Bata India: Company continues to face challenges in mid/mass price segments

Bata India’s revenue remained flat YoY at INR 9.42bn (HSIE: INR 10bn) amid weak consumption, adverse weather, and geopolitical disruptions, with volumes and ASP also flattish. The company continues to face challenges in the mid/mass price segments, which remain under pressure despite initiatives on value proposition.

Zero base merchandizing footprint rose to 194 stores in the quarter

Zero Base Merchandising (ZBM) footprint rose to 194 stores (+48 stores), with plans to roll out ~50 stores per quarter. Bata opened 16 stores (net) in Q1 (franchise/total store count: 644/1,978). Gross Margin (GM) contracted 137bps or 1.37% YoY to 53.5% (HSIE estimate was: 55.2%) on clearance of discontinued/aged inventory and focus on value proposition. EBITDAM or EBITDA margin expanded 153bps or 1.53% YoY to 21.1% (HSIE estimate was: 20.2%) due to tighter cost control.

We’ve toned down our FY27/28 EPS estimates by ~2/3% respectively and maintain our REDUCE rating with a DCF-based Target Price (TP) of INR1,085/sh (earlier INR1,150), implying 35x Jun-27 P/E.

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