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Bata India Q4CY11 results were robust and were above expectations with
highest ever quarterly revenue growth of (30%) and EBITDA margin of 15.1%.
We also highlight that the company’s inventory levels have reduced by 2 weeks
YoY.
Highlights of the results:
» Topline driven by increase in volumes (as stated by the MD)
» We witnessed benefits of operating leverage from benefits of K-agent run
stores as EBITDA margins expanded by 100 bps YoY at 15.1% despite
increase in rentals as a % of sale.
» Gross margins compressed by 180 bps
» Reported PAT at Rs. 360mn against Rs 252mn (adjusted for one time gains)
last year, a jumped 43% from the earlier corresponding period.
» During the quarter, Company has added 67 new stores, which is the highest
ever quarterly store addition. The expansion drive saw stores opening
across metros like Delhi, Mumbai, Chennai, Hyderabad and Bangalore. It
also increased brand penetration in mini metros / tier II cities such as
Ambala, Anand, Bilaspur, Hissar, Bhopal, Kannur, Indore, Bareilly, Gaya etc.
» Effects of operating leverage evident on Employee costs and other
expenditure however gross margins contract for the third consecutive
quarter. Rental costs impact EBITDA for the fourth consecutive quarter.
Valuation: The stock trades at 16.5x CY13E EV/EBITDA (CY13E cash of Rs 4bn)
and 12.5x CY13E EV/EBITDA. We roll over our earnings model to CY13E We
marginally revise our estimates downwards for CY12E EBITDA margins to account
for gross margin contraction. The company’s CY13E EBITDA margins are at
17.7% and RoE at 30.5% (not adjusted for cash which is 40% of CY13E Balance
sheet) warrant valuations at 15x EV/EBITDA as other Consumer sector
companies with similar EBITDA margin and RoE profile trade at similar valuations..
Maintain our BUY rating and revise our target price to Rs 1,005.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bata India Q4CY11 results were robust and were above expectations with
highest ever quarterly revenue growth of (30%) and EBITDA margin of 15.1%.
We also highlight that the company’s inventory levels have reduced by 2 weeks
YoY.
Highlights of the results:
» Topline driven by increase in volumes (as stated by the MD)
» We witnessed benefits of operating leverage from benefits of K-agent run
stores as EBITDA margins expanded by 100 bps YoY at 15.1% despite
increase in rentals as a % of sale.
» Gross margins compressed by 180 bps
» Reported PAT at Rs. 360mn against Rs 252mn (adjusted for one time gains)
last year, a jumped 43% from the earlier corresponding period.
» During the quarter, Company has added 67 new stores, which is the highest
ever quarterly store addition. The expansion drive saw stores opening
across metros like Delhi, Mumbai, Chennai, Hyderabad and Bangalore. It
also increased brand penetration in mini metros / tier II cities such as
Ambala, Anand, Bilaspur, Hissar, Bhopal, Kannur, Indore, Bareilly, Gaya etc.
» Effects of operating leverage evident on Employee costs and other
expenditure however gross margins contract for the third consecutive
quarter. Rental costs impact EBITDA for the fourth consecutive quarter.
Valuation: The stock trades at 16.5x CY13E EV/EBITDA (CY13E cash of Rs 4bn)
and 12.5x CY13E EV/EBITDA. We roll over our earnings model to CY13E We
marginally revise our estimates downwards for CY12E EBITDA margins to account
for gross margin contraction. The company’s CY13E EBITDA margins are at
17.7% and RoE at 30.5% (not adjusted for cash which is 40% of CY13E Balance
sheet) warrant valuations at 15x EV/EBITDA as other Consumer sector
companies with similar EBITDA margin and RoE profile trade at similar valuations..
Maintain our BUY rating and revise our target price to Rs 1,005.
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