Bata India Q2 Results Review - Sectoral Headwinds Put Pressure On The Earnings; Upgrade To 'Buy': IDBI Capital

IDBI Capital Report

Bata India Ltd.’s Q2 FY25 result was below our estimates on key parameters. Slowdown in demand due to subdued consumption weighed on sales volume. Further, higher sales through franchise stores and e-commerce put pressure on the operating margin in Q2 FY25. During the quarter, the company added 39 stores to 1955 stores.

Bata is currently facing headwinds in the mass segment led by higher competition and lower consumption. However, the premium offerings such as the EV Slide Power series and a leather collection series driving the growth in the near term.

The management is confident about recovery in the consumption in H2 FY25 led by festive season .We have broadly maintained our earnings estimates over FY25E/FY26E.

The stock has corrected significantly in price recenelty, which gives us potential upside from current level. Upgrade the stock to Buy with a target price of Rs 1,610 (unchanged), assigning 50 times PER on FY26E.

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