Equity Research Report

February 13, 2016

Bata India Limited

CMP:
Recommendation :
Target Price :

Rs 460.10
BUY
Rs 700

Target Period:

6 Months

Stock Details
Market Cap
52- wk HI/L
Avg.Volume (Monthly)
Face Value

Rs 6,094.78 Crore
Rs 658.35 Rs 438
425274.33
Rs 5

About
Bata India Limited is an India-based company engaged in the manufacturing

Historical Prices
BSE
Gain/Loss

NSE
Gain/Loss

BSE CODE: 500043

NSE CODE: BATAINDIA
SECTOR: LEATHER PRODUCTS

1 week

1 month

3 month

6 month

1 year

488.60
-3.01%
487.25
-2.64%

457.15
3.66%
460.25
3.07%

472.20
0.36%
472.30
0.44%

589.10
-19.5%
587.98
-19.3%

643.13
-26.3%
642.58
-26.2%

and retailing of footwear and accessories for women, men and kids. The
Company offers various categories for women and men, which include
chappals, closed shoes, sandals, formal shoes and sport shoes. The
Companys women accessories include scarves and handbags. Its men
accessories include bags, belts, wallets, shoe care, foot care, handkerchief
and socks. The Companys brands include Ambassador, Angry Birds, Bata,

Revenue (Rs Crore)

Bata Lite, Bata Walks Green, Comfit, Hush Puppies, Marie Claire,
2694

3000
2000

1258.08

1542.54

1842.45

2065.18

Naturalizer, North Star, Power, Sandak, Scholl, Sparx, Sundrops and

Sunshine, among others. It also operates a non-retail distribution network
through its urban wholesale division. The Way Finders Brands Limited

1000

(WFBL) is a wholly owned subsidiary of the Company. Bata India gains as

0
Dec'10

Dec'11

Dec'12

Dec'13

Dec'15

EBIDTA (Rs Crore)

Financial Highlights

500
300

409.7

361.38

400

parent company hikes stake.

304.4

343.1

Bata Indias (Bata) Q1FY16 revenues were up 9.4% YoY to Rs.

680.45 crore (I-direct estimate: 603.5 crore)

194.35

200

100

EBITDA for the quarter declined 11.1% YoY to Rs 86.38 crore on

account of a 294 bps YoY dip in operating margin to 12.7%. The

0
Dec'10

Dec'11

Dec'12

Dec'13

Dec'15

operating margin declined owing to higher rental, promotional

schemes and price discounts and higher proportion of traded goods

Profit After Tax(Rs Crore)

171.6

200
150

as a percentage of sales

231.2

225.84

250

190.7

95.35

PAT for the quarter stood at Rs. 92.2 crore, posting growth of

100

~55.3% YoY (I-direct estimate: Rs. 53.2 crore). PAT was mainly

50

driven by exceptional income of 42.95 crore. Excluding this, there

0
Dec'10

Dec'11

Dec'12

Dec'13

Dec'15

was degrowth in PAT by 17% YoY

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Equity Research Report

February 13, 2016

Bata India Limited

Mar
'15
Investment Valuation Ratios
Face Value
Dividend Per Share
Operating Profit Per Share (Rs)
Net Operating Profit Per Share (Rs)
Bonus in Equity Capital
Profitability Ratios
Operating Profit Margin(%)
PBIT Margin(%)
Gross Profit Margin(%)
Cash Profit Margin(%)
Adjusted Cash Margin(%)
Net Profit Margin(%)
Adjusted Net Profit Margin(%)
Return On Capital Employed(%)
Return On Net Worth(%)
Return on Long Term Funds(%)
Liquidity And Solvency Ratios
Current Ratio
Quick Ratio
Debt Equity Ratio
Debt Coverage Ratios
Interest Cover
Total Debt to Owners Fund
Financial Charges Coverage Ratio
Management Efficiency Ratios
Inventory Turnover Ratio
Debtors Turnover Ratio
Investments Turnover Ratio
Fixed Assets Turnover Ratio
Total Assets Turnover Ratio
Asset Turnover Ratio
Number of Days In Working Capital
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit
Dividend Payout Ratio Cash Profit
Earning Retention Ratio
Cash Earning Retention Ratio
Earnings Per Share
Book Value

Dec
'13

5.00
5.00
6.50
6.50
52.11 50.08
419.21 321.36
15.24 15.24

Investment Rationale
Over the last seven years (CY06-CY13), Batas revenues have grown at a
CAGR of 17.6%. This growth came on the back of an improving product
mix, which aided the company to report realisation growth of 10.2% during
the period. Bata faced supply chain problems in FY15 (15 months),
particularly during October 2014-March 2015, owing to teething problems
related with its new SAP system installed at ~1274 stores. The company

12.43
9.34
9.49
10.18
10.18
8.58
8.44
30.02
23.22
30.02

15.58
12.52
12.71
12.40
12.40
9.23
9.09
36.16
23.46
36.16

2.08
0.79
--

2.05
0.84
--

faced connectivity issues at many stores. Hence, these stores could not
receive the required quantum of supplies, thereby negatively impacting
revenue growth. With most supply chain issues sorted out in Q1FY16, we
expect revenue growth to revive and expect a CAGR of 18% in FY15-17E.
In Feb15, the firm reinstated the old IT platform at the distribution center
level, without changing the new SAP software at the store level. Store
managers suggest that inventory levels, which declined 30-40% at the store
level in Oct14-Jan15, are back to normal levels from Feb15 onwards.
Some store managers have started reaping the intended benefits of the new
software which includes improved efficiency of the distribution centers
amidst a widened range of SKUs and use of store-level MIS by each store
manager to better prepare for upcoming demand patterns.
During CY07-12, Batas volumes increased from 4.4 crore pieces to 5.2

170.22 226.33
--215.34 271.90

crore pieces while realisations improved significantly from Rs. 197/piece to

Rs. 343/piece. Accordingly, revenues increased from Rs. 867.5 crore to Rs.
1,842.5 crore in CY12. We expect revenues to further increase to Rs. 3,011

3.88
49.28
3.88
3.88
2.71
2.89
76.69

3.60
43.08
3.60
3.44
2.54
2.68
86.32

crore by FY17E. Volumes are likely to increase to 6.4 crore pieces with an
average realisation of Rs. 457/piece.
After the success of the Hush Puppy stores, the company plans to launch
more brand specific stores, going forward. This helps customers to delink
the brand from the Bata group and, thereby, overcome the drag of a mass
market brand. On the back of these changes, we remain hopeful of a pickup in Batas sales. This will also help to enhance the brand image of the

18.06 21.89
13.45 16.71
79.08 79.20
85.03 83.94
35.97 29.68
154.89 126.52

company and, thereby, remove the perception drag on the companys

impression. We expect revenue growth to revive owing to better demand,
supply side concerns receding and aggressive store addition. We expect
Bata to continue to command a better multiple than its peers not only
because of its size but also owing to the better financial health. We, thereby,
maintain our BUY rating on the stock with a target price of Rs. 700.

For any assistance or help, you may contact us at Phone: (+91) 7411847019, 7411847021, 08123061512 or Email: info@marketindexanalyst.com

Equity Research Report

February 13, 2016

Bata India Limited

Balance Sheet (INR Crores)

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities

Technical Outlook

Mar '15
15 mths

Dec '13
12 mths

64.26
64.26
0.00
0.00
931.09
995.35
0.00
0.00
0.00
995.35
Mar '15
15 mths

64.26
64.26
0.00
0.00
748.79
813.05
0.00
0.00
0.00
813.05
Dec '13
12 mths

Application Of Funds
Gross Block
694.95
Less: Revaluation Reserves
26.79
Less: Accum. Depreciation
388.27
Net Block
279.89
Capital Work in Progress
48.17
Investments
4.95
Inventories
704.70
Sundry Debtors
58.42
Cash and Bank Balance
209.97
Total Current Assets
973.09
Loans and Advances
304.54
Fixed Deposits
0.00
Total CA, Loans &
1,277.63
Advances
Deferred Credit
0.00
Current Liabilities
539.54
Provisions
75.75
Total CL & Provisions
615.29
Net Current Assets
662.34
Miscellaneous Expenses
0.00
Total Assets
995.35
Contingent Liabilities
130.88
Book Value (Rs)
154.89

601.18
27.95
354.94
218.29
23.71
4.85
582.69
50.92
255.73
889.34
218.62
0.00

Bata India Limited 6 month Stock Performance

Bata India Limited Performance Against Nifty

Peer Analysis
Name

1,107.96
Bata India

0.00
453.07
88.68
541.75
566.21
0.00
813.06
111.11
126.52

Relaxo Footwear
Mirza Intl

Last
Price
473.80

Market
Cap.(Rs)
6,089.63

Sales(Cr)
2,694.00

Net
Profit
231.17

Total
Assets
1,022.14

399.90

4,800.39

1,480.81

103.05

578.80

97.75

906.20

918.99

51.16

496.01

Bhartiya Inter

474.50

555.82

423.95

14.07

350.28

Sreeleathers

129.55

325.88

66.76

8.44

195.87

Liberty Shoes

145.90

248.61

525.69

17.06

277.47

Superhouse

138.75

158.45

710.71

32.47

392.74

For any assistance or help, you may contact us at Phone: (+91) 7411847019, 7411847021, 08123061512 or Email: info@marketindexanalyst.com

Equity Research Report

February 13, 2016

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