Bata India - 1QFY2019 Result Update - Angel Broking

For 1QFY2019, Bata India (BIL) posted strong set of numbers, exceeding our expectations on bottom-line front. Revenues grew by ~8% yoy (in-line with our estimate). The company's operating margins improvement by robust 355bps yoy. On the bottom-line front, BIL reported growth of ~37% yoy to Rs. 83cr on the back of strong operating performance.

Healthy volume growth drives top-line: BIL's top-line grew by ~8% yoy to Rs. 797cr on the back of healthy growth in footwear segment. The growth was mainly due to its high-decibel 'Come & Be Surprised' campaign featuring Kriti Sanon to mark the launch of its New Red Label collection. The number is not comparable to yoy due to the introduction of GST in July 2017. Further, the company is also planning to open 100 new own retail stores and +50 new franchise stores going forward.

Strong operating performance aids profitability: On the operating front, the company reported better margins, up 355bps yoy at 16.5%. On the bottom-line front, BIL reported growth of ~37% yoy to Rs. 83cr on the back of strong operating performance and healthy volume growth.

Outlook and Valuation: We expect BIL to report net revenue CAGR of ~16% to ~Rs. 3,555cr over FY2018-20E mainly due to increasing brand consciousness among Indian consumers, new product launches, higher number of store additions in tier II/ III cities and focus on high growth women's segment. Further, on the bottom-line front, we expect CAGR of ~21% to Rs. 323cr over the same period on the back of margin improvement (increasing premium product sales). Thus, we maintain our Buy recommendation on Bata India with Target Price of Rs. 955.

Shares of BATA INDIA LTD. was last trading in BSE at Rs.897.45 as compared to the previous close of Rs. 900.9. The total number of shares traded during the day was 78171 in over 2357 trades.

The stock hit an intraday high of Rs. 911.5 and intraday low of 894.1. The net turnover during the day was Rs. 70452753.

Source : Equity Bulls

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