Report on Bata

7/31/2019 Report on Bata

1/10

- 1 -

THE RISE OF INDIAS LEADING

FOOTWEAR RETAILER


2/10

- 2 -

We once again recommend Bata India a BUY.

Bata India is the largest retailer and leading manufacturer of footwea

India and is a part of the Bata Shoe Organization. It owns ~1200 stospread across 400 cities in India. Currently the company owns brands

There has been an improvement in manufacturing, changesourcing, credit management, retail restructuring, labour unionmanagement relationship, retail expansion programs, internal contrworking capital management and corporate governance to restructureoperation process of Bata.

With sylish layout and trendy sdesign Bata is repositioning its brand. The company introduced expanded

. Soothing music, colourful ambience, contemporary styling excellent staff at exclusive Bata stores are the latest strategies adopteprovide the best retail environment to its customers.

It plans to open laformat 50-60 stores in tier-2 and tier-3 cities annually of atleast an are4000 sq.ft to increase its market penetration from the current store~1200 in CY10. It is also closing down unviable old stores.

Company has recently launched shoes in the range of INR500-3000

industrial uses in the domestic market. It is also planning to becomeapproved supplier of armed forces of which demand is 1.2mn pairs a yea

The township project in JV with Calcutta Metropolitan whBata has deployed around Rs.73 crore in 2007 is expected to be compeby 2013 and would further unlock value of Bata India.

Net Sales 9,836.0 10,902.0 12,739.0 15,300.0 18,35

Growth (%) 11% 17% 20%

EBITDA 830.0 1,240.0 1,629.0 2,094.0 2,51

EBITDA Margins (%) 8.4% 11.4% 12.8% 13.7% 13Adjusted Net Profit 590.6 625.8 883.7 1,186.0 1,43

Net Profit Margins (%) 6.0% 5.7% 6.9% 7.8% 7

Net Profit Growth (%) 6% 41% 34%

EPS (Adjusted) 9.19 9.74 13.75 18.46 22

EV/EBITDA 6.95 9.35 12.81 15.40 12

P/E 55.39 52.26 37.02 27.57 22

P/BV 12.60 10.92 9.21 7.30 5

RoE 24.7% 22.4% 27.0% 29.3% 28

Source: Company, Microsec Research ( Adj. Profit Excludes One time Gain in CY11E)

nt Market Price (INR) 509.00

t Price 670.00

eek High / Low (INR) 513 /268

et Capitalization (In INR M n) 32,726.00

Market Data

Code 500043

Code BATAINDIA

mberg Ticker BATA IN

rs Ticker BATA.BO

Value (INR) 10.00y Share Capital (Rs. Mn.) 642.64

age 5 Year P/E 38x

vs Sensex 0.70x

age Daily Volmes (6 M) 442,000

end Yield (%) 0.79

Return (1 Yr) 101%

STOCK SCAN

orate

ies

1%

Individuals

15.04%

titutions

9.92%

Promoter

and

Promoter

Group

52.03%

/10 9/7/10 12/7/10 3/7/11 6/7/11

Bata India Ltd.close SENSEX


3/10

- 3 -

Bata India is the largest retailer and leading manufacturer of footwea

India and is a part of the Bata Shoe Organization. Incorporated as Bata SCompany Private Limited in 1931,. Probably the o

footwear brand that offers footwear and accessories for the entire familhas established a leadership position in the industry and is the most truname in branded footwear

The company manufactures footwear for men, women and children. Company manufactures shoes of various quality such as leather, rubcanvas and PVC shoes. Bata Group has worldwide presence acroscontinents, serving 1 million customers per day and operating 4,600 restores globally.

.. It commands around 35 percent of market share in India. Compan. It owns ~1200 sto

spread across 400 cities in India. Currently the company owns brands

Currently it has five factories located at Batanagar, (West Bengal), Batag(Bihar), Faridabad (Haryana), Peenya (Karnataka) and Hosur (Tamil Nadu

The company has also launched a range of safety shoes for industrial usthe domestic market with a price tag of INR500-Rs 3,000. The companplanning to sell these shoes directly to industrial houses and not througretail stores. Presently, the products are going through manufactu

process at its Batanagar unit in West Bengal.

Bata India Limited was awarded CNBC Awaaz Consumer Awards 2for

'Brand Equity' recognized Bata in theAugust 2010. Bata is the only lifestyle retailer in the top 50 brand

Bata India Limited received thethe year award by Images Fashion Forum in Mumbai on 1February 2011.

Bata India Limited was recognized as the at 1position by the Brand Trust Report. This ranking is post surve16,000 brands; only 300 top brands were felicitated by The TAdvisory.

Bata India Limited was awarded by the Asia Retail Congress.


4/10

- 4 -

The company has build various brand over the years like

.

Bata's leadership in the dress comfort segment continues and brands have grown very well in the year CY1

For the ladies segment, Bata's popularity continues to grow with the tre range and its latest designs to enhance a woman's femininsensuality and individuality.

The youth focused brand and specialty outdoor br presents new trendy designs with an increased focuscasual styles.

The premium brand of offers city casual styles to customThere are now 12 exclusive brand outlets along with 13 shop-in shops w

leading department stores such as Lifestyle and Central.

are offered with fresh younger designs for absocomfort with style.

Positioning in fashion footwear segment with huge range of trefootwear.

Realising that customer service and satisfaction is the Key Mantra Planning the Franchisee Route and Online Sales to push up its sale Introducing almost four designs every day. Expanding its Retail Outlets with better design and more store sp

of atleast 4000 sq.ft Area.

Shed its image as a low-cost functional footwear brand that appto the 40-plus age group

Focus on Product Design and contemporary look Targeting for a family as a whole Launch of new industrial and customized sectors Strong focus on Financial control Reduce unviable stores Increasing its business to Institutional like Hospitals, Military for

factory workers and Airlines


5/10

- 5 -

The Companys Net sales jumped by 20% to INR3107 Millions and EBIimproved by 65% to INR444 Millions when compared to prev

corresponding quarter. EBITDA Margin of the company improved to 14from 10.4%. Adjusted PAT of the company jumped by 75% to INR251 Milin comparison to previous corresponding quarter. In the Q1CY11E, theran Extra- ordinary Income of INR1093 Million resulting from the restructuof the agreement for the development of integrated township projecBatanagar. Taking the Extra-ordinary Income into account, this quarter

jumped by 663% to INR1094 Millions as against INR143 Millions.

The year 2011 has begun on a very promising note for the company highest sales growth in the first quarter as a result of its continexpansion through 29 new stores and great response from customers toever improving product range. These 29 new Bata stores are opened acIndia with a surface selling area of 4000 sft. The company also contin

expansion of its Hush Puppies brand with 4 new stores in this Quarter.

The wholesale business also continued to grow with opening of customers in unrepresented towns which resulted in additional busin

The Branding, Institutional, safety and exports division are also growinmore than 40%

Particulars Mar-11 Dec-10 Mar-10 QOQ YOY

Net Sales 3107 3559 2592 -13% 2Other operating income 37 40 24

Net Sales & Other Operating Income 3143 3598 2616 -13% 2

Total Expenditure 2699 3005 2347

PBIDT (Excl OI) 444 593 269 -25% 6

EBITDA (%) 14 .3% 16.7% 10.4%

Other Income 26 22 9

Operating Profit 470 614 277

Interest 2 2 3

PBDT 469 613 274

Depreciation 85 98 64

PBT 383 515 210 -26% 8

Tax 132 171 67

Profit After Tax Exluding EO 251 344 143 -27% 7

PAT (%) 8.0% 9.6% 5.5%

Extra Ordinary Item (Net of Tax ) 843 0 0

PAT inclding Extra Ordinary Item 1094 344 143 218% 66

Equity Capital 642.6 642.6 642.6

Adjusted EPS 3.9 5.4 2.2 -27% 7


6/10

- 6 -

Indian domestic leather goods market is estimated to be worth Rs 16,crore and is expected to grow at a CAGR of 20%.

and has grown atrate of 8.8% over the last couple of years.

. Mens footwear accountsalmost half of the total market, with womens shoes constituting 40 percand kids footwear making up for the remainder. The domestic markesubstantially price driven, with branded footwear constituting less thanpercent of the total market size.

About 37.8 percent of Footwear retail is the organized segment, wqualifies it as the second most organized retail category in India, next oto Watches. While the average spend on the footwear by urban consumis INR240/annum, consumers in rural areas spend just about INR100/ann

and top 20 cities contribute about 450 Million pairs/annin the world, next onlChina.

and has bsteadily growing over the year. Major part of the demand is met by unorganised sector and still there is a shortfall of 300 million pairs.

While internatiobrands largely dominate the higher end of the spectrum, the lower endthe market is dominated by home-grown players as well as unorganplayers. While men's footwear is the biggest target category (contribualmost 48%), children's (11%) and women's lifestyle footwear (41%) isbehind in the race.

Bata Liberty Woodland Khadim Red Tape Metro Nike Reebok


7/10

- 7 -

The stock is currently trading at INR509 at a P/E of 37x. It discountsCY11E EPS of Rs.18.4 by 27.6x and its CY12E EPS of Rs 22.3 by 22.8x. Iyear consolidated Average P/E works out to be 38x as per Bloomberg.

Bata India has transformed itself from being a shoe player to Indias growRetailer and hence is looking set to trade at higher multiples commandedother retail players.

Import of cheap footwear from China, which controls 17% of internatileather trade compared with Indias 3%, remains the main challengeBata India Ltd.

Particulars

Sales

FY11 EBITDA PAT

EPS

FY11 D/E ROE CMP

P/E

FY11 MCAP

No. of

storesPantaloon Retail 11778 1001 60 2.8 1.7 2.3% 263 95.2 5710

Shopper Stop 2194 131 43 5.3 0.5 4.9% 400 76.0 3286

Trent 1520 12 8 3.4 0.0 0.2% 1034 302.3 2074

Titan 6532 591 433 97.5 0.1 49.0% 4378 44.9 19434

BATA 1273 163 88 13.7 0.2 27.0% 509 37.0 3271 1


8/10


9/10

We Benchmark Our Research Microsec

Microsecbenchmark its Researchand the same isupdated onour website atwww.microsec.in

Plan and monitor your resources throughwww.prpsolutions.com

Performance of Microsec Fundamental Research

An amount of Rs 1,00,000 invested individually in all 116 stocks ie, 11,60,0000 investment as and

when recommended has appreciated to Rs 1,75,42,041 giving a return of 51.3 percent. On the

same basis Nifty has given a return of 17.7 percent and CNXMID CAP has given a return of 20.2

percent.

70.00%

60.00%

50.00%

45.00%

40.00%

35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00% Microsec Research Nifty CNX Midcap

As on 31stMarch 2011


10/10

- 9 -

Report on Bata

Documents