(Reuters) -Footwear maker Bata India reported a surprise fourth-quarter profit decline on Wednesday, hurt by sluggish consumer demand as the high cost of living hurts household budgets.
The company’s quarterly consolidated profit fell 28% from a year ago to 459.2 million rupees ($5.4 million) while analysts expected a growth of around 5%, according to data compiled by LSEG.
Bata, which also sells footwear brands such as Hush Puppies and North Star in India, said its revenue in the quarter dropped 1% from a year ago to 7.88 billion rupees, lower than the 8.23 billion rupees expected by analysts.
KEY CONTEXT
Urban consumer demand in India remains weak due to the high cost of living and sluggish wage growth, with lower inflation in the fourth quarter offering little respite for consumer companies.
Bata has strived to maximize volume-led growth in recent quarters by reducing the number of price points offered in stores to ease decision-making for customers, analysts have said.
Peer Metro Brands beat fourth quarter profit expectations, benefiting from growth in its premium segment, while Relaxo Footwears reported declines in quarterly revenue, profit and volume of footwear sold.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth(%) growth(% rating* analyst price yield
) s target** (%)
Bata India 50.76 19.63 8.48 7.62 Hold 10 0.96 1.49
Metro Brands 67.98 36.18 15.27 26.50 Buy 20 0.95 0.50
Relaxo Footwears 50.65 24.25 9.20 22.91 Hold 9 0.95 0.68
Campus Activewear 54.30 28.17 13.89 27.99 Buy 7 0.93
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JANUARY TO MARCH STOCK PERFORMANCE
— All data from LSEG
— $1 = 85.3620 Indian rupees
(Reporting by Ananta Agarwal and Nandan Mandayam in Bengaluru; Editing by Sahal Muhammed)
