Bata India (500043) Q2 25/26 earnings summary

Executive summary

• Focused on transformational customer experience, inventory declutter, store revamp, and network expansion to drive growth.

• Zero-based merchandising (ZBM) implemented in major cities, improving store experience and product availability.

• Aggressive marketing campaigns and product innovation, including Victoria Ballerina and Power Easy Slide, supported brand engagement.

• Franchise and shop-in-shop expansion accelerated, with franchise stores nearing 700 and a target of 2,000 by Dec 2026.

• Product portfolio reimagined for sharper assortment and better economies of scale.

Financial highlights

• Revenue from operations for Q2 FY26 was INR 8,013.34 million, up 2.7% year-over-year; gross margin declined by 155 bps, EBITDA margin fell by 221 bps.

• PAT margin decreased by 351 bps year-over-year.

• Inventory turns improved to 2.18 year-over-year, with inventory reduced by 12.7% to INR 7,215 million.

• Higher marketing investments at 3.5% of sales, nearly double last year.

• Exceptional items included VRS expenses of INR 83 million in Q2 FY26 and Rs. 130.47 million for H1 FY26.

Outlook and guidance

• Management expects margin recovery as one-off GST and inventory clearance impacts subside.

• Targeting 2,000 franchise doors by Dec 2026, with +200 stores planned and coverage expansion to 1,635 towns and 14,800 MBOs.

• Continued focus on digital sales, with Bata.com growing 25% year-over-year.

• Premiumization and volume growth to be balanced, with medium-term growth expected from both levers.