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News: Bata India’s Q1FY24 operational performance was subdued with mere 1.5% YoY revenue growth to Rs 958.1 crore (volumes declined by ~1%). While demand for footwear remained subdued during the quarter, the growth trajectory is weaker compared to other footwear companies who have declared results (growth rates in Q1FY24: Relaxo: 11%, Metro: 12%, Campus: 3%). Gross margins declined by 190 bps YoY to 54.8% owing to early start of EOSS by the industry. Subsequently, EBITDA margins contracted by 110 bps YoY to 25.0%. Given the weak operational performance, PAT declined by 11% YoY to Rs 106.9 crore.
Views: Bata continues to lag peer lifestyle categories in terms of revenue growth. The key monitorable will be sustained growth in revenues with margins reverting close to pre covid levels. Inspite of its efforts on casualisation of product portfolio and faster network expansion through franchise stores, the company has not been able to deliver significant revenue recovery. Demand recovery and acceleration expected during the festive season.
Impact: Negative