BATA India Q3: Angel Broking

Mr. Amarjeet Maurya (AVP- Mid Caps, Angel Broking):

"Bata India flattered the street with its numbers for the third quarter ended December 2018. While the Net Sales were up by 15.5% on a YOY basis, the net profits showed a growth if 52.2%. The growth in profitability was substantially driven by a 4.55% expansion in the EBITDA margins in the third quarter on YOY basis.

The smart growth in the top line was largely driven by Bata's core footwear business. The sales growth was achieved by granular brand refreshment in its 3 core franchises; Power Walking Collection, Hush Puppies Collection and the Red Label collection. Bata top line also benefited from lateral expansion as well as the rapid growth in purchasing power across urban and semi urban centers. On the operating profit front, Bata benefited from lower input costs, more controlled mid-line costs and better asset churn achieved.

If one were to look at Bata in pure P/E terms, then it discounts estimated 2019 earnings at around 50X P/E. This is at par with the benchmark P/E considering that Bata is an FMCG company with strong brands. Also, Bata valuations look a lot more meaningful when you consider the ROE and the ROCE are estimated to expand sharply in the coming fiscal. At the current valuation, the stock clearly leaves a margin for safety of over 20% for long term investors."

Shares of BATA INDIA LTD. was last trading in BSE at Rs.1257.95 as compared to the previous close of Rs. 1271.4. The total number of shares traded during the day was 216755 in over 4878 trades.

The stock hit an intraday high of Rs. 1282.65 and intraday low of 1248.85. The net turnover during the day was Rs. 273537300.

Source : Equity Bulls

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