1QFY2019 Result Update | Footwear
July 23, 2018
Bata India
BUY
CMP
`842
Performance Update
Target Price
`955
Y/E March (` cr)
1QFY19
1QFY18
% yoy
4QFY18
% qoq
Investment Period
12 months
Net sales
797
736
8.3
632
26.1
EBITDA
Stock Info
132
96
37.9
82
60.2
Sector
Footwear
EBITDA margin (%)
16.5
13.0
355bp
13.0
352bp
Market Cap (Rs cr)
10,825
Adjusted PAT
83
60
36.6
52
58.5
Net Debt
-591
Source: Company, Angel Research
Beta
0.9
For 1QFY2019, Bata India (BIL) posted strong set of numbers, exceeding our
52 Week High / Low
865/567
expectations on bottom-line front. Revenues grew by ~8% yoy (in-line with our
Avg. Daily Volume
56,135
estimate). The company’s operating margins improvement by robust 355bps yoy.
Face Value (Rs)
5
BSE Sensex
36,135
On the bottom-line front, BIL reported growth of ~37% yoy to `83cr on the back
Nifty
11,010
of strong operating performance.
Reuters Code
BATA.BO
Healthy volume growth drives top-line: BIL’s top-line grew by ~8% yoy to `797cr
Bloomberg Code
BATA.IN
on the back of healthy growth in footwear segment. The growth was mainly due
to its high-decibel 'Come & Be Surprised' campaign featuring Kriti Sanon to mark
Shareholding Pattern (%)
the launch of its New Red Label collection. The number is not comparable to yoy
Promoters
53.0
due to the introduction of GST in July 2017. Further, the company is also
MF / Banks / Indian Fls
24.7
planning to open 100 new own retail stores and +50 new franchise stores going
FII / NRIs / OCBs
6.9
Indian Public / Others
15.5
forward.
Strong operating performance aids profitability: On the operating front, the
Abs. (%)
3m 1yr
3yr
company reported better margins, up 355bps yoy at 16.5%. On the bottom-line
Sensex
6.0
14.4
28.4
BIL
4.9
47.3
41.5
front, BIL reported growth of ~37% yoy to `83cr on the back of strong operating
performance and healthy volume growth.
Outlook and Valuation: We expect BIL to report net revenue CAGR of ~16% to
Historical share price chart
~`3,555cr over FY2018-20E mainly due to increasing brand consciousness
1000
900
among Indian consumers, new product launches, higher number of store
800
additions in tier II/ III cities and focus on high growth women’s segment. Further,
700
600
on the bottom-line front, we expect CAGR of ~21% to `323cr over the same
500
period on the back of margin improvement (increasing premium product sales).
400
300
Thus, we maintain our Buy recommendation on Bata India with Target Price of
200
`955.
100
0
Key Financials
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
Net sales
2,474
2,634
3,063
3,555
Source: Company, Angel Research
% chg
2.1
6.5
16.3
16.0
Adj. Net profit
173
221
275
323
% chg
3.9
27.7
24.9
17.3
Research Analyst
EBITDA margin (%)
10.4
13.3
14.0
14.2
Amarjeet S Maurya
EPS (`)
13.4
17.2
21.4
25.1
P/E (x)
62.7
49.1
39.3
33.5
022-40003600 Ext: 6831
P/BV (x)
8.2
7.2
6.3
5.5
[email protected]
RoE (%)
13.0
14.8
16.1
16.4
RoCE (%)
14.5
19.5
21.1
21.6
EV/Sales (x)
4.2
3.9
3.3
2.8
EV/EBITDA (x)
40.1
29.1
23.6
19.9
Source: Company, Angel Research Note
Please refer to important disclosures at the end of this report
1
Bata India Ltd| 1QFY2019 Result Update
Exhibit 1: 1QFY2019 Performance
Y/E March (` cr)
1QFY19
1QFY18
% yoy
4QFY18
% qoq
FY2018
FY2017
% chg
Net Sales
797
736
8.3
632
26.1
2629
2467
6.6
Consumption of RM
373
351
6.2
279
33.6
1,196
1,153
3.7
(% of Sales)
46.7
47.7
44.1
45.5
46.7
Staff Costs
82
74
11.1
81
1.7
295
273
8.3
(% of Sales)
10.3
10.1
12.8
11.2
11.1
Selling & Adm Expenses
91
95
(4.0)
90
1.6
362
356
1.6
(% of Sales)
11.4
12.9
14.2
13.8
14.4
Other Expenses
120
121
(1.1)
101
18.8
422
429
(1.7)
(% of Sales)
15.0
16.4
15.9
16.1
17.4
Total Expenditure
665
641
3.9
550
21.0
2,275
2,211
2.9
Operating Profit
132
96
37.9
82
60.2
354
256
38.2
OPM
16.5
13.0
13.0
13.5
10.4
Interest
1
1
1.1
2
(55.9)
4
4
4.2
Depreciation
15
14
9.2
17
(11.0)
60
65
(7.1)
Other Income
12
12
3.5
14
(12.6)
51
47
9.0
PBT (excl. Ext Items)
128
92
38.2
77.1
65.8
340
234
45.6
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
128
92
38.2
77
65.8
340
234
45.6
(% of Sales)
16.0
12.6
12.2
12.9
9.5
Provision for Taxation
45
32
41.4
25
81.1
116
75
55.6
(% of PBT)
35.4
34.7
32.5
34.2
32.0
Reported PAT
83
60
36.6
52
58.5
224
159
40.8
PATM
10.4
8.2
8.2
8.5
6.4
Minority Interest After NP
Reported PAT
83
60
36.6
52
58.5
224
159
40.8
Extra-ordinary Items
(14)
Adj PAT
83
60
36.6
52
58.5
224
172
29.7
Equity shares (cr)
13
13
13
13
13
FDEPS (`)
6.4
4.7
36.6
4.1
58.5
17.4
13.4
29.7
Source: Company, Angel Research
July 23, 2018
2
Bata India Ltd| 1QFY2019 Result Update
Outlook and Valuation
We expect BIL to report net revenue CAGR of ~16% to ~`3,555cr over FY2018-
20E mainly due to increasing brand consciousness among Indian consumers, new
product launches, 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 ~21% to `323cr 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 `955.
Downside risks to our estimates
Store expansion from competitors like Khadim and Relaxo could impact the
company’s sales growth
Slowdown in economy could hurt the overall profitability of the company
Company Background
BATA India Ltd (BIL) is the largest footwear retailer in India, offering footwear and
accessories & bags across brands like Bata, Hush Puppies, Naturalizer, Power,
Marie Claire, Weinbrenner, North Star, Scholl, Bata Comfit and Bubblegummers.
Currently, the company’s ~70% revenue is derived from Men & Kids footwear
segment and balance from women’s segment. BIL retails in over 1,290 Bata stores
on bata.in and has thousands of multi-brand footwear dealer stores pan-India.
July 23, 2018
3
Bata India Ltd| 1QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E
FY2020E
Net Sales
2,423
2,474
2,634
3,063
3,555
% chg
(10.1)
2.1
6.5
16.3
16.0
Total Expenditure
2,147
2,217
2,283
2,635
3,050
Raw Material
1,152
1,158
1,202
1,397
1,635
Personnel
261
273
296
349
412
Selling & Adm
345
356
362
460
533
Others Expenses
389
430
423
429
469
EBITDA
276
257
351
429
505
% chg
(17.3)
(6.8)
36.8
22.1
17.7
(% of Net Sales)
11.4
10.4
13.3
14.0
14.2
Depreciation& Amortisation
79
65
60
69
79
EBIT
197
192
291
360
426
% chg
(22.5)
(2.6)
51.6
23.8
18.3
(% of Net Sales)
8.1
7.8
11.0
11.8
12.0
Interest & other Charges
2
4
4
4
4
Other Income
101
46
50
55
60
(% of PBT)
34.2
19.7
14.9
13.4
12.4
Recurring PBT
297
234
337
411
482
% chg
(9.8)
(21.1)
44.1
22.0
17.3
Tax
79
75
117
136
159
(% of PBT)
26.7
32.0
34.6
33.0
33.0
PAT (reported)
217
159
221
275
323
Extraordinary Items
51
(14)
-
-
-
ADJ. PAT
166
173
221
275
323
% chg
(20.5)
3.9
27.7
24.9
17.3
(% of Net Sales)
6.9
7.0
8.4
9.0
9.1
Basic EPS (`)
12.9
13.4
17.2
21.4
25.1
Fully Diluted EPS (`)
12.9
13.4
17.2
21.4
25.1
% chg
(20.5)
3.9
27.7
24.9
17.3
July 23, 2018
4
Bata India Ltd| 1QFY2019 Result Update
Balance Sheet
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
SOURCES OF FUNDS
Equity Share Capital
64
64
64
64
64
Reserves& Surplus
1,157
1,260
1,429
1,647
1,905
Shareholders Funds
1,221
1,324
1,493
1,711
1,970
Total Loans
-
-
-
-
-
Deferred Tax Liability
-
-
-
-
-
Total Liabilities
1,221
1,324
1,493
1,711
1,970
APPLICATION OF FUNDS
Gross Block
382
406
508
578
678
Less: Acc. Depreciation
78
138
199
267
346
Net Block
304
268
309
311
332
Capital Work-in-Progress
19
30
-
-
-
Investments
-
-
-
-
-
Current Assets
1,321
1,525
1,680
1,981
2,323
Inventories
685
714
765
898
1,052
Sundry Debtors
71
69
89
109
136
Cash
342
522
591
686
787
Loans & Advances
59
57
61
80
100
Other Assets
163
163
174
208
249
Current liabilities
512
599
597
682
786
Net Current Assets
809
926
1,084
1,300
1,537
Deferred Tax Asset
89
100
100
100
100
Mis. Exp. not written off
-
-
-
-
-
Total Assets
1,221
1,324
1,493
1,711
1,970
July 23, 2018
5
Bata India Ltd| 1QFY2019 Result Update
Consolidated Cashflow Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Profit before tax
297
234
337
411
482
Depreciation
79
65
60
69
79
Change in Working Capital
(41)
53
(88)
(121)
(137)
Interest / Dividend (Net)
(24)
(40)
4
4
4
Direct taxes paid
(108)
(65)
(117)
(136)
(159)
Others
1
10
0
0
0
Cash Flow from Operations
204
257
197
227
269
(Inc.)/ Dec. in Fixed Assets
(39)
(48)
(72)
(70)
(100)
(Inc.)/ Dec. in Investments
(75)
(181)
0
0
0
Cash Flow from Investing
(114)
(229)
(72)
(70)
(100)
Issue of Equity
0
0
0
0
0
Inc./(Dec.) in loans
0
0
0
0
0
Dividend Paid (Incl. Tax)
(42)
(45)
(51)
(58)
(64)
Interest / Dividend (Net)
85
197
(4)
(4)
(4)
Cash Flow from Financing
43
152
(56)
(62)
(68)
Inc./(Dec.) in Cash
132
180
69
95
101
Opening Cash balances
210
342
522
591
686
Closing Cash balances
342
522
591
686
787
July 23, 2018
6
Bata India Ltd| 1QFY2019 Result Update
Key Ratio
Y/E March
FY2016
FY2017
FY2018
FY2019E FY2020E
Valuation Ratio (x)
P/E (on FDEPS)
65.1
62.7
49.1
39.3
33.5
P/CEPS
36.5
48.3
38.5
31.5
27.0
P/BV
8.9
8.2
7.2
6.3
5.5
Dividend yield (%)
0.4
0.4
0.5
0.5
0.6
EV/Sales
4.3
4.2
3.9
3.3
2.8
EV/EBITDA
38.0
40.1
29.1
23.6
19.9
EV / Total Assets
8.6
7.8
6.9
5.9
5.1
Per Share Data ((`)
EPS (Basic)
12.9
13.4
17.2
21.4
25.1
EPS (fully diluted)
12.9
13.4
17.2
21.4
25.1
Cash EPS
23.0
17.4
21.9
26.8
31.2
DPS
3.5
3.5
4.0
4.5
5.0
Book Value
95.0
103.0
116.2
133.1
153.3
Returns (%)
ROCE
16.1
14.5
19.5
21.1
21.6
Angel ROIC (Pre-tax)
22.4
23.9
32.2
35.2
36.0
ROE
13.6
13.0
14.8
16.1
16.4
Turnover ratios (x)
Asset Turnover (Gross Block)
6.3
6.1
5.2
5.3
5.2
Inventory / Sales (days)
103
105
106
107
108
Receivables (days)
11
10
12
13
14
Payables (days)
51
62
57
56
56
Working capital cycle (ex-cash) (days)
63
54
61
64
66
July 23, 2018
7
Bata India Ltd| 1QFY2019 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed
public offering of securities of the company covered by Analyst during the past twelve months.
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Disclosure of Interest Statement
Bata India
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to -15%)
Sell (< -15%)
July 23, 2018
8