Bata India - Q1CY2013 Result Update - Nirmal Bang

- Bata India (BIL) posted revenue growth of 11.8% YoY at Rs4,539mn, 3.9%/3.7% below our/Bloomberg estimates, respectively.

- Low revenue and high lease rental costs, up 198bps YoY, led to a 88bps erosion in operating margin to 13.9% versus our estimate of 14.4%. With higher other income, net profit grew 6.8% to Rs385mn, in line with our estimate of Rs388mn.

- Following revenue moderation since a year, we have cut our revenue estimates by 3.0%/4.8% and PAT estimates by 8.3%/10.2% for CY13E/CY14E, respectively.

- With operational efficiency in place, BIL would benefit once growth bounces back and margins may improve by 106bps in CY14E, leading to 23.7% EPS growth for the year versus a mere 9.4% growth likely in CY13E.

- We have retained Buy rating on BIL with a revised TP of Rs865 (Rs1,000 earlier) based on 13.5x (14.5x earlier) CY14E EV/EBITDA.

Source : Equity Bulls

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