Stock Buzz: Bata making a comeback, is in some kind of a secular uptrend
The management of Bata has indicated that they could be launching a new strategy in order to capture the low-end Indian footwear market.
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ET Now's Nikunj Dalmia shares views about Bata India Ltd based on market sources. Excerpts:
The good old Bata seems to be making a comeback. Now in general, markets of late are risk-averse towards defensive stocks/consumption stocks but despite this recent risk-aversion towards consumption stocks, Bata has appreciated by about 10% plus in last five days.
The stock is falling less, the stock is gaining more and there is some degree of universal acknowledgement amongst fund managers now that Bata is in some kind of a secular uptrend but on stock buzz, it is all about buzz, what could be the near-term trigger for Bata.
Well, there are actually two. Number one is there is a buzz of a new order from Air Force. All of us think that Bata is just an ordinary shoe company but the shoe company only derives 65% of its total profit from the typical retail shoe market. 35% largely comes from two segments, 15% is industrial usage and about 10-12% is defence. My understanding is that they could get a large order from Indian Air Force. Second, the management of Bata privately has indicated to some fund managers that they could be launching a new strategy in order to capture the low-end Indian footwear market.
As of now, Bata has a miniscule presence in the entire two tier and sub-two tear cities in India. So that could be an interesting strategy which Bata is likely to adopt. In terms of valuations, the stock is slightly expensive but markets clearly are in a mood to pay premium to visibility in premium to quality.
They came out with good set of numbers, margins were decent, the business has managed to grow at about 17-18%. The one-year price chart is not very impressive but the one-month price chart and the five-day price chart is pretty impressive.
It could be illiquid stock, normally trades about 2 to 2.5 lakh shares both the exchanges put together but it is a trending stock and it is a stock which suddenly now seems to be finding some acknowledgement with fund managers.
HDFC Mutual Fund is a big buy here, IDFC Mutual Fund is a big buyer here and my understanding is that Fidelity also is looking at accumulating Bata aggressively at lower levels.
The good old Bata seems to be making a comeback. Now in general, markets of late are risk-averse towards defensive stocks/consumption stocks but despite this recent risk-aversion towards consumption stocks, Bata has appreciated by about 10% plus in last five days.
The stock is falling less, the stock is gaining more and there is some degree of universal acknowledgement amongst fund managers now that Bata is in some kind of a secular uptrend but on stock buzz, it is all about buzz, what could be the near-term trigger for Bata.
Well, there are actually two. Number one is there is a buzz of a new order from Air Force. All of us think that Bata is just an ordinary shoe company but the shoe company only derives 65% of its total profit from the typical retail shoe market. 35% largely comes from two segments, 15% is industrial usage and about 10-12% is defence. My understanding is that they could get a large order from Indian Air Force. Second, the management of Bata privately has indicated to some fund managers that they could be launching a new strategy in order to capture the low-end Indian footwear market.
As of now, Bata has a miniscule presence in the entire two tier and sub-two tear cities in India. So that could be an interesting strategy which Bata is likely to adopt. In terms of valuations, the stock is slightly expensive but markets clearly are in a mood to pay premium to visibility in premium to quality.
They came out with good set of numbers, margins were decent, the business has managed to grow at about 17-18%. The one-year price chart is not very impressive but the one-month price chart and the five-day price chart is pretty impressive.
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It could be illiquid stock, normally trades about 2 to 2.5 lakh shares both the exchanges put together but it is a trending stock and it is a stock which suddenly now seems to be finding some acknowledgement with fund managers.
HDFC Mutual Fund is a big buy here, IDFC Mutual Fund is a big buyer here and my understanding is that Fidelity also is looking at accumulating Bata aggressively at lower levels.
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