Bata India dives after 2.8% promoter stake sale; stock down 8% in a week

Shares of Bata India traded lower for seventh straight day, down 3 per cent at Rs 1,725 on the BSE, in Wednesday’s trade. The stock fell 8 per cent after the promoter divested nearly 3 per cent stake in the company through open market last week. In comparison, the S&P BSE Sensex was down less than 1 per cent, during the same period.

In the past six months, the stock of footwear company has underperformed the market by falling 13 per cent, as against 6 per cent decline in the benchmark index.

On June 1, 2022, BATA (BN) B V, the promoter of Bata India, divested 3.6 million shares or 2.8 per cent stake of the footwear company for nearly Rs 613 crore through open market transactions.  The shares were offloaded on an average price of Rs 1,860 apiece on the BSE. Post transaction, the promoter holding in the company reduced from 52.96 per cent to 50.16 per cent, data shows. The shares were picked by a clutch of domestic mutual funds (MFs), foreign investors, and an insurance company.

Bata India said that the said stake constitutes only a marginal part (2.8 per cent) of the promoter shareholding and will not result in any material reduction in the promoter holding from the company. BATA BN BV will continue to hold less than 50.1 per cent in the Indian subsidiary after the transaction.

"Bata BN BV continues to be fully committed to Indian consumers and deeply values their patronage that has made Bata India Ltd, the largest footwear brand in India over the last 8 decades and is eager to see the business continuing to grow in India," the company said.

Meanwhile, analysts at Kotak Securities share a ‘buy’ recommendation on Bata India with fair value of Rs 2,200. They expect the Indian footwear market to grow at 11 per cent CAGR over FY21 to FY26E at Rs 2,600 crore. Besides that, analysts anticipate the per capita consumption in India increase from 2.2 pairs, whereas, the global average stands at 3 pairs and developed countries at 6 pairs.

"Strong investments are initiated by Bata to rebuild the brand with celebrity endorsements after many years, rampant roduct innovations (new style every Friday), improvement in customer experience by bringing ‘Redconcept’ stores to India, better visual merchandising, and accelerating attempts to connect more closely with the consumer and focus on premiumisation and volume growth, are among key factors that will drive growth ahead," the brokerage firm added.