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News: Bata reported revenue growth of 17% YoY to Rs 779 crore, above our estimate of Rs 738 crore. Gross margins improved 80 bps YoY to 58.4% (I-direct estimate: 56%) and is inching closer to pre-covid level (Q4FY20 levels : 58.8%). EBITDA margins were lower by 100 bps YoY at 23.4% (I-direct estimate: 22.8%, Q4FY20: 22.4%). Absolute EBITDA increased by 12% YoY to Rs 182.1 crore. Lower other income in Q4FY23 (down 46% YoY to Rs 9.9 crore) curtailed PAT growth to 4% YoY at Rs 65.6 crore (higher than I-direct estimate: Rs 53.3 crore).
Views: For FY23, Bata reported revenue growth of 13% over pre-Covid level (FY20). The management highlighted that all its distribution channels (EBO, MBO and Ecommerce channel) are trending above the pre-Covid levels. The profitability is gradually improving as the company is focusing on premiumisation of the product portfolio. The company has driven premiumisation across top 200 stores with price range of | 2999 to | 4999. Bata’s gross margins are gradually inching towards pre-Covid levels while the company’s efforts on casualisation of product portfolio is driving gradual improvement in revenue growth momentum. The company has expanded its network to 2050+ stores with franchise and SIS network consisting of ~ 37%. The company is planning to step-up marketing investments to accelerate growth momentum.
Impact: Neutral