Brokerage house ICICI Securities reported that Gokaldas Exports (GEL) reported its best-ever quarterly performance driven by rising order book and ability to deal with supply chain disruptions. For FY22, GEL’s exports grew by 58% from the year-ago quarter, compared to 36% of India’s exports.
Shares of Gokaldas Exports have gained nearly 7.5 times 60 September 2020 to 450 each in April 2022. GEL saw significant re-rating on the back of consistently outperformance despite various headwinds, it said.
The brokerage firm likes GEL as a structural long-term story to play the apparel export space. It has maintained its buy recommendation multibagger stock Which has increased by more than 388% in a span of one year. its target value is 570, which is 23% higher than the current level.
Highlighting the key triggers for future price performance, ICICI Securities said that the company’s production is currently operating at peak utilization level with a strong order book for the next six months.
In addition, it has charted the capital expenditure of 350+ crores in the next four years (by FY2015), which will have the potential to generate incremental revenue 1,300 crores.
With recent fundraising (QIP: 300 crores), the company has strengthened its balance sheet with debt repayment, after which GEL has become net debt free (net cash surplus: 105 crores).
The government’s increased focus on apparel exports and the China+ strategy of global brands provide long-term growth opportunities for players like GEL, according to the brokerage.
On a higher Q4FY22 basis, sales grew 97% y-o-y, supported by new capacity expansion in Karnataka and Tamil Nadu. “Gross margin declined 380 bps QoQ by 380 bps to 46.0% as a result of the recent increase in fabric price and change in product mix. However, EBITDA margin improved by 170 bps QoQ to 13.1% due to better operational efficiency and lower employee provisioning,” ICICI Securities said.
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