2QFY2019 Result Update | Footwear
November 3, 2018
Bata India
BUY
CMP
`1,008
Performance Update
Target Price
`1,243
Y/E March (` cr)
2QFY19
2QFY18
% yoy
1QFY19
% qoq
Investment Period
12 months
Net sales
673
587
14.7
797
(15.6)
Sector
Footwear
EBITDA
87
64
35.5
132
(33.7)
Market Cap (Rs cr)
12,951
EBITDA margin (%)
13.0
11.0
199bp
16.5
(356bp)
Net Debt
(591)
Adjusted PAT
56
43
29.8
83
(32.6)
Beta
0.9
Source: Company, Angel Research
52 Week High / Low
1,116/657
For 2QFY2019, Bata India (BIL) posted strong set of numbers, exceeding our
Avg. Daily Volume
179,938
Face Value (Rs)
5
expectations on bottom-line front. Revenues grew by ~15% yoy (in-line with our
BSE Sensex
35,012
estimate). The company’s operating margins improvement by robust 199bps yoy.
Nifty
10,553
On the bottom-line front, BIL reported growth of ~30% yoy to `56cr on the back
Reuters Code
BATA.BO
of strong operating performance.
Bloomberg Code
BATA.IN
Healthy volume growth drives top-line: BIL’s top-line grew by ~15% yoy to `673cr
Shareholding Pattern (%)
on the back of healthy growth in footwear segment. The growth was mainly due
Promoters
53.0
to successful new brand campaign 'Be Surprised' featuring Kriti Sanon, the stylish
MF / Banks / Indian Fls
16.0
FII / NRIs / OCBs
8.8
Bollywood actor and youth icon as the new face for Bata's fashion forward
Indian Public / Others
22.2
women's range and over 100 new styles. Bata India continued the launch of its
international 'Red Angela' stores in multiple cities across India. With almost 50
Abs. (%)
3m 1yr
3yr
new international design 'Red Angela' stores now open, it has already started to
Sensex
(5.8)
4.3
31.8
BIL
3.8
23.8
100.0
yield positive results by way of footfalls and delighted customers.
Strong operating performance aids profitability: On the operating front, the
company reported better margins, up 199bps yoy at 13.0%. On the bottom-line
front, BIL reported growth of ~30% yoy to `56cr on the back of strong operating
Historical share price chart
performance and healthy top-line growth.
1,200
1,000
Outlook and Valuation: We expect BIL to report net revenue CAGR of ~15% to
800
~`3,494cr over FY2018-20E mainly due to increasing brand consciousness
600
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,
400
on the bottom-line front, we expect CAGR of ~22% to `329cr over the same
200
period on the back of margin improvement (increasing premium product sales).
0
Thus, we maintain our Buy recommendation on Bata India with Target Price of
`1,243.
Source: Company, Angel Research
Key Financials
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2020E
Net sales
2,474
2,634
3,006
3,494
% chg
2.1
6.5
14.1
16.2
Research Analyst
Adj. Net profit
173
221
280
329
Amarjeet S Maurya
% chg
3.9
27.7
27.0
17.4
022-40003600 Ext: 6831
EBITDA margin (%)
10.4
13.3
14.5
14.7
[email protected]
EPS (`)
13.4
17.2
21.8
25.6
P/E (x)
75.0
58.7
46.3
39.4
P/BV (x)
9.8
8.7
7.6
6.5
RoE (%)
13.0
14.8
16.3
16.6
RoCE (%)
14.5
19.5
21.4
22.0
EV/Sales (x)
5.0
4.7
4.1
3.5
EV/EBITDA (x)
48.4
35.2
28.1
23.6
Source: Company, Angel Research Note
Please refer to important disclosures at the end of this report
1
Bata India Ltd| 2QFY2019 Result Update
Exhibit 1: 2QFY2019 Performance
Y/E March (` cr)
2QFY19
2QFY18
% yoy
1QFY19
% qoq
1HFY19
1HFY18
% chg
Net Sales
673
587
14.7
797
(15.6)
1470
1330
10.6
Consumption of RM
298
263
13.0
373
(20.1)
670
621
7.9
(% of Sales)
44.2
44.9
46.7
45.6
46.7
Staff Costs
81
71
13.9
82
(1.7)
163
145
12.4
(% of Sales)
12.0
12.1
10.3
11.1
10.9
Selling & Adm Expenses
94
100
(5.5)
91
3.7
185
183
1.4
(% of Sales)
14.0
17.0
11.4
12.6
13.8
Other Expenses
113
88
28.0
120
(5.6)
232
221
5.2
(% of Sales)
16.8
15.0
15.0
15.8
16.6
Total Expenditure
586
522
12.1
665
(12.0)
1,251
1,170
6.9
Operating Profit
87
64
35.5
132
(33.7)
219
160
37.0
OPM
13.0
11.0
16.5
14.9
12.0
Interest
1
1
46.4
1
25.4
2
2
22.0
Depreciation
15
14
6.5
15
2.2
30
28
7.9
Other Income
15
15
0.5
12
24.3
27
26
1.8
PBT (excl. Ext Items)
86
64
33.8
128
(32.9)
214
157
36.4
Ext (Income)/Expense
-
-
-
-
-
PBT (incl. Ext Items)
86
64
33.8
128
(32.9)
214
157
36.4
(% of Sales)
12.7
10.9
16.0
14.5
11.8
Provision for Taxation
30
21
41.9
45
(33.6)
75
53
41.6
(% of PBT)
35.1
33.1
35.4
35.3
34.0
Reported PAT
56
43
29.8
83
(32.6)
138
103
33.8
PATM
8.3
7.3
10.4
9.4
7.8
Minority Interest After NP
Reported PAT
56
43
29.8
83
(32.6)
138
103
33.8
Extra-ordinary Items
Adj PAT
56
43
29.8
83
(32.6)
138
103
33.8
Equity shares (cr)
13
13
13
13
13
FDEPS (`)
4.3
3.3
29.8
6.4
(32.6)
10.8
8.0
33.8
Source: Company, Angel Research
November 3, 2018
2
Bata India Ltd| 2QFY2019 Result Update
Outlook and Valuation
We expect BIL to report net revenue CAGR of ~15% to ~`3,494cr 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 ~22% to `329cr 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 `1,243.
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.
November 3, 2018
3
Bata India Ltd| 2QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E
FY2020E
Net Sales
2,423
2,474
2,634
3,006
3,494
% chg
(10.1)
2.1
6.5
14.1
16.2
Total Expenditure
2,147
2,217
2,283
2,570
2,980
Raw Material
1,152
1,158
1,202
1,371
1,607
Personnel
261
273
296
343
405
Selling & Adm
345
356
362
436
507
Others Expenses
389
430
423
421
461
EBITDA
276
257
351
436
514
% chg
(17.3)
(6.8)
36.8
24.0
17.8
(% of Net Sales)
11.4
10.4
13.3
14.5
14.7
Depreciation& Amortisation
79
65
60
69
79
EBIT
197
192
291
367
435
% chg
(22.5)
(2.6)
51.6
26.2
18.5
(% of Net Sales)
8.1
7.8
11.0
12.2
12.5
Interest & other Charges
2
4
4
4
4
Other Income
101
46
50
55
60
(% of PBT)
34.2
19.7
14.9
13.2
12.2
Recurring PBT
297
234
337
418
491
% chg
(9.8)
(21.1)
44.1
24.0
17.4
Tax
79
75
117
138
162
(% of PBT)
26.7
32.0
34.6
33.0
33.0
PAT (reported)
217
159
221
280
329
Extraordinary Items
51
(14)
-
-
-
ADJ. PAT
166
173
221
280
329
% chg
(20.5)
3.9
27.7
27.0
17.4
(% of Net Sales)
6.9
7.0
8.4
9.3
9.4
Basic EPS (`)
12.9
13.4
17.2
21.8
25.6
Fully Diluted EPS (`)
12.9
13.4
17.2
21.8
25.6
% chg
(20.5)
3.9
27.7
27.0
17.4
November 3, 2018
4
Bata India Ltd| 2QFY2019 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
1,651
1,916
Shareholders Funds
1,221
1,324
1,493
1,716
1,980
Total Loans
-
-
-
-
-
Deferred Tax Liability
-
-
-
-
-
Total Liabilities
1,221
1,324
1,493
1,716
1,980
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
1,975
2,322
Inventories
685
714
765
881
1,034
Sundry Debtors
71
69
89
107
134
Cash
342
522
591
704
812
Loans & Advances
59
57
61
78
98
Other Assets
163
163
174
204
245
Current liabilities
512
599
597
670
775
Net Current Assets
809
926
1,084
1,304
1,547
Deferred Tax Asset
89
100
100
100
100
Mis. Exp. not written off
-
-
-
-
-
Total Assets
1,221
1,324
1,493
1,716
1,980
November 3, 2018
5
Bata India Ltd| 2QFY2019 Result Update
Consolidated Cashflow Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Profit before tax
297
234
337
418
491
Depreciation
79
65
60
69
79
Change in Working Capital
(41)
53
(88)
(108)
(135)
Interest / Dividend (Net)
(24)
(40)
4
4
4
Direct taxes paid
(108)
(65)
(117)
(138)
(162)
Others
1
10
0
0
0
Cash Flow from Operations
204
257
197
245
276
(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
113
108
Opening Cash balances
210
342
522
591
704
Closing Cash balances
342
522
591
704
812
November 3, 2018
6
Bata India Ltd| 2QFY2019 Result Update
Key Ratio
Y/E March
FY2016
FY2017
FY2018
FY2019E FY2020E
Valuation Ratio (x)
P/E (on FDEPS)
77.9
75.0
58.7
46.3
39.4
P/CEPS
43.7
57.8
46.1
37.2
31.8
P/BV
10.6
9.8
8.7
7.6
6.5
Dividend yield (%)
0.3
0.3
0.4
0.4
0.5
EV/Sales
5.2
5.0
4.7
4.1
3.5
EV/EBITDA
45.7
48.4
35.2
28.1
23.6
EV / Total Assets
10.3
9.4
8.3
7.1
6.1
Per Share Data ((`)
EPS (Basic)
12.9
13.4
17.2
21.8
25.6
EPS (fully diluted)
12.9
13.4
17.2
21.8
25.6
Cash EPS
23.0
17.4
21.9
27.1
31.7
DPS
3.5
3.5
4.0
4.5
5.0
Book Value
95.0
103.0
116.2
133.5
154.1
Returns (%)
ROCE
16.1
14.5
19.5
21.4
22.0
Angel ROIC (Pre-tax)
22.4
23.9
32.2
36.3
37.2
ROE
13.6
13.0
14.8
16.3
16.6
Turnover ratios (x)
Asset Turnover (Gross Block)
6.3
6.1
5.2
5.2
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
November 3, 2018
7
Bata India Ltd| 2QFY2019 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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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%)
November 3, 2018
8