Bata India - Q1FY21 First Cut - ICICI Securities

(CMP: Rs. 1258; MCap: Rs. 16173 crore)

Results for the quarter were materially impacted owing to temporary store closures for ~45 days and closure of schools (Q1 is the strongest quarter for Bata owing to sale of school shoes). Results came in below our estimates across all parameters.

Q1FY21 Earnings Summary

- Bata reported revenue de-growth of 85% YoY to Rs. 135 crore (vs. estimated de-growth of 75% YoY). Post lockdown relaxations, stores re-opened gradually, however operations were impacted owing to frequent lockdowns and restrictions mandated by local administrations

- Company undertook rationalization of fixed overheads with employee and other expenses declining by 14% and 57% YoY to Rs. 85 crore and Rs. 56.0 crore, respectively. Further, company secured significant lease rental waivers (~50%) leading to cost saving of Rs. 50.1 crore. Despite sharp reduction in operating overheads, EBITDA losses came in higher than our estimates owing to significant contraction in gross margins (down 1430 bps YoY to 40.4%). Subsequently, EBITDA loss came in at Rs. 86.1 crore (I-direct estimate: loss of Rs. 56.2 crore)

- Loss at PBT level came in at Rs. 135.0 crore (I-direct estimate: loss of Rs. 112.6 crore), however tax write back (Rs. 34.0 crore) led to company reporting PAT loss of Rs. 101.1 crore

Around 85% of the stores are currently operational, with Bata achieving ~40% of pre-Covid sales level. Apart from strengthening its e-commerce channel, company has rolled out two new hyper local channels: a) 'Bata ChatShop' (allowing customers to shop remotely from neighbourhood stores by interacting with store managers via WhatsApp) and b) 'store on wheels' (temporary stores are set-up in association with RWAs in residential localities). Given the current demand scenario, Bata has also launched various new products, in categories such as fitness-at-home, Easy-wash & Work-from-Home. Franchise store rollout continues with a plan to open 500 stores by 2023. We believe that with its strong brand patronage and pan-India retail reach, Bata India should be able to revive its revenue growth trajectory as and when the impact of the Covid-19 is phased out.

Shares of BATA INDIA LTD. was last trading in BSE at Rs.1258.4 as compared to the previous close of Rs. 1263.8. The total number of shares traded during the day was 69283 in over 4495 trades.

The stock hit an intraday high of Rs. 1271.4 and intraday low of 1252.15. The net turnover during the day was Rs. 87268957.

We will soon be coming out with a detailed report.

Source : Equity Bulls

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