Should you buy Bata India post Q4 results?

• Follow

Analysts retained their mixed view on shoemaker Bata India after it reported a 23.3% drop in consolidated net profit at Rs 29.47 crore for the fourth quarter ended March 31, 2021. It had posted a net profit of Rs 38.40 crore in the year-ago period.

The scrip traded 5.04% higher at Rs 1636.25 at around 10.05 am (IST). On the other hand, the benchmark BSE Sensex was up 148 points or 0.29% at 52,089.

Revenue from operations came down to Rs 589.90 crore during the quarter under review from Rs 620.57 crore in the corresponding quarter of 2019-20.

Commenting on the results, Bata CEO Sandeep Kataria said: “The Q4 results are satisfactory for us, considering Q3 sales have historically been always better because of the festive season.”

For the financial year ended March 31, 2021, the company reported a loss of Rs 89.31 crore against a profit of Rs 32.89 crore in the previous year. Its revenue from operation in the fiscal year was down 44.1% to Rs 1,708.48 crore. It was Rs 3,056.11 crore in 2019-20.

Should you buy? Axis Capital revised the target price upward for Bata India to Rs 1,700 (from Rs 1,550 earlier). “We cut FY22E revenue/ EBITDA by 20%/ 50%. However, raise FY23E by 2%/7% respectively to bake in better revenue recovery in FY23 post expected vaccine rollout. Potential gains from high pent-up demand, sustained store expansion and strengthened management bandwidth underpin our change in view to a constructive one,” Axis Capital said in a report.

ICICI Securities holds a ‘Reduce’ call on Bata India with a price target of Rs 1,400. “Bata is likely to be a key beneficiary of ‘full unlocking’. Inferior product mix (away from formals and fashion and more towards open style footwear), is likely to put further pressure on profitability till then,” the brokerage added.