Bata India: Signs of demand green shoots visible…BATAINDIA - 1609 Change: -9.50 (-0.59 %)
News: Bata India reported strong operational numbers in Q2FY22 with revenue recovery rate reaching 85% of pre-Covid levels vs. 51% in Q2FY21. On a favourable base, Bata reported revenue growth of 67% YoY to Rs 614.1 crore (I-direct estimate: Rs.570.2 crore). On account of positive operating leverage, EBITDA margins came in at 19.4% (I-direct estimate: 18%, Q2FY21: 4.9%). On a low base, absolute EBITDA grew 6.6x YoY to Rs 119.1 crore (I-direct estimate: Rs.102.1 crore, highest EBITDA in the last six quarters). Tracking the strong operational performance, the company reported PAT worth Rs. 37.0 crore (Q2FY21: (-) Rs. 44.3 crore, I-direct estimate: Rs. 28.3 crore).
Views: Bata continues to penetrate in newer towns through franchise operated stores (continued its distribution business across 49 new towns). It has enhanced its casual footwear portfolio and launched 240 new lines across clusters. With a 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 revive its revenue growth trajectory as and when the impact of the Covid-19 gets phased out (expect the company to reach pre-Covid levels by Q3FY22). We continue to remain positive on the stock