Bata India shares slip over 3% after Citi initiates coverage with 'sell' rating, target price set at Rs 1,310

Bata India share price: Shares of footwear manufacturer Bata India slipped over 3 per cent in the opening deals on Wednesday, September 13, after foreign brokerage Citi initiated a sell rating on the stock with a target price of Rs 1,310. The stock eventually ended at Rs 1,671.95, down 1.71 per cent on the BSE.

In its rationale, the brokerage said that the company has lost market share and has had a 0 per cent volume compound annual growth rate (CAGR) over the past decade. The brokerage further said that despite multiple initiatives and reach expansion, revenue CAGR over FY19–23 was only 4 per cent - the lowest among the top-four listed footwear players in India. Further, as per reports, the brokerage added that the reverse discounted cash flow (DCF) at the CMP (Rs 1701.05 on the BSE) implies 17.2 per cent revenue CAGR over FY26–36E (against 10.8 per cent revenue CAGR pre-Covid in the past decade).

Bata India Q1 Results 

Footwear maker Bata India reported its first drop in profit in eight quarters for the April-June period, as soft demand dragged its revenue growth to a nine-quarter low. The company's consolidated profit fell 10.5 per cent to Rs 107 crore ($12.92 million) during the three-month period, while revenue from operations increased just 1.6 per cent to Rs 958 crore.

That was the slowest revenue growth since the March quarter of 2021 as the company, which is better known for its formal shoes, grapples with a growing consumer preference for casual wear.

Bata has lagged behind its peers due to a slow pace of innovation and ebbing brand pull, while its lower-priced products have grown at a slower pace, Reuters reported, citing brokerage Ambit Capital.

Bata India's share price

Shares of the company have slipped around 12 per cent over the past 12 months, data show.

About Bata India 

Bata India is the leading manufacturer of footwear in India and is a part of the Bata Shoe Organization.

Incorporated as Bata Shoe Company Private Limited in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932. In January 1934, the foundation stone was laid for the first building of Bata’s operation, now called the Bata. In the years that followed, the overall site was doubled in area. This township is popularly known as Batanagar, as per the company's website. 

The company went public in 1973 when it changed its name to Bata India Limited, Bata India's official website says.