Buy Bata India; target of Rs 1955: ICICI Direct
ICICI Direct’s research report on Bata India
Bata reported moderate revenue growth of 7.3% YoY to Rs 722.0 crore despite a challenging market environment. However, it continues to enhance its spending on new initiatives with enhanced focus on categories like women & youth, refurbishing and redesigning existing store models and higher ad-spends. Gross profit continued to see improvement, with gross margins expanding 60 bps YoY to 54.4%. Constant efforts towards premiumisation of product portfolio have translated into better margins. Furthermore, controlled fixed cost efforts led EBITDA margins to improve 50 bps YoY to 13.5%. Lower tax rate (26.8% vs. 35.0% in Q2FY19) boosted profitability with PAT growing robustly by 27.4% YoY to Rs 71.3 crore.
We roll our estimate forward and bake in revenue and PAT CAGR of 11% and 20%, respectively, in FY19-22E. We have a BUY rating on the stock with a revised target price of Rs 1955 (44.0x FY22E EPS of Rs 44.4).
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.