Footwear major Bata India is showing early signs of recovery after a challenging period, helped by improving consumer demand, premium product sales and a growing online business. However, rising costs and pressure on profitability have prompted analysts to retain a cautious stance on the stockThe company reported around 5% year-on-year revenue growth in the fourth quarter of FY26, supported by a similar increase in volumes. This marked the second consecutive quarter of improving performance, suggesting that consumer demand may be gradually returning.
A key driver of growth has been Bata’s premium portfolio, led by the Hush Puppies brand, which now contributes nearly one-fifth of overall revenue. The company has also expanded its Zero Base Merchandising (ZBM) programme to more than 700 stores, with plans to cover up to 80% of its retail network in the coming months. The initiative is aimed at improving store productivity and inventory management.
Digital sales continue to outperform traditional channels. E-commerce revenue grew 26% year-on-year, supported by an omnichannel network that allows more than 700 stores to fulfil online orders, improving delivery speed and inventory efficiency.
Despite the improvement in sales, profitability remained under pressure. Bata’s EBITDA margin fell by 441 basis points to 18.2% in the quarter. Earnings were affected by one-off expenses, including a voluntary retirement scheme costing Rs 28 crore and a non-cash foreign exchange loss of Rs 22 crore. The company also faced raw material inflation of around 5-6%.
On the expansion front, Bata ended FY26 with 700 franchise stores and plans to increase the count to 1,000 over the next year through an asset-light growth strategy.
While management remains optimistic about a broader demand recovery, analysts believe it is still too early to confirm a sustained turnaround. As a result, they have maintained a “Hold” recommendation on the stock, lowering the target price to Rs 700 per share from Rs 920 earlier, citing limited upside potential and continued margin challenges.
