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Geojit Research Report
Bata India Ltd. is the largest retailer and leading manufacturer of footwear in India with approximately 1,550 retail stores as of June 2020.
Q1 FY21 revenue de-grew sharply by 85% YoY owing to lockdown in April and May and with nil production due to Covid-19 pandemic.
Despite significant lease waivers (approximately 50%), Bata reported net loss of Rs 101 crore versus net profit of crore YoY due to sharp decline in gross margin (40.4% versus 54.7%YoY), low sales and high fixed costs.
With gradual relaxation in lockdown, 85% of Bata’s stores are now open, but prevailing uncertainties are impacting discretionary demand, (currently achieved approximately 35-40% of the pre-Covid-19 business levels).
We have cut down revenue/ earnings estimates to factor the impact of Covid-19, expected to grow at 4%/7% compound annual growth rate over FY20-22E. We believe, Bata will be able to revive its revenue growth trajectory when the economy is back to normal.
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