The Nifty Midcap Index has gained only 0.66 percent in one year, while shares of Adani Power and Bata India have surged about 100 percent during the same period. Adani Power has rallied nearly 100 percent to Rs 47.40 per share while shares of Bata India jumped about 90 percent to Rs 1,387.30 per share.
Adani Power, a unit of the Adani Group, is engaged in providing power generation by coal-based thermal power plants and coal trading. Since February 13, the stock has rallied over 30 percent. The company has recently received approval from the government to set up its first power sector special economic zone (SEZ). With the SEZ status, it would now enjoy duty waiver, tax exemptions, and faster clearances.
Meanwhile, Bata India is in the business of manufacturing footwear and accessories in both retail and wholesale networks. The company has become investors long-term bet after it changed its strategies about premiumization.
The footwear company has been growing in double digits with robust growth coming in from tier-3 and tier-4 cities. Sandeep Kataria, CEO of Bata India, said to CNBC TV18, “Besides shoe and foot care, we have also expanded into ladies and men bags and with so much more to do there. The company has a target of 500 franchise stores over the next 4-5 years and would also continue to open more company-operated stores.”
In terms of valuations, Bata is richly priced in with a P/E of 60x. However, its return on equity remains in a comfortable position of 15.83 percent. Bata is a debt-free company with strong results. Its revenue in Q3FY19 was higher by 16 percent at Rs 778 crore while net profits increased 84 percent to Rs 103 crore.
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First Published: Mar 28, 2019 2:09 PM IST
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