Bata India, Metro Brands: 2 Key reasons why Goldman Sachs expects up to 34% upside for these footwear stocks

Bata India, Metro Brands share prices among footwear stocks are expected to see 35 % upside as per Goldman Sachs Equity Research. The target price of Metro Brands at ₹1450  for the stock trading at close to ₹1075 levels means  an upside of  up to 34% . Meanwhile target price of BATA India Ltd at ₹1470 indicates more than 8% upside for the stock trading at around ₹1353 levels.

The 2 key reasons that will drive upside in Bata India and Metro Brands share prices-

Multi-brand footwear retailers to see improved penetration- The Multi-brand footwear retailers as   Bata India , Metro Bands share price are best positioned to benefit from the same . In India, the market share of branded footwear is increasing, while that of non branded and other brands has decreased over the last ten years, from around 85% to about 75% now. Global trends as per Goldman Sachs indicate that as the footwear business expands, the top 15 brands will likely account for 40–60% of the market share.

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 Goldman Sachs thereby sees organized multi-brand retailers as best positioned to capture the rising brand penetration.

Sports & Athleisure (S&A) category is at inflection, to be a multi-decade growth opportunity: According to Goldman Sachs, over FY25–45, the value of India's branded S&A footwear sector will increase at a 13% CAGR (compounded annial growth rate). The bear and bull case estimates stand at 12%  and 14%). Their S&A industry model predicts that by FY45, India's footwear market metrics will catch up to those of China (2020) with similar underlying macro drivers. They think that growth will be accelerated by the recent strategic agreements (Reebok - ABFRL, Fila - Metro Brands) made by global S&A brands with local retailers.

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Goldman Sachs believes that Metro Brands is better positioned compared to Bata with respect to key structural trends like premiumization and rising S&A penetration. The recent efforts by Bata India  to premiumize its portfolio, boost marketing expenditures, etc., are yet to succeed in reviving growth.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions