Bata India's Q1 results for the fiscal year 2025-26 reveal a mixed performance, with a significant decline in net profit but a rise in adjusted EBIT. The footwear giant is now focusing on expanding its reach in smaller markets to tap into new growth opportunities.

Financial Performance

Bata India reported a consolidated net profit of ₹52 crore for the first quarter ended June 30, 2025, a 70% decline compared to ₹174 crore in the same quarter last year. This drop in profit is attributed to higher expenses, sluggish consumer demand, and an unfavorable base effect from the previous year.

However, the company's operating performance showed some resilience. Earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 7% year-on-year to ₹200 crore. EBITDA margins also expanded by approximately 150 basis points to 21.1%.

Revenue from operations remained relatively stable at ₹941.85 crore, a slight decrease from ₹944.63 crore in the corresponding quarter of the previous year. While revenue was nearly flat, there was a 17% quarter-on-quarter increase in consolidated revenues.

Strategic Focus on Smaller Markets

Bata India is strategically targeting smaller towns and rural markets to drive future growth. The company aims to generate 30% of its revenue from Tier III to Tier V markets in the next two years. This expansion involves increasing the number of franchise stores in these regions and focusing on value-for-money products to cater to local consumer preferences.

Gunjan Shah, MD and CEO of Bata India, noted the better performance in Tier III to Tier V markets and the company's optimism about their growth potential. Bata Chairman Ashwani Windlass highlighted that consumers in smaller cities prioritize value propositions, which the company is addressing by offering enhanced ranges and competitive pricing.

Factors Influencing Performance

Several factors influenced Bata India's Q1 performance. Fluctuating weather patterns and geopolitical uncertainties created headwinds. The company also faced sluggish consumption momentum, impacting overall sales.

Despite these challenges, Bata's premium brands, such as Hush Puppies, Comfit, and Floatz, demonstrated resilience. The company is also focused on improving inventory efficiencies and forecast accuracy to optimize stock levels and enhance agility.

Other Key Points

• Bata India continued its voluntary retirement scheme (VRS) program, incurring a one-time exceptional cost.
• The company's holding company sold a freehold industrial land for ₹156 crore, resulting in a gain.
• Bata India is investing ₹300 million to modernize its Batanagar manufacturing facility, focusing on advanced production processes.
• In the past year, Bata India has opened approximately 130 new retail stores, with over 50% located in smaller towns.

Market Reaction

Following the release of the Q1 results, Bata India's shares experienced a decline. The stock price has underperformed the market in the year 2025, with an 18% fall compared to a 2.6% rise in the BSE Sensex.