- 26 May 2022
- ICICIdirect Research
Bata posts strong profitable growth driven by better gross margins in Q4FY22
BATAINDIA - 1406 Change: -30.55 (-2.13 %)News: On a favourable base, Bata reported revenue growth of 12.8% YoY to | 665.2 crore (I-direct estimate: | 729.8 crore). Revenue miss was mainly on account of higher than anticipated Covid led disruptions in January-February. However, from March onwards, it witnessed a consistent increase in footfalls across its retail outlet. Gross margins improved 450 bps YoY (490 bps QoQ) to 57.6%, significantly ahead of our estimates (53.6%). Positive impact of higher gross margins and lower employee expense, flowed to EBITDA wherein margins improved 540 bps YoY to 24.4% (I-direct estimate: 19%). Absolute EBITDA grew 45% YoY to | 162.2 crore (I-direct estimate: | 135.7 crore). Tracking healthy operational performance, PAT grew 2.1x YoY to | 63.1 crore (I-direct estimate: | 43.2 crore)
Views: Bata continues to penetrate in newer towns through franchise operated stores (continued its distribution business across 42 new towns to cross presence across 1000+ towns). Sneakers led the growth recovery in the quarter while formal & fashion also recovered significantly. The company expects the healthy momentum to sustain given the reopening of schools and offices. The current quarter till date is trending at 11% ahead of pre-covid levels with gross margins sustaining at 58%. We believe that with its strong brand patronage and pan-India retail reach, Bata India should be able to enhance its revenue growth trajectory, going forward. Bata continues to have robust cash & investment worth | 968 crore
Impact: Positive