Bata India Upgraded to 'Hold' Rating by MarketsMOJO, Strong Management Efficiency and Debt Servicing Ability

Bata India, a leading consumer durables company, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This decision is based on various factors, including the company's high management efficiency with a ROCE (Return on Capital Employed) of 20.54%. This indicates that the company is utilizing its capital effectively to generate profits.
Another positive aspect of Bata India is its strong ability to service debt, with a low Debt to EBITDA ratio of 0.31 times. This means that the company has a good balance between its debt and earnings, making it less risky for investors.

Technically, the stock is currently in a Mildly Bullish range and has shown improvement from a Sideways trend on 01-Aug-24. This is supported by various factors such as MACD, Bollinger Band, and KST, which are all indicating a bullish trend for the stock.

In terms of valuation, Bata India has a Fair valuation with a ROCE of 18 and an Enterprise value to Capital Employed ratio of 8.8. Additionally, the stock is currently trading at a discount compared to its average historical valuations, making it an attractive option for investors.

However, it is important to note that the company has shown poor long-term growth, with Net Sales growing at an annual rate of 3.48% and Operating profit at 4.84% over the last 5 years. This may be a concern for some investors.

In the recent quarter, Bata India's results were negative, with PBT LESS OI(Q) at Rs 61.03 crore, falling by -29.7%, and PAT(Q) at Rs 63.65 crore, falling by -13.6%. This could be due to various factors such as market conditions and competition.

Despite these challenges, Bata India has a high institutional holding of 35.14%, indicating that these investors have better capability and resources to analyze the company's fundamentals compared to retail investors.

In conclusion, while Bata India has underperformed the market in the last 1 year, with negative returns of -8.08%, it still holds potential for growth and has been upgraded to a 'Hold' rating by MarketsMOJO. Investors should carefully consider all the factors before making any investment decisions.