Bata India — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

Bata India reported a Q3 FY26 with approximately 3% turnover-led growth and a 200 basis points expansion in EBITDA. The company highlighted the positive impact of its Zero-Based Merchandising initiative, which has scaled to 400 stores, and strong growth in its e-commerce and franchise channels. However, management acknowledged the lingering impact of GST disruption on 9-month performance and the challenge of low brand recall among younger demographics, alongside a long period of single-digit growth.

Highlights

  • Turnover-led growth of about 3% this quarter, indicating signs of momentum and green shoots.

  • EBITDA went up by about 200 basis points, reflecting a well-rounded performance across channels from a margin perspective.

  • Zero-Based Merchandising (ZBM) project scaled up to 400 stores, providing continuous incremental benefit and impacting overall SSG.

  • Franchise network continued to expand, nearing 2,000 points, with a target of 1,000+ franchise stores in the next couple of years.

  • E-commerce channel showed strong growth of about 15% last quarter, now contributing mid-double digits, with an ambition to grow even faster.

Concerns

  • GST disruption in one of the quarters led to overall flattish 9-month numbers, impacting sales recovery.

  • Brand recall among the younger demographic (20s-mid 20s) remains low, requiring work on product relevance and digital engagement.

  • Growth has been lagging around single digits for a long period, prompting questions on strategies for double-digit growth.

Key financials

  1. Revenue Growth — +3%YoY
  2. EBITDA Margin Expansion 200 bps

What they filed

Q1 FY27: revenue up 3.9%, net profit up 23.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue837 919 788 942 801 −4%945 +3%828 +5%979 +4%
EBITDA174 200 178 199 145 −17%212 +6%151 −15%204 +3%
Net profit52 59 46 52 14 −73%66 +12%2 −96%64 +23%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Distribution

  • Franchise Stores Count Distribution · next couple of years · High confidence 1,000 plus
    We hope to get to 1,000 hopefully in the next couple of years, right, if not earlier.

    — Gunjan Shah

  • Hush Puppies Exclusive Brand Outlets (EBOs) Distribution · next 12 months · High confidence 200 plus
    We should be aiming for, as I said, in the next 12 months, reasonably ambitious, but we should be aiming for about 200 plus.

    — Gunjan Shah

Operations

  • Zero-Based Merchandising (ZBM) Agenda Completion Operations · this year · High confidence done
    So we hopefully, this year, we should be done with the ZBM agenda also, right?

    — Gunjan Shah

Exports

  • Export Revenue Growth Exports · next 2, 3 years · Low confidence significant jump
    You will see a significant jump over the next 2, 3 years. I can't comment numbers right now, but I'm sure in the next couple of quarters, I will have numbers for you.

    — Gunjan Shah

What to watch in Q4 FY26

Quantified Export Targets

next couple of quarters
Current Qualitative 'significant jump'
Target Specific numbers for export revenue/volume

Why it matters

Management indicated they would provide specific export numbers in upcoming quarters, which is key for assessing international growth potential.

You will see a significant jump over the next 2, 3 years. I can't comment numbers right now, but I'm sure in the next couple of quarters, I will have numbers for you.

Risks & concerns

  • Sustained single-digit growth

    high

    The company has experienced a long period of growth lagging around single digits, raising questions about the effectiveness of current initiatives to achieve double-digit growth.

    Analyst acknowledged

  • GST disruption impact on sales

    medium

    GST disruption in one of the quarters led to overall flattish 9-month numbers, though channel issues are now resolved.

    Both acknowledged

  • Competition in the footwear market

    medium

    Management acknowledges competition as part of doing business in a significantly fragmented market, especially at both value and premium ends.

    Analyst acknowledged

  • Low brand recall/relevance among younger demographics

    medium

    The average age of Bata consumers is in the early 30s, with lower relevance for the 20s-mid 20s cohort, requiring focus on product profile and digital engagement.

    Both acknowledged

Q&A highlights

5 direct
Growth strategy given focus on efficiency and limited store additions Partial
The reason that this rationalization that you see in kits, etc., is also to get authority on the product going. So we want to make sure that the products at the end of this full funnel that I've talked about over the last 4 quarters, we our next 4 quarters, you will see that our ability to make sure that the right kind of a product with the right authority from a design, material as well as comfort perspective comes through to the consumers in a scale that is relevant enough and which will enable consumers to make our choices much easier for us.

Analyst questioned how efficiency-focused initiatives and limited store growth would lead to double-digit growth aspirations, prompting management to elaborate on product funnel reimagination and marketing investments as growth drivers.

Asked by Sameer Gupta

Sharp jump in key retail outlets (MBOs) this quarter Direct
So this is a combination of that. It's been in effort for the last about 4 quarters. It is not revisiting the channel, but basically trying to look at the -- these are the big ones. So I believe we reached about 20,000 outlets in MBOs, right, roughly. It's not a very easily trackable data.

Analyst noted a significant increase in MBOs, and management clarified it's a cumulative effort over 4 quarters to improve engagement and range presentation in top performing outlets, not a sudden change in strategy.

Asked by Sameer Gupta

GST impact and sales recovery, especially for lower price points Partial
It's a little difficult, Gaurav, to do a complete arithmetic on this because there was an impact, which was some amount of impact was channel, but a decent amount of impact was also consumer hesitancy. Now for sure, as I had mentioned even at the last quarter when I said that post that, we have seen and that momentum, as I gave in my opening remarks, we continue to see that through the quarter.

Analyst inquired about the recovery of sales lost due to GST disruption, particularly for lower price points. Management acknowledged the difficulty in quantifying the recovery but confirmed continued momentum and structural benefits from GST 2.0.

Asked by Gaurav Jogani

Sustainability and future growth of Zero-Based Merchandising (ZBM) delta Direct
So it's a delta versus rest of network. So as soon as the rest of the network -- I mean, once the ZBM now is 400 stores, our ambition is to take it to almost a full network or a large part of it by the end of this year, right, in the next few couple of quarters. So the delta is not the only relevant metric, but I understand where you're coming from.

Analyst questioned if the 5% delta from ZBM was early stage or sustainable. Management confirmed ZBM's continuous incremental benefit and ambition to expand it to a full network by year-end, implying sustained positive impact.

Asked by Gaurav Jogani

Online channel contribution and margin impact Direct
It is now in, I would say, mid-double digits in terms of contribution from an e-commerce perspective. And we look at it purely e-commerce, not just the omni part, which is additional. And the second one is from a contribution perspective or profitability, I would say, broadly, it's at par. It might be slightly lower than overall profitability, but my sense is scale gives us great benefits on this. And I think at the growth that it is, it will hopefully not be a drag anymore.

Analyst sought clarity on the online channel's contribution and profitability. Management stated it's mid-double digits, grew ~15% last quarter, and is broadly at par with overall profitability, with scale mitigating any slight margin dilution.

Asked by Gaurav Jogani

Size of Hush Puppies business and competitive intensity Direct
It is about -- overall, it's in the range of about, I think, INR700 crores, I would say, right? And in retail stores, it contributes to anywhere between 15% to 20%.

Analyst inquired about the scale of the Hush Puppies brand and competitive threats. Management quantified Hush Puppies at ~INR 700 crores, contributing 15-20% in retail stores, and outlined strategies for expansion and product proposition.

Asked by Devanshu Bansal

Brand recall among younger demographic (20s-mid 20s) Direct
So even the 20s, consumers know Bata. Do you have relevance from a product profile perspective of what they're needing and wanting from an experience as well as product profile, there is areas to work upon.

Analyst highlighted low brand recall among younger consumers. Management acknowledged the challenge, emphasizing the need to improve product relevance (sneakers) and digital engagement through social media influencers and a younger store aesthetic.

Asked by Chetan Thacker

Long period of single-digit growth and what hard decisions are needed for double-digit growth Partial
I think the biggest one, not a hard decision, but the one with the longest gestation is the product piece, right? Making sure that we've got a significant authority as well as our own stamp of design as well as comfort behind each product of ours is where the gestation is the longest and - but there is now enough work underway, as I've outlined in the chart, which is I think Chart Number 15, which I had opened up last time and now I have given a lot more color to it, right, is the one that is the longest gestation.

Analyst challenged management on the company's prolonged single-digit growth. Management attributed it to the long gestation period of product development and reimagination, which they believe is a strong pillar for future growth.

Asked by Kunal Bhatia

3 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview

Bata India reported a turnover-led growth of approximately 3% for Q3 FY26, signaling renewed momentum. This growth was accompanied by a significant expansion in EBITDA, which increased by about 200 basis points. Management noted a well-rounded performance across various channels, contributing to the improved margins. The overall 9-month numbers, however, were described as flattish due to a GST disruption in one of the preceding quarters.

Zero-Based Merchandising (ZBM) Initiative

The Zero-Based Merchandising project has been a key driver, scaling up to 400 stores and showing continuous incremental benefits. This initiative is now impacting the overall Same Store Growth (SSG) positively. The company aims to expand ZBM to almost a full network or a large part of it by the end of the current fiscal year, expecting further improvements in curated choices for consumers and operational efficiency.

Channel Expansion and Mix

The franchise network continues to expand, currently nearing 2,000 points, with a target to reach over 1,000 dedicated franchise stores in the next couple of years. This expansion is primarily focused on Tier 3 and downward markets. The e-commerce channel demonstrated strong growth of approximately 15% last quarter, now contributing mid-double digits to the total business. Management aims to accelerate this growth further, noting that e-commerce profitability is broadly at par with overall profitability.

Product Strategy and Innovation

A significant focus is on reimagining the product funnel to ensure the right kind of product, with authority in design, material, and comfort, reaches consumers. This includes rationalizing kits to improve efficiency and reduce inventory. Brands like Hush Puppies, Power, and Floatz are driving disproportionately better growth. The company is also working on elevating marketing investments, with double-digit growth in marketing spend, to support product campaigns and overall brand visibility.

Marketing Investments and Brand Perception

Bata has significantly increased its marketing investments, with double-digit growth in spend, and plans to continue this trend. The focus is on targeted product campaigns and shifting digital spend towards social media influencers to connect with younger demographics. Management acknowledged that while Bata is known, relevance among the 20s-mid 20s cohort needs improvement, particularly in product profiles like sneakers and overall store experience.

Manufacturing Strategy (In-house vs. Outsourcing)

The company's long-term strategy involves a gradual reduction in in-house manufacturing contribution, which has tapered from 30-35% to mid-teens. The goal is to retain in-house production for IPR-driven, technology-intensive, and automated processes requiring large capex. Contract manufacturing partners are being consolidated from over 120 to 60, with a target of only 15 partners to leverage best practices, technology, and product development more effectively.

GST Impact and Sales Recovery

Management noted that the GST disruption in one of the quarters impacted the overall 9-month performance, leading to flattish numbers. While channel-related issues from the GST change have been resolved, there was also an element of consumer hesitancy. Despite this, the company observes continued momentum and expects structural benefits from GST 2.0 to persist, though recovery in lower price points has not been as strong as desired.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Durables earnings calls