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  • 09 Feb 2022
  • ICICIdirect Research

BATA REVENUE SURPASSES PRE-COVID LEVELS

BATAINDIA - 1442 Change: 4.40 (0.31 %)

News: On a favourable base, Bata reported healthy revenue growth of 37% YoY to Rs.841.3 crore (I-direct estimate: Rs.811.2 crore). Revenue recovery rate has improved to ~101% of pre-Covid levels vs. 85% in Q2FY22. On account of improved product mix (recovery in formal/fashion footwear), gross margins improved 110 bps YoY to 52.7% (I-direct estimate: 52.7%), however still remains below pre-Covid levels (~58-60%). The company continues to rationalise fixed overheads across rentals and manufacturing operations. On account of positive operating leverage, EBITDA margins improved 100 bps YoY to 20.0% (I-direct estimate: 19.8%). Tracking the strong operational performance, PAT grew 2.8x YoY (up 95% QoQ) to Rs.72.3 crore (highest PAT in the last eight quarters, I-direct estimate: Rs.66.8 crore).

Views: The company witnessed a consistent increase in footfalls across its retail outlet along with strong growth in e-commerce platforms. Bata continued its retail expansion drive in tier III-V cities through franchisee route (added ~35+ stores taking the total store count to 285+ franchisee stores). E-commerce contributed ~ Rs.90 crore in revenue (~11% of sales) which was more than double of pre-Covid levels. With gradual opening of economy, we expect premiumisation story to resume (higher sales of formal/fashion footwear) resulting in healthy margins and revenue recovery. 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. We continue to remain positive on the stock.

Impact: Positive