Bata India Q1 Results Review - Underperformance Continues: Dolat Capital

Dolat Capital Report

Bata India Ltd.’s Q1 FY25 revenue was in line, while Ebitda and adjusted profit after tax were below estimate. Revenue de-grew by 1.4% YoY due to harsh summer season and elections in Q1 FY25. On a five-year basis, Relaxo exhibited 2.9% growth while Bata registered a 1.4% increase.

The company continued with its retail expansion drive in tier-3/4/5 cities through franchise route and added 33 (net) new stores, taking the franchise store count to 566.

Further, the company added 54 total net stores to take the store count to 1,916. Going ahead, management aspires to add 40-45 stores every quarter.

We lower our FY25/26E EPS estimates by 8.3/7.4% at Rs 24.9/30.5 to factor in Q1 performance. Key triggers are-

1. favorable base,

2. new advertising campaigns,

3. continued E-com traction and

4. ramp-up in store openings.

However, an increase in brand investment would pressurize the margin in FY25E. Valuing at 50 times FY26E earnings per share we arrive at target price of Rs 1,523. Maintain ‘Reduce’ rating.

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