BATA INDIA LTD- Q2 FY18

BATA INDIA LTD, one of the most trusted Indian footwear brand reported stable September quarter FY18 with double digit growth for PAT & EBDITA and mild uptick of 1% in Revenues. Revenue was reported at Rs. 5869 Mn against Rs. 5837 Mn same period previous year. PAT or Net Profit  stood at Rs. 429 Mn in the current quarter compared to Rs. 346 Mn same period previous year. EBDITA jumped YOY from Rs. 676 Mn in Q2 FY17 to Rs. 793 Mn in the current Q2 FY18. Sequential growth is negative with respect to Revenue, EBDITA & PAT as September quarter has been somber compared to the previous June quarter. June is the strongest quarter for BATA as schools & educational institutions re-open during the quarter. BATA India is still regarded as the most trusted brand for school & Kids footwear across India. EBDITA Margin was reported at 13.51% in current quarter compared to 11.58% corresponding quarter previous year jumping 193 basis points YOY. Net Profit Margin jumped 138 basis points YOY and was reported at 7.31% in Q2 FY18. Lower finance costs & depreciation declining 39% & 10% respectively improved the Net Profit Margin in the current quarter. Other Income has increased 44% YOY and 28% sequentially in the current quarter. Other Income was reported at Rs. 148 Mn against Rs. 103 Mn same period previous year.

BATA has well maintained its leadership in the branded footwear industry and is working towards being a contemporary lifestyle brand evident from the launch of SS 2017 collection which included international styles for women like Espadrilles and Bata Insolia range in the previous quarter. Women  footwear contributes 26% to total revenues. BATA has been constantly premiumizing its product offering with several new launches in men & women categories like Hush puppies, Naturalizer, North Star as part of its AW17 collections with digital promotions. The company also introduced first of its kind, new category of footwear, TWEENS for 10-14 year olds. BATA has maintained its margins focusing on value added products and coast efficiencies in cost structure.

Bata stands for Trust, Superior Quality & Credibility and it has maintained it for over more than 85 years. In the present scenario, the company has over 1290 Bata stores, sells 50 million pairs and serves 120,000 customers every day. We recommend BUY for the stock for medium & long term investment with target price of Rs. 875.00.

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