Bata reports lower-than-expected revenue, profitabilityBATAINDIA - 1634 Change: -22.20 (-1.34 %)
News: On a favourable base, Bata reported revenue growth of 253% YoY to Rs 943.0 crore (I-direct estimate: Rs 970 crore). Revenue recovery rate stood at 107% of pre-Covid levels vs. our expectation of 110% of pre-Covid levels. Bata has maintained its gross margins on a sequential basis at 57.0% (I-direct estimate: 57%) on the back of calibrated price hikes and improvement in product mix. However, EBITDA margins came in below our estimates at 26% (I-direct estimate: 28.0%) mainly on account of lower than anticipated revenue growth. Ensuing EBITDA stood at Rs 244.6 crore (I-direct estimate: Rs 271 crore, Q1FY22: Rs (-) 34 crore). EBITDA remained constant as compared to pre-Covid levels. On account of lower depreciation and finance cost as compared to pre-Covid levels, coupled with lower tax rate (Q1FY20: 35%, Q1FY22: 25%), PAT came in at Rs 119 crore (119% of pre-Covid levels, I-direct estimate: Rs 139 crore).
View: Bata reported its highest ever quarterly revenues driven by franchise and MBO expansion with thrust of casualization of product portfolio and enhancement of digital footprint. Bata continues to penetrate in newer towns through franchise operated stores and added 20 new franchise stores taking the total number of franchises stores to 320. It also continued its expansion of distribution business and has increased the presence across 1100+ towns. The company plans to continue its focus on driving the volumes through investments in brand promotions which should show positive impact in the ensuing period. We believe that with its strong brand patronage and pan-India retail reach and casualisation of product portfolio, Bata India should be able to enhance its revenue growth trajectory, going forward.