95% of stores have resumed operations – Bata India

Update on Indian equity market:
The optimism in markets continued as Nifty closed the holiday-shortened week at 11,415 (+1.5%). Among the index, INDUSINDBK (12.3%), BAJFINANCE (5.0%), and BAJAJAUTO (4.1%) were the top-performing stocks while DRREDDY (-1.4%), ITC (-0.5%) and ONGC (-0.5%) were the laggards. The optimism was such that all the sectors traded in the green zone on a weekly expiry day with PVT BANK (4.1%), BANK (3.6%), and MEDIA (3.1%) leading the rally.
Excerpts of an interview with Mr. Sandeep Kataria, CEO, Bata India (Bata) published on ETNOW dated 25th September 2020:
Mr. Kataria said the sales trends are changing after COVID-19. The Work-From-Home norm has affected the demand trends as the demand is moving towards comfort wear.
Footfalls are gradually increasing in the stores as the unlock is happening. 95% of the Bata stores have resumed operations.
Small towns with 1-3 lakh population are the fastest to return to pre-COVID levels. The company has seen demand from smaller towns as they choose to shop from local stores instead of traveling to cities. Stores near residencies are doing better.
The company has identified new avenues of growth in the post-pandemic era as the country gradually learns to cope with the virus. Sales via distribution channels are witnessing growth.
He said that sales via digital retail have seen dramatic growth in India during the lockdown. The company has even sold products via video calls and WhatsApp.
The company was growing between 7% and 11% for the last five years before the pandemic struck. Its revenue fell 9% in the quarter ended in March 2020. He expects FY21 to be subdued due to disruptions caused by the virus and confident of attaining growth in the following years.
Consensus Estimate: (Source: marketscreener & investing India website)
The closing price of Bata was ₹ 1,345/- as of 01-Oct-2020. It traded at 179x/ 45x/ 37x the consensus EPS estimate of ₹ 7.5/ 29.8/ 35.9 for FY21E/ FY22E/ FY23E respectively.
Consensus target price of ₹ 1,290/- implies a P/E multiple of 36x on FY23E EPS of ₹ 35.9/-.
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