A forgettable earnings performance in FY25 has left footwear maker Bata India Ltd limping. Amid weak demand, revenue at ₹34,887 crore was flat year-on-year, while Ebitda margin slid 150 basis points to 21.1%, hurt by elevated expenses. But what’s making the Street impatient is the slow pace of Bata’s turnaround. Despite a slew of initiatives, progress has been underwhelming.
In FY26, the company plans to take its Zero Base Merchandising (ZBM) strategy deeper, scaling it from 146 stores in Q4FY25 to 300 stores by December 2025—covering nearly half of its retail revenues. The aim: better inventory turns, faster service, and improved customer conversions.
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On the pricing front, Bata is chasing volume-led growth by lowering opening price points across stores. Its push into the value segment with sub- ₹1,000 products has broadened its appeal, particularly in smaller towns. However, this has come at the cost of gross margins, which shrank 80 basis points to 56.3% in FY25.
The challenge now is to sustain volume growth at the mass end while lifting margins through premiumisation, led by the Hush Puppies brand, and boosting fashion appeal through partnerships like Geisha India.
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Inventory agility is also key. After trimming inventory by 16% year-on-year in Q4FY25 and sharply reducing aged stock over five quarters, Bata is pursuing further gains via sharper forecasting, tighter product curation, and faster in-store replenishment. This should help free up working capital for backend tech upgrades or retail expansion.
The company added around 100 stores in FY25, taking its total count to 1,962, and store additions are expected to be slightly higher in FY26.
Bata is making the right moves, but the road to revival remains bumpy as consumer demand stays soft. E-commerce discounting and a crowded value segment could keep pricing power weak. Premiumisation, a key margin lever, may take time to deliver. And scale-up risks loom large as expanding ZBM without disrupting store operations or customer experience will test execution.
According to Bata, Q4FY25 marked its second consecutive quarter of mid-single-digit volume growth. Yet earnings downgrades persist.
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JM Financial Institutional Securities Ltd has cut its FY26 and FY27 earnings per share estimates by 8-10%, citing weak operational performance due to a change in accounting for licence/royalty costs. It cautions that benefits from Bata’s strategic initiatives will be gradual, and near-term performance may remain tepid.
At ₹1,215, the stock is nearing its 52-week low of ₹1,136, and trades at a rich 43.5x FY27 estimated earnings, Bloomberg data showed.
