Bata India shares hit new high in range-bound market; jump 68% in 6 months

Bata India shares hit a new high of Rs 1,444, up 2 per cent on the BSE in the intra-day trade on Tuesday, on expectation of strong financial performance during March quarter of financial year 2018-19 (Q4FY19). The S&P BSE Sensex was up 0.23 per cent at 38,732 levels at 12:58 pm.

In the past six months, the stock of footwear retailer has outpaced the market by surging 68 per cent, on the back of foreign investors buying.  In comparison, the S&P BSE Sensex has risen 15 per cent during the period. In the past one year, it has rallied 83 per cent against 12 per cent rise in the benchmark index.

Foreign institutional investors (FIIs) continued accumulating shares of Bata India for the fourth straight quarter. They hiked their holdings in the company by 79 basis points (bps) to 11.14 per cent in March quarter from 10.35 per cent at the end of December quarter.

During the financial year 2018-19, FIIs stake in Bata India increased by nearly 5 percentage points from 6.19 per cent.

Bata India had reported a strong growth of 51 per cent in net profit at Rs 103 crore in December 2018 quarter (Q3FY19).

Operational revenues grew 16 per cent at Rs 779 crore in Q3FY19 against Rs 674 crore in the corresponding quarter of previous fiscal. Ebitda (earnings before interest, taxation, depreciation and amortisation) margin improved 450 basis points to 21 per cent from 16.5 per cent.

For Q4FY19 Bata India’s performance, the brokerage firm Nirmal Bang Securities expects increase in sales/Ebitda/profit after tax by 16 per cent/39 per cent/38 per cent, respectively, on YoY basis. It expects Ebitda margin improvement of 260bps on a YoY basis compared to the 450bps that one saw in Q3FY19.

“The sales growth to be driven by retail sales (around 85 per cent of revenue) growth in the mid-teens driven by very low double- digit price increase based on premiumization and low single digit volume growth. Higher footfalls on the back of advertisement spending which has gone up to around 2.5 per cent of sales compared to less than 1 per cent two years ago and fresh and trendy inventory (on a relative basis compared to history),” the brokerage firm said in a result preview with target price of Rs 1,479.