India; target of Rs 1100: Geojit

Geojit recommended reduce rating on Bata India with a target price of Rs 1100 in its research report dated August 10, 2020.

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November 19, 2020 / 16:29 IST

26 Aug, 2025 12:21

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Geojit's research report on Bata India

We downgrade our rating to SELL with revised Target of Rs.1,100 (earlier Rs1,400) factoring in the likely weak performance in the short term due to COVID-19. Q1FY21 revenue de-grew sharply by 85%YoY owing to lockdown in April & May & and with nil production due to Covid-19 pandemic. Despite significant lease waivers (~50%), BIL reported Net loss of Rs.101cr Vs Net profit of Rs.100cr YoY due to sharp decline in gross margin (40.4% Vs 54.7%YoY), low sales and high fixed costs. With gradual relaxation in lockdown, BIL's 85% of the stores are now open, but prevailing uncertainties is impacting discretionary demand,(currently achieved ~35-40% of the pre-Covid business levels).

Outlook

We have cut down revenue/ earnings estimates to factor the impact of Covid-19, expect to grow at 4%/7% CAGR over FY20-22E. We believe, BIL will be able to revive its revenue growth trajectory when the economy is back to normal. We value BIL at 37x (above 3Yr Avg) on FY22 EPS.

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