Reduce Bata India; target of Rs 1450: HDFC Securities

HDFC Securities recommended reduce rating on Bata India with a target price of Rs 1450 in its research report dated February 15, 2023.

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February 21, 2023 / 13:56 IST

26 Aug, 2025 12:21

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HDFC Securities' research report on Bata India

Bata’s Q3 performance vis-a-vis pre-pandemic sales (INR9bn; 3-year CAGR: 2.8%) remains weak; up 7% YoY. On a relative basis, the disappointment is even starker (Note: Metro brands/Campus Activewear grew at ~19% CAGR each over three years). The bigger disappointment was on profitability. EBITDAM missed estimates by 170 bps and is ~880bps lower than pre-pandemic levels, given the (1) increasing skew of lower margin wholesale, online and franchisee channels and (2) higher brand and tech stack building spends. We’ve highlighted in our IC note too that treading the growth-margin equation across Bata’s volume drivers is likely to be tough to execute. Note: for the cost elevation seen in 9MFY23, Bata has a mere ~2% volume CAGR (3-year) to show.

Outlook

We cut our FY24/25 EPS estimates by 6% each and maintain our REDUCE rating with an unchanged DCF-based TP of INR1,450/sh, implying 36x Dec-24 P/E.

For all recommendations report, click here