HDFC Securities Advises Reducing Position in Bata India, Sets Target Price at Rs 1500
In its research report dated October 3, 2023, HDFC Securities recommends a reduction in rating for Bata India, with a target price of Rs 1500.
The report highlights Bata India’s performance in the market, noting that its premiumization-volume trade-off strategy has not been as successful as that of its peers. Over the period from FY15 to FY23, Bata India experienced a loss of more than 10 percentage points in market share and accounted for approximately 13% of revenue and 16% of EBITDA in FY23.
To gain a better understanding of Bata India’s strategy, HDFC Securities engaged with the company’s management, including CFO Mr. Anil Somani. The key takeaways from these interactions include Bata’s focus on:
- Continuous improvement of price and product range across various distribution channels.
- Enhancing the economics of its distributors and franchisees.
- Transitioning cost structures to be more variable, up to a certain extent.
While maintaining a REDUCE rating for Bata India, HDFC Securities has set an unchanged target price of INR 1500 per share. This target price implies a price-to-earnings (P/E) multiple of 35x based on September 2025 earnings. The report suggests that the HDFC Securities team is awaiting tangible progress on the above-mentioned initiatives before adopting a more positive stance on the stock.
Investors are advised to consider this research report when evaluating their positions in Bata India, taking into account the company’s efforts to address its market challenges and enhance its competitive positioning within the industry.
