Buy This Mid-Cap Stock With Rs. 2200 Target Price: Axis Securities
Stock To Buy: Target Price & Financial Result
The current market price (CMP) for Bata India is Rs. 1922. Axis Securities has estimated a Target Price for the stock at Rs. 2200. The stock is expected to yield an annual return of 14% over the next year. It’s a mid-cap company with an estimated market capitalization of about Rs. 23,894 crores. Gross Margins increased to 56.6 percent (up 47bps year-on-year) however they fell by 97bps in QoQ due to the rising cost of raw materials.
The company’s EBITDA margins increased by 3,774bps/160bps on a QoQ/YoY basis as a result of the demand returning to pre-Covid levels and the cost rationalization initiatives taken in the firm. EBITDA was the sum of Rs. 245 crore due to the higher cost of marketing. The recurring PAT was Rs. 119 Cr.
| Stock Outlook | |
|---|---|
| Current Market Price (CMP) | Rs. 1922 |
| Target Price | Rs. 2200 |
| Potential 1-year return | 14.00% |
| 52-week high share price | Rs. 2,262 |
| 52-week low share price | Rs. 1,592.10 |
Advantages of The Stock: Axis Securities
In the words of Axis Securities, “Bata India Q1FY23’s topline is in accordance with expectations with revenues at Rs. 943 Cr. This was an increase of 253 percent YoY (2 percent on a 3-year CAGR). The increase was fueled by the improvement in consumer sentiment and the economic opening and higher realizations.
With the strong economic recovery in Q1FY23 and the optimistic demand outlook forward, we remain an investment grade rating on the stock with a Target Price that remains unchanged of Rs. 2,200/share, and a target ratio of 43x (40-45x 5-year average PE band, and discounts to its retail peers listed) since we anticipate Bata’s valuations will catch up as time goes on.”
“We believe that Bata will benefit from market share gains that it is expanding its stores in smaller cities where the unorganized segment is the dominant one, yet is under the pressure of passing on RM inflation by introducing price hikes. In addition, Bata’s approach to casualization by introducing fast-growing shoes will attract a younger crowd,” the brokerage firm said.
Company portfolio: Bata India
Bata, a major shoemaker, has 125 Sneaker studios throughout India (accounting for 19% of the revenue) with Northstar leading the industry in total sales (margin accrued biz). Bata has continued to increase its marketing with campaigns such as Unlimited Sneaker and It’s Got to be Bata and the 24-hour casual collection.
Bata added the stores to 74 in Q1FY23 bringing the total count of stores to 1888 with more than 800 towns being covered. The company added 13 franchise stores in Q1FY23 bringing the total number of stores to 321 locations with more than 275 towns covered by this franchise system. It has increased its coverage to 1,079 towns, and 39% Distributor-WD by Exiting on June 22. It also has launched an experiment on the Men’s and Ladies’ Open value-added products.
Disclaimer
The above stock was selected from the broker report of Axis Securities. When investing in stocks, you run the possibility of financial loss. Therefore, investors must exercise cautiousness. The author and the brokerage house are not accountable for any losses incurred due to decisions made based on the information.
