The shares of footwear brand Bata India have surged over 150 percent since February 2018, thus doubling investors’ money in less than two years.

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The stock was trading at Rs 1,826 on the NSE at 12:25 pm on Monday with a market capitalisation of Rs 23,469 crore.

The company reported a 14.75 percent rise in its consolidated net profit to Rs 118.26 crore for the third quarter of fiscal 2020 compared to Rs 103.05 crore in the year-ago period.

Consolidated revenue from operations during the quarter stood at Rs 830.82 crore as against Rs 779.79 crore, YoY. The company reported same-store sales growth of 2 percent.

Steady sales came on the back of continuous investments over the past two years in areas of product portfolio evolution, the company said in a regulatory filing.

Gross margins continued their positive improvement trajectory and expanded 210 bps YoY to 60.7 percent owing to the increased share of premium products. However, due to negative operating leverage, EBITDA margins expanded 30 bps YoY to 21.3 percent.

"Despite market headwinds and a pan-India cross-sectoral drop in consumer spending, Bata managed stable growth in Q3 2019-2020, improving its margins and EBIDTA," Bata India CEO Sandeep Kataria said.

The management has the long term aim to enhance the share of premium products by around 500 bps in the next two to three years from current around 50 percent.

“This performance was supported by strong gross margin expansion and rent expenses in control and partially offset by higher staff costs and other expenses. We expect premiumization-led gross margin expansion to translate into better EBITDA margin, although at a slower pace, as Bata continues higher spends for brand building initiatives,” ICICI Securities said in a report.

However, post 32 percent stock returns in the last 6 months, the brokerage downgraded the stock by a notch to ‘Add’ from 'Buy' due to limited upside potential.

“At our target price, the stock will trade at 45x P/E multiple Mar-22E. Key downside risk is prolonged consumption slowdown,” ICICI Securities added.