The Hindu Business Line : Bata walks on with mid-cap tag

THE stock of Bata India has been witnessing sustained interest on the bourses in the recent past. Brokers said that with many an investor taking a hit on large-cap stocks, interest is shifting to mid-cap stocks or certain `safe' sectors. The stock has gained by more than 27 per cent from around Rs 55 levels as on end-July.

Word on the street is that a leading bull operator has been active at this counter. A large mutual fund is also said to be propping up the stock.

As on June 30, 2004, Reliance Capital Trustee Co Ltd holds around 3.44 per cent equity while UTI Mastershare Unit Scheme holds around 2.07 per cent. UBS Securities Asia Ltd holds around 1.53 per cent equity of the company.

Operator interest apart, spurring interest in the stock is talk of royalty payment being waived by the parent. Analysts maintain that such a move (if it occurs ) would help in improving profitability. The royalty payment is reportedly to the tune of Rs 10 crore.

The company has also been in the news of late on account of its restructuring efforts. However, analysts prefer to take a cautious stand on the company. "Whatever measures they are talking of, be it trimming their employee base, VRS programme or hiving off their manufacturing plants or selling off property etc, it will take time to fructify. In other words, it will be some time before they show a respectable profit," said an analyst tracking the company.

Sources said that the Bata India's attempts to turn itself into a marketing company' its endeavour to introduce variants in footwear etc may be viewed as a positive. But the question that props up time and again is whether the retailing story will play out and if the management will deliver.

"Until one sees positive development, it is bettor to take a cautious stand," reasoned an analyst. According to brokers the stock is overvalued at this juncture.

The stock ended at Rs 70.25, up 9.94 per cent, with around 6.17 lakh shares traded on the BSE. On the NSE, it ended at Rs 70.55, up 10.06 per cent, with around 12.92 lakh shares traded.

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