Bata India rallies 6% on report company in talks to tie-up with Adidas

The footwear company is in talks with German sportswear giant Adidas for a strategic partnership for the Indian market, a report said

Shares of Bata India zoomed 6 per cent to Rs 1,749 on the BSE in Thursday’s otherwise weak intra-day trade on a report that the footwear company is in talks with German sportswear giant Adidas for a strategic partnership for the Indian market.

The stock reported its sharpest intra-day rally since August 30, 2022. In comparison, the S&P Sensex was down 0.64 per cent at 65,122 at 12:43 pm.

According to a CNBC TV18 report, the talks are likely in an advanced stage and final deal contours are in the works.

Bata India is primarily engaged in the business of manufacturing and trading of footwear and accessories through its retail and wholesale network. The company is one of the largest footwear manufacturers in India and sells a wide range of footwear in canvas, rubber, leather and plastic.

Bata India is a 50.16 per cent subsidiary of Bata (BN) BV, Amsterdam, a group company with operations in more than 50 countries. The company has access to technical research and innovative programmes implemented by the Bata Group. It receives technical, strategic and managerial support in its various functions, including purchase, manufacture, and training of managers from its Group company and in turn pays technical fees.

In the past one week, the stock declined 6 per cent till Monday, after the company reported disappointing set of numbers for the quarter ended June 2023 (Q1FY24).

Revenue from operations grew 2 per cent to Rs 958 crore over the previous year quarter. The net profit was down 10.5 per cent year-on-year at Rs 107.8 crore primarily on account of early start of end of season sale by the industry.

On the discretionary spending front, the company said demand remains subdued in the footwear sector, prolonging the deceleration that started towards the end of March 2023. Demand recovery and acceleration expected during the festive season.

The management is optimistic on the demand resurgence going ahead and continues to expand in tier 3-5 towns, digital channels and make investments in elevating customer experience & brand marketing. The current global economic state, inflation and rising rentals due to boom in commercial real estate market pose challenges to the Indian Footwear Market, the company said.

With the strategy of casualization and premiumization, expansion in retail network and accelerated investment towards core technologies (ERP, Merchandising, etc.,), the company believe the template is set up for future profitable growth.