Bata India's Financial Results Show Negative Trends, Raises Concerns for Investors

This may indicate tight working capital management.
Bata India, a leading consumer durables company in the midcap segment, has recently declared its financial results for the quarter ending September 2024. The company has seen a negative performance in this quarter, with a score of -6 compared to 5 in the previous quarter. This decline in score is a cause for concern for investors and stakeholders.

The company's Profit Before Tax (PBT) less Other Income has fallen by 21.1% to Rs 52.59 crore, compared to the average PBT of the previous four quarters which was Rs 66.61 crore. This indicates a negative trend in the near term for PBT. Similarly, the Profit After Tax (PAT) has also fallen by 42.2% to Rs 51.98 crore, compared to the average PAT of the previous four quarters which was Rs 89.96 crore. This is a significant decline and raises questions about the company's financial management.

The company's Operating Profit to Interest ratio is at its lowest in the last five quarters, indicating a deteriorating ability to manage interest payments. The Operating Profit (PBDIT) has also seen a decline, reaching its lowest at Rs 174.59 crore in the last five quarters. This is a negative trend in the near term for the company's operating profit.

The Debt-Equity ratio for Bata India is at its highest in the last five half-yearly periods, standing at 0.98 times. This indicates that the company is borrowing more to fund its operations, which may lead to a stressed liquidity situation. Additionally, the Debtors Turnover Ratio for the company is at its lowest in the last five half-yearly periods, indicating a slowdown in the pace of settling its debtors. This could be a sign of tight working capital management.

In light of these financial results, MarketsMOJO has given a 'Strong Sell' call for Bata India's stock. Investors and stakeholders should closely monitor the company's financial performance in the coming quarters to make informed decisions.