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In the April-to-June quarter, Bata’s gross margins decreased by 185 basis points year-on-year (YoY) to 54.8%. The EBITDA margin also saw a decline of 92 basis points YoY to 25.5%. Demand for mass products, which are priced under Rs 1,000 ($1 = INR82.973), remained weak during this period, despite growth in the company’s premium portfolio.
Bata India’s sneaker portfolio grew by 1.15 times on a YoY basis, while Floatz, another brand towards the premium side, saw a growth of 2.06 times on a YoY basis. However, despite these developments and reach expansion initiatives, Bata’s revenue compound annual growth rate (CAGR) over FY19-23 was only 4% – the lowest among the top-four listed footwear players in India.
Citi highlighted that Bata India has lost market share and has had a zero percent volume CAGR over the past decade. In comparison, Metro Brands’ revenue has grown at a CAGR of 15% over FY19-23, while Relaxo Footwears’ revenue has grown at a CAGR of 7%in the same period.
By Wednesday afternoon, Bata India shares were down 1.11% at Rs 1681.95 on the National Stock Exchange (NSE). At the time of filing this report, the stock was trading 2.26% lower at Rs 1,662.60 on the Bombay Stock Exchange (BSE).
The brokerage further added that the reverse discounted cash flow (DCF) at the current market price (CMP) of Rs 1701.05 on the BSE implies a 17.2% revenue CAGR over FY26–36E. This is against a 10.8% revenue CAGR pre-COVID in the past decade.
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