Company Update : Bata India Ltd by JM Financial Services Ltd
Miss on all grounds
* Revenue at INR 8 bn (7% miss to JMFe) missed our already weak estimates and declined 4% YoY due to deferment of purchases by channel partners and customers since the announcement of GST rate rationalization. Further, disruption in one of the largest warehouses in July 2025 also had temporary business impact. However, the quarter has ended on a positive note with signs of recovery in festive season.
* EBITDA declined 17% YoY to INR 1.5 bn (26% below JMFe) as EBITDA margins contracted ~280 bps YoY to 18.1% (JMFe: 22.9%) led by ~120 bps YoY contraction in gross margins to 55.4% (~160 bps below JMFe) due to higher markdown (pre festive inventory clearance) and ~30 bps/120 bps higher employee /other expenses (higher marketing investments).
* APAT declined 58% YoY to INR 220 mn (59% below JMFe; before adjusting INR 83 mn for VRS) as interest and depreciation cost increased 6%/16% YoY, partially offset by an increase in other income by 24% YoY.
* Inventory efficiencies both in terms of quantity and quality continued to show strong progress. Zero based merchandising project was scaled to 200 stores
* Management highlighted that with the roll out of GST 2.0 and pre-festive buying enthusiasm, the demand has started to revive. Overall Q2 did have muted demand, adversely impacted by the GST 2.0 transition, it is seeing positive signs of recovery this festive season post 22nd Sept.
* Key highlighted of Q2 –
* Premium products has shown robust growth in brands like Hush Puppies and Power.
* Victoria Ballerina campaign touched the right chords and attracted female customers, helping the company to gain additional 1% in the Sales mix.
* It achieved highest weekly pairage contribution from Power Easy Slide collection.
* It passed on the GST benefits to its customers much prior to the official announcements, to unclog the demand pipeline.
* It added 30 Franchise Stores in the quarter as it continues to expand in smaller towns /semiurban markets.
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SEBI Registration Number is INM000010361
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