Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Bata India - Hazy windscreen view - ICICI Securities

Posted On: 2021-06-10 14:41:10 (Time Zone: UTC)


Weak performance continued in 4Q (revenue declined 5%; 2-year CAGR decline of 7%). Portfolio-specific headwinds (higher formal and fashion salience) continued to hurt; some of the peers have already seen good recovery. We note several initiatives by Bata to accelerate recovery - (1) ramping up sales from new channels (ChatShop, Home Delivery, Store on Wheels), (2) capturing semi-urban / rural demand through franchisee stores, and (3) restarting promotional campaigns and new launches. That said, Bata is likely to be a key beneficiary of 'full unlocking'. Inferior product mix (away from formals & fashion and more towards open style footwear), is likely to put further pressure on profitability till then. Reiterate REDUCE; TP Rs1,400.

- Revenue yet to recover completely: Q4FY21 revenue / EBITDA / PAT declined 5% / 19% / 22% respectively. Revenue decline of 5% is weaker when seen in the context of a weak base (2-year CAGR decline of 7%). Despite Q4 being a seasonally weak quarter (festive season in Q3), sequential decline of 4% is weak given it was a near-normal quarter for several discretionary categories. Product mix would have continued to be unfavourable for the quarter given lower demand of formals (schools were largely closed and offices had resumed only partially). Some of the recovery was driven by growth in digitally enabled platforms and store expansion (franchise stores) in smaller towns.

For FY21, revenue and EBITDA declined 44% and 81%, respectively; net loss came in at Rs857mn.

- Company initiatives: Bata continued to scale-up its digital initiatives (Bata website, online marketplaces, Bata ChatShop, Bata Home Delivery and Bata Store on Wheels). It launched a 'Relaxed Workwear' collection (across brands) offering a good blend of comfort and formal aspect. Bata opened 10 additional franchise stores (total 228 now) in smaller towns and cities.

- EBITDA margin continued to be weak: Gross margin declined 566bps to 53.1% in 4Q due to unfavourable product mix and lower fixed cost absorption with lower sales. Staff costs and other opex were lower by 1% and 6% YoY, respectively. EBITDA margin contracted 340bps to 19.0% (broadly flat QoQ). Management has highlighted efforts to introduce efficiencies in value chain and elimination of redundancies.

- Balance Sheet: Bata's cash generation took a hit given the weak performance. There were some WC savings (absolute basis) due to a 30% reduction in year-end inventory. BS continued to be strong with net cash balance of Rs10.9bn. Reported OCF / FCF declined by 21% / 15% to Rs4.6bn / Rs4.2bn respectively.

- Valuation and risks: Our FY23 earnings estimates are largely unchanged; modelling revenue / EBITDA CAGR of 42 / 145 (%) over FY21-23E. Retain REDUCE with a DCF-based target price unchanged at Rs1,400. At our target price, the stock will trade at 41x P/E multiple Mar-23E. Key upside risk is faster-than-anticipated recovery in discretionary demand.

Shares of BATA INDIA LTD. was last trading in BSE at Rs.1632.7 as compared to the previous close of Rs. 1557.7. The total number of shares traded during the day was 465933 in over 17707 trades.

The stock hit an intraday high of Rs. 1657.5 and intraday low of 1540. The net turnover during the day was Rs. 760287561.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

CESC Q4FY21 Results Review Report - Loss decline, strong CF make valuation attractive - HDFC Securities

White Goods & Durables - Analysis of pressure cooker market: TTK Prestige is key beneficiary - ICICI Securities

CESC - Good earnings in a challenging environment - ICICI Securities

Somany Ceramics - Walking the talk - ICICI Securities

DB Corp - Rise in newsprint price adds to risk - ICICI Securities

CEAT - Market share ambitions remain strong - ICICI Securities

Consumer Staples & Discretionary - Worm's world view #32: Conversations with paint dealers regarding price hikes - ICICI Securities

Oil & Gas - Oil, gas & spot LNG surge to bring gains for GAIL & OIL - ICICI Securities

Asset Management Companies - Positive trends to support earnings - ICICI Securities

Q4FY21 Result Update - Lemon Tree Hotels - ICICI Direct

Q4FY21 Company Update - Globus Spirits - ICICI Direct

Q4FY21 Result Update - DB Corp - ICICI Direct

Q4FY21 Result Update - Somany Ceramics - ICICI Direct

KEC International: Company Update - Building on diversification - HDFC Securities

LIC Housing Finance - Q4 FY21 Result Update - YES Securities

Entertainment Network Ltd - Beating on solutions business - ICICI Securities

Asahi India Glass - Operating leverage, product mix aid margins - ICICI Securities

Whirlpool of India - Market leading revenue growth - ICICI Securities

Lemon Tree Hotels - Wait for recovery gets longer - ICICI Securities

LIC Housing Finance - Stupendous growth momentum; needs to shore up provisioning and capital buffer - ICICI Securities

Quant Pick - Bank of Baroda - ICICI Direct

Company Update - Amara Raja Batteries - Investor Event Outcome - ICICI Direct

Q4FY21 Result Update - Bhel - ICICI Direct

Q4FY21 Company Update - NRB Bearings - ICICI Direct

CESC - Q4FY21 First Cut - ICICI Direct

Q4FY21 Result Update - Entertainment Network India - ICICI Direct

LIC Housing Finance Results Review Report - Balance sheet beefs up; P&L to stay soft - HDFC Securities

Jubilant FoodWorks 4QFY21 Results Review Report - Missing excitement; recovery priced in - HDFC Securities

BFSI Sector Update - MFI Consultation Paper Takeaways - Incrementally positive for NBFC-MFIs - HDFC Securities

Q4FY21 Result Update - JK Cement - ICICI Direct

Q4FY21 Result Update - Minda Industries - ICICI Direct

Stock Tales - Indo Count Industries - ICICI Direct

IPO Review - Krishna Institute of Medical Sciences Ltd - ICICI Direct

Q4FY21 Company Update - Greenply Industries - ICICI Direct

IPO Review - Dodla Dairy Ltd - ICICI Direct

Lemon Tree Hotels - Q4FY21 First Cut - ICICI Direct

Jubilant Foodworks - Q4FY21 investor call takeaways - YES Securities

Greenply Industries Ltd - Q4 FY21 Result Update - YES Securities

Whirlpool of India Ltd - Q4 FY21 Result Update - YES Securities

New India Assurance Report - CoRs disappoint yet again - HDFC Securities

Maintain BUY on Kajaria Ceramics - Performance shines through; outlook bright - HDFC Securities

Retain ADD on Deccan Cement - Volume strong; high other expense dents margin - HDFC Securities

Reiterate ADD on NHPC - Lower generation impacts earnings - HDFC Securities

Maintain BUY on JK Cement - Robust volume and utilisation - HDFC Securities

Maintain BUY on DLF - Gaining traction - HDFC Securities

Maintain BUY on Capacite Infraprojects - Marginal miss - HDFC Securities

DLF Ltd - Q4 FY21 Result Update - YES Securities

Greenply Industries Ltd - Q4FY21 first cut - YES Securities

Coal India - Coal makes a comeback - ICICI Securities

Kajaria Ceramics - Q4FY21 beat largely priced in - ICICI Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020