Bata India Q3 Result Review: Centrum Downgrades Both Rating, Target Price — Here's Why

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Centrum Broking Report

Bata India Ltd.’s Q3 FY25 print was below our estimates; revenue /Ebitda/profit after tax grew by 1.7%/9.4%/ 19.8% YoY. Management observed rebound in volume growth led by power and Floatz. Volume growth was driven by-

1. value proposition and

2. End of season sale.

Further, lowest inventory led by EOSS helped to reduce complexity in the store. Management has been working on Zero based Merchandising (17 stores) which would help to improve performance led by lower complexity (lower inventory and only three price points at Rs 999/1,299/1,499) and to target top 100 stores (~50% sales contribution) by FY26.

Sneaker Studio is now implemented in 756 stores. Bata is banking on Omni-channel (6% sales contribution) strategy with 1953 stores covering 1500+ towns. Gross margins increased by 13bps to 56.2% whereas Ebitda Margin settled at 21.7% (+152bps).

Going forward, management wants to continue 150-160 net store opening for next couple of years. With lower Q3 FY25, we cut our earnings and change rating from Reduce to Sell with target price of Rs 1,174 (45 times FY27E earnings per share).

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