Bata India reported a 71.82% increase in consolidated net profit of Rs 119.37 crores

Bata India Ltd. posted its highest ever quarterly sales:

Bata India reported a 71.82% increase in consolidated net profit of Rs 119.37 crores for the first quarter, as the shoemaker achieved the “highest ever quarterly sales”. The company posted a net profit of Rs 69.47 crores in June 2021. Its revenue during the June quarter was Rs 943.01 crore, up over three-fold from Rs 267 crore in the pandemic-hit corresponding quarter of FY22. Bata India’s total expenses were at Rs 792.58 crore, up two-fold in Q1FY23 as against Rs 371.61 crore a year ago. During the quarter, the company continued to improve cost structures and increase efficiencies across the company. The digital channel sales momentum was due to three levers: D2C bata e-store, marketplaces, and omni-channel home delivery.

Cost-focus initiatives to drive the quarterly results:

A direct result of focus on key areas of franchise and MBO expansion and digital footprint expansion is seen in the quarterly results.  This is done continuous improvement in portfolio and marketing investments. Moreover, footfalls across retail outlets saw a significant spike, besides sales through digital channels. All the cost-focused initiatives, which have been put in place across multiple work streams, are showing increasing impact this quarter. Bata is witnessing a significant uptick in sales with rising demand for fashionable and comfortable footwear.

They continue to expand their reach through new franchise stores and multi-brand outlets. They have opened 20-plus new franchise stores, taking the total number to over 320, with a strong future pipeline and expanded availability via a distribution channel that continued to scale up to close to 1,100 towns. Almost 60+ stores renovated during the June quarter. Simultaneously, Bata also focused on driving volumes in these inflationary times, which should have an impact in the ensuing period. 

In the face of volatile inflation and geopolitical unrest, they are cost efficient and accordingly planning cost-savings measures across their network, which has reflected in the profitability. They are continuing to flesh out new opportunities across all value chains, which will help them capture the emerging consumer demand efficiently. They continue to be optimistic about the momentum going ahead, driven by innovation, scaling up digital channels, expansion in Tier 3-5 towns, and productivity enhancement in brands and stores.

The Net Promoter Score (NPS), feedback for loyalty for all offline and online channels that Bata services, stood at 70%. It was the continued growth of the sneaker category that led to the growth recovery. The sneaker studio in 125 stores to display up to 300 styles across 9 brands. Bata continued with an expansion drive in tier 3–5 cities. The company continued to expand its distribution business in MBOs across 1100 towns.

Valuations:

The EPS was Rs. 22.7 for the June 2022 quarter. The ROCE was at 8.37%, whereas the ROE was at 5.74%. The EBITDA stood at 33.2x for Q1 FY23. The price to book value was at 13.6x. The P/E was at 84.9x, while the 5 year P/E was at 45.9x for Bata India Ltd. The return on assets was 2.99% for the same quarter. The shares of Bata India Ltd on Friday settled at Rs 1927, up 0.25% from the previous close.