Bata India is down in the red today, currently a decline of almost 4% at Rs.1028.50, with an intra day low at Rs.1014.

The stock has slipped after the company declared a set of flat numbers for first quarter ended 31^st March 2014 (year ending 31^st Dec). On a 9% (YoY) rise in net sales at Rs.495 crore, the company posted a meager 2.4% rise in net profit at Rs.39 crore. Two reasons for this flat profit apart from subdued demand – a 10% rise in operating costs  and there is also an ‘investment’ of Rs.3 crore which was made in 2014 marketing campaign and it is sure that we will start seeing the benefits of this in current 2015.

Bata has nearly 1400 stores and plans to open 100 new stores across markets this year. Yet, despite the flat net profit, the company’s strategy of offering new footwear designs is obviously because at time when competition from China and cheaper footwear is killing other footwear companies, Bata is actually doing pretty well. This is a debt free MNC and we had recommended this stock in May’13, in our Stock Recommendation section at Rs.740 for a target of Rs.900 within 12 months and it surpassed this target in six months time.