Buy This Footwear Stock For 14% Upside, In 1 Year: Geojit BNP Paribas Suggests

Brokerage firm Geojit BNP Paribas has suggested investors buying the stocks of Bata India Ltd. (BIL) for 14% return.

Target Price

The Current Market Price (CMP) of Bata India is Rs. 1868. Geojit has estimated a Target Price for the stock at Rs. 2135. The stock is expected to offer a 14% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 1868
Target Price	Rs. 2135
1 year return	14.00%

Company performance

Q3FY22 revenue grew by 37%YoY (+37%QoQ) on a low base (de-growth of 26% in Q3FY21) and crossed pre-covid level sales first time. However, EBITDA improved by 44%YoY to Rs. 169 crore while PAT grew by 180%YoY to Rs. 72 crore. Gross margin/EBITDA margin has improved to 52.7%/20.0% from 51.5%/19.1% YoY. The company focuses on adding franchise stores and targets to open 500 by FY23 which will control rental cost (added 34 franchise stores in Q3FY22 Vs 16 in Q2FY22). Also, the company got rent concession for Rs. 54 crore in 9MFY22 (Rs. 86 crore in 9MFY21 & Rs. 101 crore in FY21).

Comments by Geojit BNP Paribas

About the stock, Geojit stated, "BIL's cost-saving measures across rentals, operations & manufacturing will drive sustainable margin expansion in future. BIL has a strong brand recall & distribution reach and a strong balance sheet. BIL will be able to revive its revenue growth trajectory as the economy is back to normal given its strong brand recall & reach. We expect revenue to grow at ~23% CAGR over FY22E-24E." The brokerage firm thinks that BIL is showing a strong recovery, and its topline has crossed the pre-covid level.

About the company

Bata India Ltd (BIL) is the largest retailer and leading manufacturer of footwear in India with ~1,700 retail stores as of Dec 2021. The distribution reach has now crossed 1,000+ towns in Dec 2021 Vs 892 in 2020. To reach smaller towns, the company opens new stores via franchise route and ensures availability in multi-brand outlets via distribution channels. The company had introduced other channels like Bata Chatshop, Bata Store on Wheels and has launched products to suit work from home, Fitness at home and Monsoon collection to push volumes during Covid period.

(Also read: ICICI Direct Recommends To Buy This Automotive Stock For 32%, In Near Term)

Disclaimer

The above stock was picked from the brokerage report of Geojit BNP Paribas. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.