- 11 Nov 2022
- ICICIdirect Research
BATA INDIA REPORTS SUBDUED OPERATIONAL PERFORMANCE
BATAINDIA - 1296 Change: -23.75 (-1.80 %)News:
On a favourable base, Bata reported revenue growth of 35% YoY to Rs 829.8 crore (I-direct estimate: Rs 837 crore). Gross margins improved 210 bps YoY to 55% (I-direct estimate: 57.1%; Q1FY23 : 56.7%) on the back of calibrated price hikes and improvement in product mix. However, EBITDA margin was flattish on YoY basis at 19.4% (I-direct estimate: 25.4%) as decline in employee cost to sales ratio (lower by 171 bps YoY to 12.89%) was negated by increased other expense to sales ratio (higher by 381 bps YoY to 22.69%) Ensuing EBITDA grew 35% YoY to Rs 161 crore (I-direct estimate: Rs 213 crore, Q1FY23: Rs 246 crore). EBITDA stood at 87% of pre-Covid levels (Q2FY20). Consequently, PAT grew by 38% YoY to Rs 51.1 crore (72% of pre-Covid levels, I-direct estimate: Rs 93 crore)
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Bata India continued to enhance its focus on sneakers category which outpaced the growth of other categories. The company has now implemented Sneaker Studios in 250 stores across the country. Further the company continued to focus on enhancing asset light distribution through franchise stores and added 30 stores in Q2FY23 taking the franchisee store count to 350+. The company has also scaled up its distribution channel presence in more than 1100 towns. Initiatives like casualisation of product portfolio, asset light retail foot print expansion through franchise outlets, enhanced digital footprint and calibrated investments in brand promotion focussed on engaging with the younger generation are expected to provide momentum to volume growth and revenues for Bata over the next few years. Further the company is continuously working on implementing cost savings across its network. The key monitorable would be sustained improvement in revenue growth and profitability which appears to be lagging to other lifestyle category players performance
Impact:
Negative