Why Bata India Share Price is Falling

Benchmark indices came under pressure on Friday, 16 December 2022, and saw a steep fall of 879 points after the US Fed increased its interest rate by 50-basis points.

Other factors that drove the market lower, were the depreciation in the rupee and a rise in the interbank call money rate which touched a 44-month high.

Amid this gloomy sentiment in the market, all sectors took a beating.

Footwear stocks also fell with Bata India falling 3%.

The stock is down over 4% in the last month and more than 12% in 2022. Lets find out why.

Muted outlook due to inflation

Bata India posted a 35% YoY increase in revenue at Rs 8.3 bn for the September 2022 quarter. This was on the back of strong sneaker sales and premium categories gaining traction.

Sales from the mass segment were muted on account of inflation and GST fees which led the company towards selling premium products.

Plus, with the rural market in India suffering, the purchasing power in the rural market has been more affected than in urban India, driving the sales down.

However, compared to its peers Metro and Shoppers Stop in the branded footwear segment, the company's revenue growth was lower.

Metro Brands reported a 46.7% YoY increase in revenue at Rs 4.7 bn for the quarter, while Shoppers Stop registered its highest ever revenue of Rs 10.2 bn with a growth of 59.6% YoY.

Bata India's gross profit margin expanded by 2.1% YoY to 55% during the quarter. But this was still down 2% compared to Metro.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) margin came in flat at 19.4% driven by high input costs.

The company has even underperformed on the net profit front compared to its peers Metro.

Bata India for the quarter reported 47.4% rise in the net profit at Rs 548.2 m, this was lower than Rs 737.7 m reported by Metro Brands. However, its net profit was higher than Shoppers Stop.

In the earnings call, the management has said that it has seen flattish sales and profit growth over the last five years. Going forward, over the next three to five years, it will focus on volume growth.

However, this may remain flat for coming three to four quarters due to inflation pressure.

How Bata India Shares have performed recently

Bata India shares have declined by more than 4% in the last month. Over the last year, the stock is down more than 12%.

The company touched its 52-week high of Rs 2,067.8 on 31 January 2022 and its 52-week low of Rs 1,566 on 17 June 2022.

At the current price, the stock is trading at a PE multiple of 69.3 and a price-to-book value multiple of 16.5. This makes it overvalued on the PE front.

About Bata India

Bata India is the largest manufacturer and retailer of footwear in India and is a part of the Bata Shoe Organisation.

Incorporated as Bata Shoe Company in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932.

In January 1934, the foundation stone for the first building of Bata's operation was laid. In 1973, the company went public and changed its name to Bata India.

Today, Bata India has established itself as India's largest footwear retailer. Its retail network of over 1,375 stores gives it a reach that no other footwear company can match.

For more details about the company, you can have a look at Bata India's factsheet and Bata India's quarterly results on our website.

You can also compare Bata India with its peers.

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