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SELL
INITIATING COVERAGE BATA IN EQUITY December 09, 2015
Bata India, Indias largest footwear retailer, will face an existential crisis, Recommendation
as it cedes distribution equity to e-commerce (footwear market size of Mcap (bn): `64/US$1
US$500mn). The under-investment in the brand (meager 1% of revenues 6M ADV (mn): `250/US$3.7
over CY08-15) will bite into future earnings whereas the over-investment
CMP: `495
in stores will cap capital efficiency. FY17E EBITDA margin of 12.4%
TP (12 mths): `388
remains a far cry away from its historical peak (15.6% in CY13) given
Downside (%): 22
high fixed costs (35% of FY15 sales) amid pressure to increase
commissions and ad-spend. A significant turnaround is some time away
given (a) historical high inventory (nine months) requiring write-downs; Flags
(b) high possibility for gross margin compression and (c) declining asset Accounting: GREEN
turns (2.4x in FY17 from 3.1x in CY09); we expect FY17E RoE to be 19%. Predictability: RED
We re-initiate with SELL and implied valuation of 23.5x FY17E EPS. Earnings Momentum: RED
Competitive position: WEAK Changes to this position: NEGATIVE
Catalysts
Brand equity is actually distribution equity
Over CY09-FY15, Bata generated `12bn CFO; rather than investing in the Increased competition from e-
brand, it expanded retail space to 3.3mn sq ft (from 1.3mn), investing 1/4th CFO commerce is a threat to at least 12%
in brandex vs equal outlay by peers. Unparalleled network (>500 cities) and 84- of Batas FY17E revenues
year-old history made it a default consumer choice until customer moved online FY16E and FY17E earnings to be
and started buying more aspirational brands, easily available online than Bata. impacted by inventory write-downs
Bata brands diminishing distribution equity is evident from the muted growth
(10%/4% in CY13/FY15) despite adding 50% more space Increased K scheme commissions
and ad spends from FY17E
Distribution equity challenged by new brands and e-commerce
In the last four years, Nike/Puma have expanded at a CAGR of 40%/30%, aided
by e-commerce; online footwear sales account for over 11% of the organised Performance (%)
footwear market. Even after assuming that sports footwear is the dominant 120
category in footwear sold online, foreign brands pose a direct threat to 12-15% 110
of Batas portfolio and can impede the growth of the Power brand. Every 5% fall 100
in revenue growth of Power impacts overall earnings by 3%. 90
80
A large ship is difficult to steer in rough waters 70
With a network of over 1,200 stores and 4,800 employees, Bata resembles a 60
large ship in rough watersrising competition, negative operating leverage
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
(high-and-rising fixed costs) and inventory management challenges looming on
EBITDA margins (est 10.7%/12.4% in FY16E/17E). Moreover, we expect an
BATA IN SENSEX
increase in K scheme commissions (currently unviable rates) and ad spends. A
similar situation played out in China, with local incumbents losing to
international competition which quickly switched to online sales. Source: Bloomberg, Ambit Capital research
Limited scope to improve asset turns impedes RoE Bata ranks at an insignificant #3 in online shopping searches
Puppies
With average
13% of Portfolio and
selling price of
any high value
Rs200/pair and Vulnerable to Popular brand Competition from foreign brand
(above Rs1500)
Ability to withstand e- catering to low ecommerce as online as well as and high fixed costs from large
product is Derives nearly 30%
com competition value categories availability of offline. Moreover it store network, make Bata
vulnerable to more of revenues from
and has limited foreign brands at has smaller but vulnerable
aspirational brands ecommerce
store network. similar price points very efficient store
online and has high
Therefore there is is high network
fixed costs at 35% of
no immediate
sales
threat to Relaxo.
Inventory days have deteriorated
from 177 days in CY10 to 237
days in FY15. During this period
Inventory days
194 105 168 177 156 peers' inventory days on an
average has stayed around the
150 day mark
Source: Company, Ambit Capital research Note: - Strong; - Relatively Strong; - Average; - Relatively weak. Pumas CAGR calculated for CY11-
CY14.
1,000 0%
CY09 CY10 CY11 CY12 CY13 FY15
CY07
CY08
CY09
CY10
CY11
CY12
CY13
FY15
Exhibit 4: Barring CY11 there has been no real LTL growth for Bata since CY10
4%
3%
2%
1%
0%
-1% CY10 CY11 CY12 CY13 FY15
-2%
-3%
-4%
-5%
-6%
-7%
Source: Company, Ambit Capital research
70.00 55.0%
60.00 54.0%
50.00
53.0%
40.00
52.0%
30.00
51.0%
20.00
10.00 50.0%
0.00 49.0%
CY08 CY09 CY10 CY11 CY12 CY13 FY15
Under-investment in brands
The company has invested `6bn in capex over CY05-FY15 with ad spend at `1.68bn
whereas peers have invested significantly more in percentage of sales terms as well
as absolute terms.
Exhibit 6: No concrete brand building strategy has been adopted
2.5%
Ad spend as % of Sales
2.0%
1.5%
1.0%
0.5%
0.0%
CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 FY15
Relaxo's Sales (Rs mn) (LHS) Bata's Sales (Rs mn) (LHS)
Liberty's Sales (Rs mn) (LHS) Metro's Sales (Rs mn) (LHS)
Relaxo's Ad. expenses as a % of Sales (RHS) Metro's Ad. expenses as a % of Sales (RHS)
Liberty's Ad. expenses as a % of Sales (RHS) Bata's Ad. expenses as a % of Sales (RHS)
16,000 12%
24,000 5%
14,000 21,000
10%
12,000 4%
18,000
8%
10,000 15,000 3%
8,000 6% 12,000
6,000 9,000 2%
4%
4,000 6,000
2% 1%
2,000 3,000
- 0% - 0%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: Company, Ambit Capital research Source: Company, Ambit Capital research
Exhibit 10: Momentum in brandex is high Exhibit 11: ...forming a considerable portion of sales
0 0 0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Liberty's Capex (Rs mn) Bata's Capex (Rs mn) (LHS)
Relaxo's Capex (Rs mn) Metro's Capex (Rs mn) (LHS)
Liberty's Ad spend (Rs mn) Bata's Ad spend (Rs mn) (RHS)
Relaxo's Ad spend (Rs mn) Metro's Ad spend (Rs mn) (RHS)
Source: Company, Ambit Capital research Source: Company, Ambit Capital research
Most leading footwear companies have continued to invest as much in their A&P as
they are investing in capex; during this phase, they have grown faster than Bata, as
they have allocated capital equally for expansion and brand building unlike Bata.
Therefore, a decade of under-investment has impacted Batas brand equity which has
been built on its strong network and 84 years of existence. This underinvestment will
impact adversely in the future given that millennials and the nextgen, the core target
audience for lifestyle brands, are more likely to be influenced by product, positioning,
fashion quotient and effective promotion; Bata not only isnt aspirational/fashion but
also lacks effective promotion to be on top of recall.
Although Relaxo footwear serves the lower end of the footwear market with ASPs of Louis Philippe shoes, an extension
`200 per pair (123mn pairs sold in FY15), it has captured a large customer base from of the largest mens wear brand
the unorganised market through specific brand positioning (sub-brands with separate Louis Philippe has already reached
brand ambassadors) and investments in the brand. For Bata, the market is largely revenues of `800 mn with
restricted to the mid to upper end of the footwear market and Relaxo has successfully successful product extension on the
gained market share at the lower end of the market through its wholesale network. strength of the brand.
30%
25%
20%
15%
10%
5%
0%
CY11 CY12 CY13 FY15
Despite adding 697 stores (1.85 mn sq ft) over CY10-CY15, the Bata brand has just
about doubled its revenues as much as the store space, implying no like-to-like
growth. The pace of Bata brands growth too moderated in CY13 to 10% despite
adding 430 stores (1.13mn sq ft on a base of 1.78mn sq ft in CY10) over CY11-FY15.
The overall growth of 12% was largely due to 32% growth in licensed brands where
Angry Birds had its first full year of operation (launched in 4QCY12) and the number
of Hush Puppies outlets increased by 40%, as seen in the above exhibit.
Competitive intensity
HIGH
FDI in retail along with the strength of the
Indian consumption story; many domestic and
international players have entered into the
footwear retail industry.
Low switching costs have led to intensified
rivalry in the industry
Regional/ apparel brands are using online
channel to become national footwear brands
Opportunities Threats
Tapping the unorganised share which accounts for ~60% of the Indian Ecommerce has eroded distribution advantage and made foreign and
footwear market. domestic brands available across India at attractive prices.
Banking on brand recall by tying up with e-tailers thereby increasing Foreign players like Adidas, Nike and Puma which have been allowed
online presence. 100% FDI are an increased threat.
Strengthening brand loyalty by leveraging on their customer care Growth of domestic incumbents due to proliferation of e-commerce.
initiative of The Bata Club. Existence of several trade unions and a history of disputes with them.
Source: Company, Ambit Capital research
Exhibit 17: Composition of Indian e-commerce market Exhibit 18: Break-up of Jabongs CY14 revenues
Exhibit 19: Competition in online is more than offline Exhibit 20: Footwear figures high in purchase priority
Number of footwear SKUs Men Women Total
Source: Ambit Capital research Source: Google Forrester Consumer Research, 2014
Exhibit 24: Modern footwear market has expanded at 24% Exhibit 25: and e-commerce has played an important role
CAGR with 11% share
200 Other
Online channels,
180
4%
160 channel,
140 11%
120
100
80 Exclusive
60 brand
Multi brand outlets,
40
outlets, 55%
20 30%
0
FY12 FY15
Modern footwear market (Rs bn)
Exhibit 27: Relative search interest across footwear brands Power ranks lowest
70.00
60.00
50.00
As more customers buy online, the
40.00
popularity of aspirational brands
30.00 increases at the expense of existing
20.00 brands with little USP
10.00
0.00
lotto shoes puma shoes reebok shoes adidas shoes power shoes
lotto shoes puma shoes reebok shoes adidas shoes power shoes
Exhibit 29: Portals such as Myntra offer wide range at frequently attractive prices
Exhibit 30: Larger marketplaces such as Snapdeal have Exhibit 31: Flipkart offers wide range at similar price points
even wider choice of footwear ( up to `4,000)
Exhibit 32: Power has limited presence online despite efforts to increase presence
Exhibit 33: Availability of brands which compete with Power is wide across ecommerce
platforms.
Exhibit 35: Google trends for leading footwear brands in India over Jan13-Oct15
70
60
50
40
The Bata brand lags in online
30 searches despite its 84-year-old
20 legacy in India
10
0
Bata Metro Clarks Red Tape Hush Puppies
Exhibit 36: Bata has 119 SKUs including Hush Puppies on Exhibit 37: Ruosh a brand owned by one of Batas
Amazon India as against suppliers has higher online presence
Source: Amazon, Ambit Capital research Source: Amazon, Ambit Capital research
30,000
` mn
` mn
10,000
20,000
5,000
10,000
0 0
CY09 CY10 CY11 CY12 CY13 FY15 FY17E FY18E
7.0%
6.0%
5.0%
4.0%
3.0% CY13 revenue growth was driven
2.0% by licensed brands, implying 50%
of the revenue growth came from
1.0%
licensed brands EBOs in CY13
0.0%
CY07 CY08 CY09 CY10 CY11 CY12 CY13 FY15 FY16E FY17E FY18E
Exhibit 40: the economics for K scheme store managers become unviable unless
there is LTL growth or commissions increase
CY12 CY13 2014 FY16 FY17 FY18
Store Area sq ft 3,000 3,000 3,000 3,000 3,000 3,000
Revenue ` per sq ft 7,500 7,500 7,500 7,200 7,920 8,316
LTL growth 0% 0% -4% 10% 5%
Store Revenues ` mn 23 23 23 22 24 25
K Scheme Commission % 7% 7% 7% 7% 8% 8%
K Scheme Commission ` mn 1.58 1.58 1.58 1.51 1.90 2.00
Number of Store Employees 7 7 7 7 7 7
Average Salary per employee ` mn pa 0.14 0.16 0.17 0.19 0.21 0.22
Average wage inflation 10% 10% 10% 7% 7%
Employee cost excluding incentive `
1.01 1.11 1.22 1.34 1.44 1.54
mn
Net income for store manager ` mn 0.57 0.47 0.36 0.17 0.47 0.46
Source: Ambit Capital research
Is there RoE beyond ASP growth? The company will have to invest
more in its brand and restructure
Batas RoE profile has been dependent on ASP growth and K scheme (higher
the commission structure to retain
incremental EBITDA margins). But in the absence of visibility of either, we are unlikely
K scheme stores
to witness a phase of high RoEs>30% anytime soon. The company will have to invest
more in its brand and restructure the commission structure to retain K scheme stores.
Exhibit 41: RoEs are driven by net margins Exhibit 42: which have been driven by ASP
Asset turnover (x) Net Margins (RHS) RoE (RHS) Sales/Net block (x) Working capital turnover
3.5 40% ASP Rs (RHS)
3.0 35% 10.0 800
2.5 30%
8.0
25% 600
2.0
20% 6.0
1.5 400
15% 4.0
1.0 10% 200
0.5 2.0
5%
0.0 0% 0.0 0
FY16E
FY17E
FY18E
FY19E
FY20E
FY16E
FY17E
FY18E
FY19E
FY20E
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
FY15
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
FY15
Source: Company, Ambit Capital research Source: Company, Ambit Capital research
Exhibit 43: Batas inventory days have increased faster Exhibit 44: than that of its peers
- 0 - 0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: Company, Ambit Capital research, FY15 inventory data for Metro is Source: Company, Ambit Capital research
not available
9,000 300
8,000
250
7,000
6,000 200
5,000
150
4,000
3,000 100
2,000
50
1,000
- -
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q5FY15
1QFY16
2QFY16
Q2CY11
Q3CY11
Q4CY11
Q1CY12
Q2CY12
Q3CY12
Q4CY12
Q1CY13
Q2CY13
Q3CY13
Q4CY13
30,000 50.0%
25,000
40.0%
20,000
30.0%
15,000
20.0%
10,000
5,000 10.0%
0 0.0%
CY08 CY09 CY10 CY11 CY12 CY13 FY15 FY16E FY17E FY18E
Source: Company, Ambit Capital research, Note: FY15 was a 15 month period
Indicates Exited during/following year- some may not have exited the company
Indicates addition during the year
Indicates not part of the exec com but continued with the company
Exhibit 52: Daphne International Weak LTL impacted Exhibit 53: Belle International LTL has been on a
margins downtrend since CY12
Revenue (HKD mn) Operating profit % (rhs) Revenue (RMB mn) PAT % (rhs)
PAT % (rhs) SSG Operating profit % (rhs) SSG
12,000 25% 50,000 20%
20% 15%
10,000 40,000
15%
8,000 10%
10% 30,000
6,000 5% 5%
0% 20,000
4,000 0%
-5%
10,000
2,000 -5%
-10%
0 -15% 0 -10%
2011 2012 2013 2014 2011 14mth-2014
Source: Company, Ambit Capital research Source: Company, Ambit Capital research
Exhibit 55: Nike Chinas ecommerce business has grown Exhibit 56: Footwear is sizeable in Chinese e-commerce
rapidly
Source: Company, Ambit Capital research Source: Alibaba Inc, Ambit Capital research
Exhibit 57: Chinese footwear companies recognised the e-commerce impact but have not been able to mitigate it
Commentary on ecommerce/
2013 2014 2015
competition
As retail channels continued to evolve
rapidly, revenue was impacted. Whilst From a longer-term strategic
Same store volume was slightly down,
the foot traffic in department stores prospective, the Group has made
which was closely related to the weak
was diluted, the fast-growing shopping a decision to enter the fashion
Belle International foot traffic in the department store
mall channel and e-commerce channel apparel category and is in the
channel as well as overall sluggish
have not become effective retail process of cultivating relevant skills
consumer sentiment.
channels for and talent in this field.
quality footwear products.
Chinese economy has
Consumption sentiment is still weak
entered into a new normal as
and takes time to improve. Inflationary During the year, stiff competition from
the growth continued to
pressure of operating costs including local regional players and online
Daphne International decelerate. E-commerce channel
staff and rental costs. Competition retailers, as well as rising operating
continued its high growth, and
from e-commerce. More intense costs persisted, if not intensified.
therefore intensified the
competition from regional players.
competition with retailers.
Source: Company, Ambit Capital research
2.0%
53.0%
1.5%
52.0%
1.0%
51.0%
0.5%
50.0% 0.0%
FY16E FY17E FY18E FY19E
Source: Company, Ambit Capital research
Exhibit 59: Inventory days and sales growth both will recover due to base effect
15.0%
200
10.0%
5.0% 150
0.0% 100
-5.0%
50
-10.0%
-15.0% 0
FY16E FY17E FY18E FY19E
Exhibit 60: India has currently the lowest royalty Exhibit 61: . amongst other Bata companies in Asia
CY14/FY15
CY08
CY09
CY10
CY11
CY12
CY13
CY14/FY15
CY08
CY09
CY10
CY11
CY12
CY13
Bata Pakistan's PAT Margin (%) (LHS) Bata Indonesia's PAT Margin (%) (LHS)
Bata India's PAT Margin (%) (LHS) Bata Bangladesh's PAT Margin (%) (LHS)
Bata Pakistan's royalty (as a % of Sales) (RHS) Bata Indonesia's royalty (as a % of Sales) (RHS)
Bata India's royalty (as a % of Sales) (RHS) Bata Bangladesh's royalty (as a % of Sales) (RHS)
Source: Company, Ambit Capital research Source: Company, Ambit Capital research
Exhibit 62: Royalty payout is likely to increase from FY20E, as the current agreement
expires
8.0%
6.0%
4.0%
2.0%
0.0%
FY15 FY16E FY17E FY18E FY19E FY20E FY21E FY22E FY23E FY24E FY25E
140,000 30.00%
120,000 25.00%
100,000
20.00%
80,000
15.00%
60,000
10.00%
40,000
20,000 5.00%
0 0.00%
FY26E FY27E FY28E FY29E FY30E
Net Turnover (Rs mn) (LHS) EBITDA Margins (%) (RHS) RoE (%) (RHS)
Exhibit 64: Batas one-year forward P/E band chart Exhibit 65: Batas one-year forward EV/EBITDA band chart
60 28
55 25
50
45 22
40 19
35 16
30
25 13
20 10
15 7
10
5 4
- 1
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
Jul-13
Nov-13
Mar-14
Jul-14
Nov-14
Mar-15
Jul-15
Nov-15
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
Jul-13
Nov-13
Mar-14
Jul-14
Nov-14
Mar-15
Jul-15
Nov-15
One-yr fwd P/E 5-yr avg P/E One-yr fwd EV/EBITDA 5-yr avg EV/EBITDA
Source: Company, Ambit Capital research, Bloomberg Source: Company, Ambit Capital research, Bloomberg
Exhibit 66: Lower asset turns and earnings growth are the new normal
3.5 100%
3.0 80%
2.5 60%
2.0 40%
1.5 20%
1.0 0%
0.5 -20%
0.0 -40%
CY09 CY10 CY11 CY12 CY13 FY15 FY16E FY17E FY18E
Asset turnover (x) Core Earnings growth (RHS) RoE (RHS)
20
15
10
0
May-11
May-12
May-13
May-14
May-15
Nov-10
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
Daphne's one yr fwd P/E Daphne's 5 year avg P/E
Belle's one yr fwd P/E Belle's 5 year avg P/E
Source: Company, Ambit Capital research, Bloomberg
Exhibit 68: Lower assets and PAT margins turns have Exhibit 69: Belle has managed to maintain asset turns but
affected Daphnes RoE drastically a fall in PAT margins has led to an RoE decline
Source: Company, Ambit Capital research Source: Company, Ambit Capital research
Liberty Shoes Ltd 53 11 9.3 7.7 6 0.2 0.2 0.1 0.1 16.2 19.1 24.4 11.9 12.8 15.3 17.6 19.4 - 17.2 -
Relaxo Footwear
886 27.0 24.9 20.1 15.9 58.9 41.6 31.7 26.6 21.0 24.9 36.2 32.0 28.6 28.3 27.7 19.7 16.1 19.5 23.8
Ltd
Belle International
7,585 5.6 5.7 5.6 5.4 12.1 12.1 11.8 11.3 4.5 0.7 1.6 18.6 18.4 17.5 16.8 20.5 18.5 16.8 18.4
Holdings
Daphne
Internatonal 289 6.0 5.3 3.8 2.9 12.7 41.2 16.6 8.7 -6.1 -1.7 -12.5 3.5 1.1 2.6 4.8 22.4 19.2 6.8 4.0
Holdings
Bata India Ltd. 935 17.3 24.2 17.9 15 28.3 43.8 32.5 26.8 3.0 -3.6 -3.6 21.4 14.9 18.1 19.4 30.9 17.2 21.8 23.0
Catalysts
Increasing competition: Increased competition across footwear categories from
sports to formal in the e-commerce space is a threat to 12% of Batas revenues and
hence poses an earnings risk in FY17E.
Inventory pile-up will constrict gross margins: Nine months of inventory at the
end of 2HFY16 places `2bn of excess inventory susceptible to markdowns and write-
offs, impacting earnings in FY16E and FY17E.
Operating costs will increase: Note that 35% of sales is fixed costs and makes the
business vulnerable to an earnings spiral in the event of minor market share loss.
Moreover, we expect the K scheme commission to increase by 100bps to keep the
scheme sustainable for the store manager and ad spend to increase by 5 bps in
FY17E for brand rejuvenation.
Batas accounting is clean give its high CFO/EBITDA ratios and cash yields over the years. The company
Accounting GREEN
is audited by a quality audit company.
Predictability RED Recent internal and external disruptions have led to volatile revenue and earnings.
Earnings have been downgraded after the 2QFY16 earnings on the back of poor revenue and earnings
Earnings momentum RED
growth and inventory pile-ups.
Source: Company, Ambit Capital research
Balance Sheet
Year to March (` Mn) CY13 FY15 FY16E FY17E FY18E
Share capital 643 643 643 643 643
Reserves and surplus 7,756 9,569 10,483 11,795 13,399
Total Networth 8,399 10,212 11,126 12,438 14,042
Loans - - - - -
Deferred tax liability (net) - - - - -
Sources of funds 8,399 10,212 11,126 12,438 14,042
Net block 2,475 3,077 3,252 3,368 3,396
Capital work-in-progress 237 482 482 482 482
Investments - - - - -
Cash and bank balances 2,558 2,101 2,263 4,733 5,969
Sundry debtors 509 584 602 705 790
Inventories 5,827 7,047 7,514 7,361 7,670
Loans and advances 1,413 2,087 1,636 1,915 2,146
Total Current Assets 10,419 11,926 12,147 14,869 16,748
Current Liabilities 4,531 5,396 5,377 5,863 6,150
Provisions 891 762 264 1,304 1,320
Current liabilities and provisions 5,421 6,158 5,641 7,167 7,470
Net current assets 4,998 5,768 6,506 7,702 9,278
Miscellaneous expenditure
Application of funds 8,399 10,212 11,126 12,438 14,042
Source: Company, Ambit Capital research
Income Statement
Year to March (` Mn) CY13 FY15 FY16E FY17E FY18E
Revenue 20,652 26,940 24,417 28,582 32,030
yoy growth 12% 30% -9% 17% 12%
Total operating expenses 17,432 23,274 21,805 25,177 28,060
EBITDA 3,220 3,666 2,612 3,404 3,971
yoy growth 17% 14% -29% 30% 17%
Net depreciation 592 793 776 833 922
EBIT 2,627 2,873 1,836 2,571 3,048
Interest and financial charges 13 18 12 - -
Other income 315 434 316 435 602
PBT 2,929 3,289 2,140 3,006 3,650
Provision for taxation 920 976 642 992 1,204
Adj PAT 1,909 2,313 1,498 2,014 2,445
yoy growth 11% 21% -35% 34% 21%
Reported PAT 1,909 2,313 1,498 2,014 2,445
EPS (`) 15 18 12 16 19
DPS (`) 6.5 6.5 4.5 5.5 6.5
Source: Company, Ambit Capital research
Ratio analysis
Year to March CY13 FY15 FY16E FY17E FY18E
Revenue growth 12.1 30.4 (9.4) 17.1 12.1
EBITDA growth 17.1 13.9 (28.8) 30.3 16.6
PAT growth 10.9 21.2 (35.2) 34.4 21.4
EBITDA margin 15.6 13.6 10.7 11.9 12.4
EBIT margin 12.7 10.7 7.5 9.0 9.5
Net margin 9.2 8.6 6.1 7.0 7.6
RoCE (%) 34.1 30.9 17.2 21.8 23.0
RoE (%) 28.5 21.4 14.9 18.1 19.4
Source: Company, Ambit Capital research
Valuation parameters
Year to March CY13 FY15 FY16E FY17E FY18E
P/E (x) 33.5 27.6 42.6 31.7 26.1
P/B(x) 7.6 6.3 5.7 5.1 4.5
Debt/Equity(x) - - - - -
Net debt/Equity(x) (0.3) (0.2) (0.2) (0.4) (0.4)
EV/Sales(x) 3.2 2.3 2.5 2.1 1.8
EV/EBITDA(x) 17.9 16.9 23.6 17.4 14.6
Source: Company, Ambit Capital research
800
700
600
500
400
300
200
100
0
Nov-12
Mar-13
May-13
Sep-13
Nov-13
Mar-14
May-14
Sep-14
Nov-14
Mar-15
May-15
Sep-15
Nov-15
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
BATA INDIA LTD
Copyright 2015 AMBIT Capital Private Limited. All rights reserved. Ambit Capital Pvt. Ltd.
Ambit House, 3rd Floor. 449, Senapati Bapat Marg,
Lower Parel, Mumbai 400 013, India.
Phone: +91-22-3043 3000 | Fax: +91-22-3043 3100
CIN: U74140MH1997PTC107598
www.ambitcapital.com