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Bata India falls 3% intraday after Motilal Oswal downgrades stock to offer

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The Bata India stock (BATAINDIA)fell 3 percent intraday in trade on Friday after brokerage Motilal Oswal downgraded the stock to ‘sell’.

The brokerage has given target of Rs 578, a downside of 23 percent compared to the current price. At 11:49 am, the stock was trading 1.86 percent or 14 points lower at 734 level on the BSE.  The stock is up 82.74 percent on an yearly basis. It rose 65 percent since the beginning of this year The brokerage said Bata India is banking on premiumization of products to raise average realisation. “The intent is to expand average realization through premiumization and increase the revenue contribution of premium products from 30% to 45% in FY18. However, with subdued growth in 1HFY18, we expect the ramping up of premium products’ contribution to get pushed to FY19, with marginal margin expansion of 70bp in FY18 to 12% and 100bp thereafter to 13% in FY19,” the brokerage said in a report.It also commented on the revenue growth of the firm during the first half of FY18. “Considering subdued revenue growth in 1HFY18, we cut our revenue estimates by 4% for FY18 and by 6% for FY19. We keep our earnings estimates unchanged. We expect revenue CAGR of 9% and PAT CAGR of 19% over FY17-19,” the brokerage’s report added.The stock hit a fresh 52-week low of 400 on November 25, 2016 on the BSE.

On November 1, 2017, the stock hit a 52 week high of 833 level on the BSE.

   

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