Bata India Stock Price Triples in 5 Years. Is it Worth Investing in Bata India Stock Now?

22 Dec 2020by Pradeep U

Bata India Stock Price Triples in 5 Years. Is it Worth Investing in Bata India Stock Now?

Bata share prices have tripled in the last five years, generating impressive returns for investors who remained invested in the company with a long-term perspective. From a price of around Rs. 490-500 levels in Dec 2015, Bata share price has moved up to Rs. 1500 levels.

Is this steady rally in Bata India stock sustainable in the future too?

To understand whether Bata share price can continue this phenomenal run in the coming years as well, let’s take a detailed look at the strengths and weakness of Bata India with a fundamental perspective.

Bata which started operations in India in 1931 as Bata Shoe Company Pvt. Ltd. is the largest manufacturer and retailer of footwear in India. One of the world’s largest shoemaker by volume, Bata caters to more than 1mn customers every day.

The company owns 3mn sq. ft. retail space in India and more than 1,500 stores. Bata India produces more than 21mn pairs annually at its four manufacturing facilities and sells nearly 47mn pairs. Its revenue market share is between 12-15% in the branded footwear market in India.

Key strengths and opportunities for Bata India stock

Favorable demographics

    • India's GDP per capita crossed the key level of $2,000 in 2018
    • A high proportion of the young and working-age population in India

                   

Growing retail sector

    • Low per capita consumption of footwear in India
    • A growing share of the organized footwear market

Brand legacy

    • Nearly 90-year-old brand in India
    • High brand recall value

Brand repositioning

    •  Worked on repositioning brand from "old-man's shoes" and "school shoes" to a premium, youthful and aspirational brand
    • Introduced brands across price points ranging between Rs. 249 and Rs. 9,999, across every few hundred Rupees
    • Smart advertising campaigns through celebrity endorsements featuring Bollywood actress Kriti Sanon and Indian women's cricket team opener, Smriti Mandhana

Strong balance sheet

    • Debt-free balance sheet
    • Steady free cash flow generation

Store count growth

    • Over the last few years, Bata has revamped its stores to give a swanky, youthful appeal
    • Most extensive store presence among Indian footwear companies

Raw material tailwinds

    • A growing proportion of leather products reduces dependency on crude
    • Current low crude price offers margin tailwinds

Wide product range, across price points

Brand

Women

Men

Kids

Type

Price Range (Rs.)

Own Brand

Bata

Y

Y

Y

Formal shoes, casual

shoes, sandals, chappals,

299-6999

Y

Comfit

Y

N

N

Chappals

499

Y

Disney

Y

N

Y

Chappals, sandals, flip-flops, shoes

299-1499

Disney, USA

Footin

Y

Y

N

Sandals, Chappals, Heels

489-4499

USA

Hush Puppies

Y

Y

N

Sandals, Chappals, Formal Shoes

799-9999

Wolverine Worldwide

Inc. USA

Marie Claire

Y

N

N

Chappals, Stilettos, Bags, Backpacks

1499-2999

Y

Naturalizer

Y

N

N

Shoes, Sandals

999-6999

Brown Shoe, USA

North Star

Y

Y

N

Shoes, Sneakers

552-2499

Y

Power

Y

Y

Y

Sports Shoes

349-3999

Y

Scholl

Y

Y

N

Chappals, sandals

951-2999

SSL International, USA

CAT

N

Y

N

Shoes, Sandals, Boots

4999-6999

Caterpillar, USA

Weinbrenner

N

Y

N

Sandals, Casual Shoes, Chappals

999-4499

Y

Bubblegummers

N

N

Y

Kids shoes, sandals, chappals

249-1999

Y

Source: Bata Website. Prices subject to change.

Wide distribution network, largest in the sector


Key risks which may affect Bata India stock price in future

    • An extended slowdown in the economy
    • Hike in crude price may impact input costs for the company as nearly 50% of the raw materials used are derivatives of crude oil
    • Intense competition from established players like Relaxo, Mirza International, Khadim and Metro Shoes as well as unorganized brands at the lower end of the spectrum

Bottom line: Is it worth investing in the stock of Bata India stock now?

Bata is a fundamentally sound stock with a proven track record of wealth creation for patient investors. However, the past performance of Bata India stock price alone should not be the reason to invest in the stock. Before investing, one should consider all the pros and cons and invest wisely. For investing in 20-25 multibagger stocks chosen after detailed research click here.


This article was last updated on 26/02/21 

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