Shares of footwear major Bata India rose 5.3 per cent on Thursday amid reports the company is in talks with German footwear brand Adidas for a strategic partnership in the Indian market.
The scrip touched an intraday high of Rs 1,767.95 after opening at Rs 1,636.05 on the BSE. It settled at Rs 1,733.75 at the close of trade.
Bata has not confirmed the development but the Bombay Stock Exchange has sought a clarification from the company on a CNBC-TV18 report.
In response to a query from The Telegraph, Claudia Lange, VP of external communication, Adidas, said the company will not comment on the development.
Market observers, however, are upbeat on the prospects of a strategic partnership between the two footwear giants.
A strategic tie-up could fit well with Bata’s existing plan to consolidate in sneakers and its focus on premiumisation.
Bata India has informed analysts at its first quarter earning call that the company has extended Sneaker Studios to 565 stores and the category continues to outpace growth.
The company’s own brand North Star has seen a 1.15 times year-on-year growth in June 2023.
In the case of Adidas, a partnership would drive growth in a market where the company is bullish on its future prospects.
It would also allow the sports focussed brand to tap into the country-wide retail network of Bata.
Adidas announced in 2021 that it would be selling Reebok to Authentic Brands Group for $2.5 billion after the takeover failed to deliver on the company’s expectations.
While the contours of the deal are not known, Reuters reported a strategic partnership would likely entail Adidas either offering its products on a wholesale basis to Bata or creating standalone “shop in shop” in Bata stores, according to a note from analysts at Deutsche Bank.
Either of the options would benefit Adidas “in an important long-term growth market” and likely help overtake Puma as the number one sportswear brand in India, the note added.
In a call with analysts two weeks ago, Adidas chief executive officer Bjorn Gulden said India is “probably the fastest-growing market in our industry going forward”.
Bata has reported a 10 per cent decline in standalone net profit to Rs 107.8 crore for the quarter ended June 30, 2023.
The company posted a net profit of Rs 119.3 crore in the corresponding quarter of the last year.
Revenue from operations for the quarter stood at Rs 958.1 crore, a growth of 2 per cent from a year ago.