Shares in Bata India fell as much as 6.1 per cent to Rs 1,002 on Friday after the footware retailer disappointed the Street with its muted March quarter earnings.
Bata India, which reported its Q1 (the company follows a calendar year for earnings) on Thursday, said net profit grew 2.5 per cent to Rs 39.4 crore as against Rs 38.5 crore in the same quarter last year. In the December quarter, Bata's net profit stood at Rs. 52.75 crore.
Bata's revenue grew by 9 per cent y-o-y to Rs 495 crore in the first quarter of calendar year 2014, but its net profit took a hit due to reduced ebitda (earnings before interest, tax and depreciation) margin. Its ebitda margin fell to 13.2 per cent from 13.8 per cent y-o-y in this quarter.
High rental and employee cost brought down its overall profit margin, an analyst told NDTV.
Nirmal Bang Institutional Equities, which retained its buy rating despite weak profits, says Bata's ebitda margins are not very discouraging given the fact that the March quarter is seasonally weak and fixed costs remain at elevated level.
The brokerage said Bata spent Rs 4.5 crore in brand building in the March quarter, which impacted margins.
Nirmal Bang, however, cut its target price on Bata from Rs 1,310 to Rs 1,245 which translates to a valuation of 26.9 times its calendar year 2015 expected earnings per share post earnings announcement.
Shares in Bata India traded at Rs 1,017 apiece down 4.8 per cent as against 0.24 per cent gain in the broader index Nifty as at 1 p.m.
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Shares in Bata India fell as much as 6.1 per cent to Rs 1,002 on Friday after the footware retailer disappointed the Street with its muted March quarter
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