Bata India surges 6%, nears 52-week high post March quarter results

Shares of Bata India surged 6 per cent to Rs 1,657.50 on the BSE in intra-day trade on Thursday on expectations that the company would be able to revive its revenue growth trajectory as and when the impact of the Covid-19 phases out. The stock of the footwear company was trading close to its 52-week high level of Rs 1,705 touched on January 11, 2021.

For the January-March 2021 quarter (Q4FY21), Bata reported revenue de-growth of 4.8 per cent year-on-year (YoY) to Rs 589.9 crore on a favourable base of Q4FY20. The profit after tax declined 21.9 per cent YoY to Rs 29.4 crore.

While the third quarter ended on a comparatively stronger note because of festive sales, the Q4 results indicated steady and consistent growth, in line with the quarter’s seasonality, Bata India said.

The management said the company has adequate cash reserves and is curbing discretionary expenses to eliminate redundancies and introduce efficiencies in its value chain. Bata India remains hopeful that with the roll-out of vaccines for everyone above 18 years, business would start growing back.

Bata India is the largest footwear retailer in India, offering footwear, accessories and bags across brands such as Bata, Hush Puppies, Naturalizer, Power, Marie Claire, Weinbrenner, North Star, Scholl, Bata Comfit and Bubblegummers, to name a few. It retails in more than 1,600 Bata-owned and franchisee stores, on bata.in and in thousands of multi-brand footwear dealer stores pan-India.

Bata India’s gross margins witnessed an improvement of around 160 basis points (bps) quarter-on-quarter (QoQ) to 53.1 per cent, indicating green shoots in formal and fashion footwear demand. However, on a YoY basis, gross margins were down 570 bps YoY owing to an unfavourable product mix. Subsequently, EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins declined 340 bps YoY to 19 per cent.

"Bata continues to have a healthy balance sheet, with surplus cash of around Rs 1,093 crore as of FY21. The company continues to strengthen its e-commerce facilities in Q4FY21 as well, by making a wider portfolio available on all marketplaces. Aligning with the current demand scenario, Bata has tweaked its product portfolio from formals and fashion categories to casuals, fitness, and essential categories, covering comfortable sneakers, open and sandals styles," ICICI Securities said.