Comments
Bonanza
Bata India (Buy)
CMP: ₹1,130
Target: ₹1,404
Recently stock price of Bata India Ltd. (Bata) corrected by about 27 per cent from ₹1,495 as the company fail to meet the street estimates in its recent quarterly results due to problems relating to introduction of new supply chain IT systems. Approximately 80-85 per cent of Bata sales come from the retail segment. After the success of the Hush Puppies stores, the company plans to launch more brand specific stores, going forward. This helps customers de-link the brand from the Bata group and, thereby, overcomes the drag of a mass market brand.
In Budget 2015, the government has reduced excise duty on leather footwear and having retail price of more than ₹1,000 a pair to 6 per cent from 12 per cent. This move of the government will help Bata to reduce prices and capture more market share.
Risks: a) Any fluctuation in raw material prices that cannot be passed on to the end user may impact the operational efficiency of the company. b) As growth potential in the Indian market is significant, Bata faces the risk of an increase in the royalty payments; c) Any increase in competitions from unorganised market or imported Chinese products may affect business of Bata.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.