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CapitalAim
Bata India (Buy)
CMP: ₹1,537.05
Target: ₹1,800
Business outlook: With changing lifestyles and increasing affluence, domestic demand for footwear is projected to grow at a faster rate than the country has ever seen. India has a good potential for the footwear industry in view of its young population, rapid change in lifestyle, increase in disposable income of middle-class people and continuous growth in the number of working women.
Q1 performance: For the quarter ended 30-06-2019 the company has reported standalone sales of ₹882.14 crore up 10.64 per cent from last year same quarter sales of 797.28 crore and 29.84 per cent from last quarter sales of ₹679.39 crore. Company has reported a net profit after tax of ₹100.73 crore in the latest quarter up by 14.11 per cent q-o-q, while y-o-y up by 22 per cent.
Valuation: According to the financial record, company is fundamentally sound but overvalued and the company has potential growth as well the company has planned to 100 stores in FY2020. According to previous record and estimate companies, September quarter result may be disappointing q-o-q basis but not y-o-y basis and December quarter financial performance is expected to be better. We recommended Buy on dips below ₹1,500 for a target of ₹1,800 in a year’s time frame.
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