Bata India shares trade almost 2 percent higher on Wednesday, just 1.75 percent away from its 52-week high of Rs 1480. The stock has gained over 4 percent in a week and 8.5 percent in a month.
Year-to-date, the stock has surged 28.59 percent, while the one-year return on the stock is over 45 percent. Bata India has returned almost 1700 percent return to investors in the last 10 years.
Brokerages are positive on the stock in a near-to-medium term as the discretionary consumer company posted robust results in the first quarter ended in June.
Bata India reported a 22.5 percent jump in consolidated net profit at approximately Rs 101 crore. It ad reported a profit of Rs 82.41 crore in the April-June quarter in 2018. The footwear major's net sales came in at approximately Rs 883 crore, up nearly 11 percent while EBITDA at Rs 159 crore was up 21 percent year-on-year.
The 1QFY20 results were announced on August 2. In a research note published after the company's April-June quarter results on Friday, Edelweiss rated Bata India as 'buy' with a target price of Rs 1500 apiece.
"Bata is a high-quality consumer brand in the fast-growing footwear category and is taking all the right initiatives to drive growth, improve brand strength and propel earnings. Given the track record over the last 3 years, we expect the strong performance to continue and hence assign 42x P/E FY21E to arrive at our medium-term price target of INR 1,500. Further, this high-quality consumer brand has all the potent ingredients in place for a further surprise on growth levers, which we believe makes it a compelling compounding story to be played over the long term time frame," it said in the research note.
The company's attempts towards premiumisation are visible in the margins as gross margins improved 130 bps YoY helping overall margins improve on a YoY basis for the 13th successive quarter, the note added.
Angel Broking is also positive on the stock and raised its price target to Rs 1525.
"We expect BIL to report net revenue CAGR of ~15% to ~`3,805cr over FY2019-21E mainly due to increasing brand consciousness among Indian consumers, new product launches, a higher number of store additions in tier II/ III cities and focus on high growth women’s segment. Further, on the bottom-line front, we expect CAGR of ~16% to `436cr over the same period on the back of margin improvement (increasing premium product sales). Thus, we maintain our Buy recommendation on Bata India with Target Price of `1,525," the brokerage said in a research note on August 3.
Bata India shares quoted at Rs 1453.85, up 1.47 percent on NSE at 12.42 pm. Meanwhile, the benchmark Nifty traded 117 points higher at 11,043.
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