Bata Shoe Company (Bangladesh) valuation report: fair value BDT 250–680 (Oct 2026)

2025 was the trough: EPS BDT 0.85 recovers to BDT 42 in 2027F, but fair value is BDT 250-680

Bata Shoe Company (Bangladesh) is the country's best-known shoe brand and its only listed multinational footwear retailer: 366 stores at the end of 2025, two factories at Tongi and Dhamrai, and brands such as Bata, Power, North Star, Weinbrenner, Bubblegummers, Hush Puppies and Dr. Scholl's [1 p.64] [1 p.30]. Almost all revenue is domestic: BDT 9,154mn of 9,164mn in 2025, of which shoes BDT 8,715mn and hosiery and accessories BDT 439mn [1 p.133]. Revenue has been flat at BDT 9.2-9.9bn since 2022 while consumer prices rose, so real sales have fallen.

2025 was the trough. Profit fell 96% to BDT 11.6mn (EPS BDT 0.85) as gross margin dropped to 42.6% from 47.2% on costlier imported materials, a weaker taka, freight and restructuring costs [1 p.33] [1 p.44], while stores were vandalised in April 2025 after Bata was wrongly linked to Israel (company statement on DSE, reported by The Business Standard) [7] [12]. The first half of 2026 shows the reset working: revenue +10.1% to BDT 5,687mn, operating expenses -4.8%, EPS BDT 36.87 against 19.87 [2 p.4].

Our base case has revenue rising to BDT 12,145mn in 2028F from more stores (389 from 366) and about 7% annual price growth, gross margin back to 45.7% and EPS of BDT 28.5 / 41.5 / 52.9 for 2026F-28F [11]. Even so, two structural costs cap the margin: fees to the parent group (Bata Brands trade-mark licence and Global Footwear Services management fee) plus other royalties take 7.7% of revenue, and store leases another 7.7% [1 p.135] [1 p.136] [1 p.130].

Fair value comes to BDT 250-680 a share, base 458: a pre-IFRS 16 DCF (70%) at a 13.77% cost of equity and 6.7% terminal growth, and a justified P/E (30%) [11]. The share price of BDT 883 (29-Oct-2026) [8] sits above our bull case. It equals 21.3x our 2027F EPS; our DCF only reaches it if the normal operating margin (after rent) is about 25.4%, above the best year in a decade (18.3% in 2017) [5 p.35].

The Bata group owns 70% and takes 7.7% of revenue in fees and royalties

Bafin (Nederland) B.V. owns 70.0% of the 13.68mn shares; it is fully owned by Compass Limited, the ultimate controlling party of the Bata group [1 p.101] [1 p.149]. The other 30% is spread among local and foreign investors, which leaves a small, illiquid free float. A new managing director, Faria Yasmin, took over on 20-Nov-2025 and Shaibal Sinha became chairman on 1-Aug-2025 [7].

The parent earns from Bata Bangladesh in three ways. First, a trade-mark licence fee of BDT 386.5mn in 2025, a steady 4.22% of revenue in both 2024 and 2025 [1 p.136]. Second, a management fee to Global Footwear Services, Singapore, of BDT 265.3mn (2.90% of revenue, up from 2.65%) [1 p.135]. Third, dividends: BDT 213.7mn was remitted to Bafin in 2025 and BDT 650.2mn in 2024 [1 p.150]. Royalties on licensed brands (Hush Puppies, Dr. Scholl's, cartoon licences) add BDT 52.5mn. In all, fees and royalties were BDT 704mn in 2025, sixty times the year's profit.

We keep the trade-mark and management fees at 4.2% and 2.9% of revenue in every year [11]. They also raise the tax bill: the 2025 tax reconciliation shows BDT 151mn of tax on non-deductible expenses, which lifted the effective rate to 94% [1 p.137]. A one-point rise in the trade-mark fee would cut fair value to BDT 434 (risk table).

Bata sold about 5% of a reported BDT 170bn shoe market, against Apex, Lotto and informal makers

There is no official measure of the Bangladesh footwear market. The most cited estimate, by EBL Securities and reported by The Business Standard in 2019, put it at about BDT 17,000 crore (BDT 170bn) a year and 20-25 crore pairs, growing 12-15% a year [13]. On that basis Bata's 2019 revenue of BDT 8.6bn [5 p.35] was about 5% of the market by value. We treat these figures as context only, not as a model input.

Competition comes from three directions. Apex Footwear, the other listed brand, trades through its own store network and also exports; its trailing revenue of BDT 19.6bn includes export orders [9]. Lotto and other local brands such as Bay and Jennys compete in sneakers and casual shoes, and a large informal sector makes cheap plastic and rubber footwear. Bata names unorganised players, domestic brands and new international entrants as its main competition risk, pressing on price and margin [1 p.73]. In the model this is the price line: we assume prices rise about 7% a year, slightly below 2025 inflation, and the risk table cuts that by 1.5 points.

Demand is discretionary. In 2025 food inflation above 10% and weak GDP growth squeezed spending on shoes [1 p.84] [7]. The trend favours casual, comfort and sneaker styles, while school and formal shoes remain Bata's core [1 p.26]. E-commerce is growing but at lower margins because of discounting [1 p.73].

What could lift demand over the next three years is easing inflation and recovering real incomes, a continued shift from unbranded to branded shoes, and more casual and sneaker purchases per person. What could restrain it is a further squeeze on discretionary spending, renewed street unrest of the kind that hit stores in April 2025, and price competition as Apex and Lotto add capacity. We do not model market share directly because no reliable share series exists; instead the store count and revenue per store carry the volume story, and the price line carries the competition story. If Bata merely kept pace with a market growing at the reported 12-15% [13], revenue would grow faster than our 10%, so our base does not assume share gains.

366 stores sold BDT 24.8mn each in 2025; factories ran at 36% of capacity

Bata ends 2025 with 366 stores: 77 city stores, 143 family stores, 15 flagships and 131 franchise stores [1 p.64]. It opened nine stores in 2025, including large-format stores in Dhaka and Chattogram, and closed 15 loss-making ones, so the count fell by six [1 p.64]. Revenue per average store, counting all channels (stores, franchise, dealers, e-commerce, institutions), was BDT 24.8mn in 2025. The company does not disclose like-for-like sales, pairs sold or sales by channel, so we use revenue per average store as a proxy: it grows with price and with volume and mix per store.

Our base case adds 5 stores in 2026 and 9 a year in 2027-28 (the 2025 opening pace without a closure programme), reaching 389 stores [11]. Revenue per store grows 7.0% from price and 1.0% from volume and mix in 2027F, giving revenue growth of 10.1% in 2027F and 10.7% in 2028F. 2026F revenue is the first half's actual BDT 5,687mn plus the weak second half of 2025 grown 7%.

Factory volume fell. Bata made 10.1mn pairs in 2025 against 12.6mn in 2024, using 36% of its 28.0mn-pair capacity (Tongi 31%, Dhamrai 62%) [1 p.134]. More products are bought in: finished goods purchased were BDT 1,637mn in 2025, and trading (sourced goods) brought in BDT 1,444mn of revenue at a 37% gross margin against 44% for own-made shoes [1 p.134] [1 p.169]. Spare capacity means volume growth needs little factory capex; we budget BDT 220-240mn a year, mainly stores and IT.

Franchise stores matter for the economics. 131 of the 366 stores are run by franchisees [1 p.64], who carry the rent and staff; Bata books lower revenue per pair but avoids the lease. More franchise openings would lower occupancy cost (lease cash was 7.7% of revenue in 2025) while keeping the brand's reach. E-commerce and the Bata Club loyalty programme add data on customers and a channel with no rent, though the company warns that online discounts press on margin [1 p.73]. We do not split revenue by channel because the filings do not.

Inventory fell to 217 days in 2025; we take it to 190 days, freeing about BDT 0.3bn

Inventory is the biggest asset after store leases. It fell to BDT 3,133mn at Dec-2025 (217 days of cost of sales) from BDT 3,549mn (264 days), helped by a new warehouse system and tighter planning [1 p.141] [1 p.33], and held at BDT 3,099mn at Jun-2026 [2 p.3]. We take inventory days to 205, 195 and 190 in 2026F-28F. Payables stay at 23.5% of revenue. Receivables are tiny because stores take cash; BDT 612mn of old dealer receivables are fully provided for [1 p.141].

Cash conversion is strong once leases are counted correctly. Operating cash flow was BDT 836mn in 2025, but BDT 481mn went on lease principal, which IFRS 16 shows under financing [1 p.130]. After leases and capex, free cash flow was BDT 202mn, less than the BDT 339mn of dividends paid. In 1H 2026 operating cash flow was BDT 841mn [2 p.6].

Gross margin returns to 45.0% in 2027F; taka and leather costs move it about 1 point each

Gross margin is the swing factor. It was 36.4% in the COVID year 2021, 44.4-47.2% in 2022-24 and 42.6% in 2025 [1 p.44]. Materials are 45% imported (PU, PVC, rubber, components) and 55% local, mostly leather from the Savar tanneries [1 p.134], so a weaker taka raises costs directly. The 2025 drop came from higher raw-material costs, taka depreciation, freight and restructuring [1 p.33]; the first half of 2026 was 45.2% against 45.5% [2 p.4].

We model the cost-of-sales ratio from its drivers each year: prior ratio x (1 + input inflation) / (1 + price) - sourcing gain [11]. Input inflation is 45% x (2% USD input prices plus a 3% taka move) plus 55% x 7% local inflation; price rises about 7%; localisation and the 2025 restructuring take 1.0 point off in 2027F and 0.5 in 2028F. Gross margin returns to 43.5% in 2026F, 45.0% in 2027F and 45.7% in 2028F, inside the 2022-24 range.

Fees, leases and staff take 30% of revenue; tax falls to 32.6% of profit by 2028F

Operating expenses were BDT 3,491mn in 2025, 38.1% of revenue [1 p.128]. Employee costs were BDT 641mn; after the restructuring, cash paid to employees fell to BDT 508mn in 1H 2026 from 757mn [2 p.6], so we cut them 8% in 2026F and then add 7% a year for wages [11]. Store rent sits mostly in right-of-use depreciation (BDT 577mn) and lease interest (BDT 228mn) [1 p.136] [1 p.140]; lease cash was 7.7% of revenue in 2025 and we keep depreciation at 6.2% of revenue. Advertising, utilities, freight, repairs and other costs were 15.5% of revenue in 2025; we use 13.5% as 1H 2026 opex fell 4.8% on 10% higher sales [2 p.4].

Tax is high because some expenses are not deductible. At the 22.5% rate, tax on non-deductible items added BDT 151mn in 2025 and BDT 51mn in 1H 2026, giving effective rates of 94% and 27.8% [1 p.137] [2 p.11]. We assume the add-on is mainly the parent fees and so grows with revenue: 1.1% of revenue (between 0.9% in 1H 2026 and 1.65% in 2025), which takes the effective rate to 32.6% by 2028F; the DCF keeps the same 1.1% of revenue in every year, so the long-run tax and WPPF charge is about 37% of operating profit, not a falling rate. VAT is charged on retail sales: Bata paid BDT 1,384mn of VAT in 2025 [1 p.85]; the revenue line is net of it.

Policy matters through three lines. VAT and supplementary duty set shelf prices; customs duty and the taka set the cost of the 45% imported materials; and the income-tax treatment of parent fees sets the tax rate. Bata is not an exporter (export revenue BDT 9.9mn [1 p.133]), so LDC graduation and the end of export cash incentives do not move the forecast.

Ten-year median ROE is 10.9%; dividends exceeded EPS four years running

The ten-year record explains the share's history. In 2016-18 Bata earned BDT 1.0-1.1bn a year on BDT 8.8-9.5bn of revenue, with operating margins of 15-18% and ROE above 20% [5 p.35] [5 p.31]. COVID turned 2020 into a BDT 1.3bn loss. Since then revenue recovered to BDT 9.9bn in 2022-23 but profit stayed below BDT 0.42bn. The ten-year median ROE is 10.9% (pre-COVID median 24.0%) [11].

Dividends have exceeded profit since 2022: DPS of BDT 33.5, 43.5, 44.5 and 24.8 against EPS of 29.98, 29.31, 21.62 and 0.85 [1 p.44] [6 p.90] [1 p.87], so book value per share fell from BDT 252 to 189. Cash fell to BDT 453mn. We assume an 85% payout from 2026F, giving DPS of BDT 24.3, 35.3 and 44.9 [11]. That is above the 57% payout a 15.6%-return business needs to retain to grow at 6.7%: in 2026-28F the cash comes from the inventory release and depleted equity, not from retained profit, so we treat 85% as a near-term policy and use the sustainable 57% in the valuation. The 2026 interim (BDT 14.07 in the model, 58% of 2026F DPS) is an assumption: the Q3 2026 statements and any interim declaration were not published when we checked on 31-Oct-2026 [7].

Capital actions in the last 24 months were cash dividends only: the 143% interim for 2025 (record date 18-Nov-2025) and the 105% final (record date 19-May-2026) [7]. There was no rights issue, bonus share, bond or change in authorised capital, and no pending issue. CRAB affirmed the AAA long-term rating in May 2026 [7]. The company has no bank debt [1 p.44].

We forecast EPS of BDT 28.5 in 2026F and 52.9 in 2028F on stores, price and margin

The latest period in this model is the first half of 2026 (to 30-Jun-2026) [2]. Our 2026F EPS of BDT 28.54 implies a second-half loss of BDT 8.33 a share, against BDT -19.02 in 2H 2025: Eid-ul-Fitr and Eid-ul-Adha both fell in the first half, and the third and fourth quarters lost money in 2024 and 2025 [7]. The board met on 29-Oct-2026 to approve the Q3 2026 statements [7]; they were not yet published when we wrote this. The model will be updated when the Q3 2026 statements are filed.

EPS rises to BDT 41.5 in 2027F and 52.9 in 2028F. The steps are revenue growth of about 10% a year (stores + price), gross margin up 2.2% points from 2026F, and operating costs growing slower than revenue as restructuring savings persist. ROE on average equity reaches 25.2% in 2028F, above the ten-year median because equity has been cut by four years of over-distribution.

Fair value range BDT 250-680: base 458 = 11.0x 2027F EPS; the price needs a 25% margin

We value Bata with a free-cash-flow DCF on a pre-IFRS 16 basis: lease cash (principal and interest, BDT 874mn in 2027F) is deducted as rent, and lease liabilities are not deducted again [11]. Cost of equity is 13.77%: the 10-year T-bond cut-off of 9.268% [10] plus a beta of 0.60 x a 7.5% equity risk premium. The measured two-year weekly beta against DSEX is 0.37 (Blume 0.58), so the 0.6 floor applies [8]. With no bank debt, WACC equals the cost of equity. Sum of the parts does not apply: Bata has one business and no subsidiaries or associates.

Revenue growth fades from 10.7% in 2028F to a terminal 6.7% by 2033F; terminal growth is (1 + 1.0% volume + 0.5% mix) x (1 + 6.1% long-run inflation implied by the bond - 1.0% price gap) - 1. The operating margin after rent fades from 9.6% in 2028F to a normal 10.0%, the median of the eight non-COVID years 2016-19 and 2022-25 (2016-18 printed at 15-18%; 2019, 2022 and 2023 estimated as the post-IFRS 16 margin less 1.4 points; 2024-25 computed at 6.8% and 3.0%); 2020-21 are excluded as COVID years. Reinvestment after 2028F is growth / 15.6% of NOPAT, where 15.6% is the five-year median of Bata's printed ROCE [1 p.44]. The DCF gives BDT 508 a share; the terminal value is 63% of enterprise value.

The second leg is a justified P/E: payout = 1 - g / ROE = 57% with the same 15.6% return, divided by cost of equity less growth, gives 8.1x 2027F EPS, or BDT 341 [11]. We weight the DCF 70% and the P/E 30% (reasons below), for a base of BDT 458: 11.0x 2027F EPS, 5.0x 2027F EV/EBITDA (pre-IFRS 16), 2.4x 2026F book and a 7.7% 2027F yield.

We do not use Bata's own historical P/E. Year-end P/E was 42.6x in 2024 and almost 1,000x in 2025 on depressed earnings [1 p.142], which tells us what the market paid, not what the earnings are worth. The price implies 21.3x our 2027F EPS. Reverse DCF: with everything else unchanged, the normal margin would need to be about 25.4% for the blended value to reach BDT 883, above any year since 2016.

Why the DCF (BDT 508) is above the P/E leg (BDT 341): we switched off one DCF feature at a time [11]. (1) The working-capital release in 2027-28F (inventory days 205 to 190) adds BDT 60; (2) the margin rising from 8.7% in 2027F to the 10.0% normal level adds BDT 58; (3) growth above 6.7% in 2028-33F, earning 15.6% on new capital against a 13.77% cost of equity, adds BDT 8; (4) the remaining BDT 41 is basis: EPS is after lease interest and before counting the cash pile, while the DCF deducts rent and adds BDT 608mn of cash. Tax is no longer a source of the gap: both legs carry the same 22.5% rate plus the 1.1%-of-revenue add-on. The DCF earns 70% because it reads the whole forecast, including the inventory release already under way (inventory BDT 3,099mn at Jun-2026 against 3,549mn a year and a half earlier) and the margin recovery seen in 1H 2026; the P/E keeps 30% because steps (1) and (2), BDT 117 together, are the least certain part of the case.

How do the legs fit together? The DCF and the P/E both use the same 13.77% cost of equity, the same 6.7% growth and the same 15.6% return on new capital. The P/E leg capitalises 2027F EPS of BDT 41.5, which still carries a below-normal margin (8.7% after rent); the DCF lets the margin reach 9.6% in 2028F before fading to the normal 10.0%. A 15.6% return sits between the ten-year median ROE of 10.9% and the pre-COVID median of 24.0%; our own forecast ROE of 25.2% in 2028F is higher only because book equity has shrunk. If we used the ten-year median ROE instead, growth would earn less than the cost of equity and value would fall further.

We also checked an EV/EBITDA cross-check against Bata's own record and dropped it: pre-IFRS 16 EBITDA was only BDT 450mn in 2025, so the multiple swings from 15x to 24x in two years on earnings, not on value, and 2022-23 prices were set under the DSE floor-price regime. Peer multiples are not used because only one listed peer (Apex Footwear) is comparable and its export business and June year end make its figures a different basis [9].

Risks: a doubled tax add-on cuts fair value 17%, a 10% taka fall 14%; bear BDT 250

The bear case (BDT 250) moves the same drivers as the risk table at once, by amounts we think have about a one-in-four chance: 6 fewer new stores in 2027-28F (3 a year instead of 9), price growth 1.5 points lower, volume 2 points lower, the taka 5% weaker in 2027, half a point less sourcing gain, other costs 0.5 point higher, and, from 2027, the trade-mark fee and store-lease depreciation each 0.5 point of revenue higher and the non-deductible tax add-on 0.3 point higher (half the risk-table shocks). 2028F EPS falls to BDT 3.5 and gross margin to 41.3%. The bull case (BDT 680) reverses each move: EPS BDT 112.1 and gross margin 49.9% in 2028F; that margin is above the 47.2% record of 2024, so the bull case leans on price and sourcing gains the company has not yet shown. In both cases the margin then fades back to the 10.0% normal level after 2028F.

Of single risks, a doubling of the non-deductible tax add-on does the most damage (fair value BDT 381), then a 10% taka fall (BDT 394, -14%), followed by weaker pricing (BDT 416) and a higher trade-mark fee (BDT 434). Store unrest like that of April 2025 shows up in volume (BDT 435). The main opportunity is a faster margin recovery: larger sourcing gains lift fair value to BDT 476. None of these closes the gap to the price on its own.

Two further points sit outside the model. First, liquidity: about BDT 0.9mn trades a day and the parent owns 70%, so the price can stay away from fundamental value for long periods [8]. Second, governance: the parent sets the brand fees and receives most of the dividends, so a higher payout or a fee change mainly shifts cash between minority owners and the group. We have not checked the contingent-liability note in this run (gap).

FAQ

What is Bata Bangladesh's fair value?

We estimate BDT 250-680 a share, base 458, from a pre-IFRS 16 DCF (70%) and a justified P/E (30%) at a 13.77% cost of equity [11]. The price on 29-Oct-2026 was BDT 883 [8].

Why did Bata's profit fall in 2025?

Gross margin fell to 42.6% from 47.2% on raw materials, the taka, freight and restructuring, stores were vandalised in April 2025, and non-deductible costs pushed the tax rate to 94%; profit was BDT 11.6mn [1 p.33] [1 p.137] [7].

How much does Bata Bangladesh pay its parent?

In 2025 a trade-mark licence fee of BDT 386.5mn to Bata Brands and a management fee of BDT 265.3mn to Global Footwear Services, together 7.1% of revenue, plus BDT 213.7mn of dividends remitted [1 p.135] [1 p.136] [1 p.150].

How many stores does Bata have in Bangladesh?

366 at the end of 2025: 77 city stores, 143 family stores, 15 flagships and 131 franchise stores; it opened 9 and closed 15 in 2025 [1 p.64].

What dividend does Bata pay?

BDT 24.80 a share for 2025 (interim 14.30 + final 10.50), against EPS of BDT 0.85 [1 p.87]. We assume an 85% payout from 2026F [11].

Which results does this report use?

The 2025 annual report and the un-audited statements for the six months to 30-Jun-2026. We will update the model when the Q3 2026 statements are filed.

Does Bata Bangladesh run earnings calls?

We found no earnings call or investor presentation in its DSE announcements; management commentary comes from the annual report and DSE releases.

Sources

1. Bata Shoe Company (Bangladesh) Limited Integrated Annual Report 2025 (year to 31-Dec-2025) · link · accessed 2026-10-31
2. Bata Shoe Company (Bangladesh) un-audited financial statements, six months to 30-Jun-2026 (Q2 2026) · link · accessed 2026-10-31
3. Bata Shoe Company (Bangladesh) un-audited financial statements, three months to 31-Mar-2026 (Q1 2026) · link · accessed 2026-10-31
4. Bata Shoe Company (Bangladesh) financial statements, nine months to 30-Sep-2025 (Q3 2025) · link · accessed 2026-10-31
5. Bata Shoe Company (Bangladesh) Limited Annual Report 2020 (2016-2020 financial results) · link · accessed 2026-10-31
6. Bata Shoe Company (Bangladesh) Limited Annual Report 2023 (dividend for 2023) · link · accessed 2026-10-31
7. DSE announcements for BATASHOE, Nov-2024 to Oct-2026 (quarterly EPS releases; Q2 2025 deviation note on store vandalism, 31-Jul-2025; dividends 29-Oct-2025 and 29-Apr-2026; MD appointment 13-Oct-2025; chairman 31-Jul-2025; CRAB AAA rating 23-May-2026; Q3 2026 board meeting 29-Oct-2026) · link · accessed 2026-10-31
8. AnalystBro price data (TradingView feed): DSE:BATASHOE daily and weekly bars, DSEX weekly, to 29-Oct-2026 · link · accessed 2026-10-31
9. AnalystBro screener: DSE footwear and leather companies, close 29-Oct-2026 · link · accessed 2026-10-31
10. Bangladesh Bank, Treasury auction cut-off yields (10-year bond 9.268% on 25-Oct-2026; 364-day bill 8.79% on 26-Oct-2026) · link · accessed 2026-10-31
11. AnalystBro model for this report (workbook tabs below) · link · accessed 2026-10-31
12. The Business Standard, 27-Sep-2025: Apex stumbles, Bata buckles: footwear giants see profits shrink amid inflation, turmoil · link · accessed 2026-10-31
13. The Business Standard, 14-Nov-2019: Apex Footwear investing more to grow bigger in a thriving local market (market size citing EBL Securities) · link · accessed 2026-10-31