Mixed Brokerage Calls as Citi Downgrades Bata India on Weak Q2 Results; JM Financial Recommends Buy on Supreme Industries
Citi downgraded Bata India to a 'Reduce' rating following weak Q2 FY26 results marked by a 73% drop in net profit and a 4% decline in revenue caused by GST-related deferred purchases and warehouse disruptions. EBITDA and margins contracted significantly. Meanwhile, JM Financial maintained a 'Buy' recommendation on Supreme Industries despite trimming estimates, showing mixed brokerage sentiments in the market.
Bata India reported a significant earnings decline for Q2 FY26, with net profit plummeting 73% year-on-year to Rs 13.9 crore from Rs 52 crore and revenue decreasing by 4.3% to Rs 801 crore, mainly due to deferred purchases after GST rate rationalization and warehouse disturbances. Expenses slightly increased while EBITDA fell 16.7%, with margins contracting from 22.4% to 20.1%, reflecting operational pressures such as higher discounts and increased costs. Citi downgraded Bata India to 'Reduce' due to the weak performance, whereas JM Financial shifted its rating to 'Reduce' but plans to provide detailed analysis later. Despite Bata’s challenges, JM Financial reaffirmed a 'Buy' on Supreme Industries despite lowered estimates, indicating mixed brokerage views. Bata’s management remains cautiously optimistic about recovery prospects driven by digital growth, premiumisation, and festive demand improvements post-September 22. This Q2 performance triggered a sharp share price decline around 7%, reflecting market disappointment amid cautious optimism moving forward.
