Gokaldas Exports hits third straight 5% upper circuit on strong Q2 results

The company reported 3-fold jump in Q2FY22 consolidated net at Rs 28.61 crore as against a profit of Rs 8.66 crore in a year ago quarter

Shares of Gokaldas Exports were locked at the 5 per cent upper circuit for the third straight trading day after the company reported a robust set of numbers, with consolidated net profit up 3-fold at Rs 28.61 crore in September quarter (Q2FY22).  The textiles company had posted profit of Rs 8.66 crore in a year ago quarter (Q2FY21) and a net loss of Rs 2.55 crore in preceding quarter (Q1FY22).

The stock was up 5 per cent at Rs 237.65 on the BSE in intrad-day trades on Tuesday and was trading at its highest level since May, 2008. It had hit an all-time high of Rs 405 in May 2006. Till 11:08 am; a combined 110,000 shares had changed hands and there were pending buy orders for a combined 1.01 million shares on the NSE and BSE. In comparison, the S&P BSE Sensex was down 0.12 per cent at 60,068.

The company’s consolidated revenue from operations during the quarter grew 30 per cent to Rs 444 crore from Rs 342 crore in previous year quarter. Earnings before interest, tax, depreciation and amortization (ebitda) jumped 63 per cent year on year at Rs 53.93 crore, margins improved 250 basis points to 12.1 per cent from 9.6 per cent in Q2FY21.

The company said it generated higher operating profit, compared to Q2 of previous year. Strong order book, increased focus on augmenting capacity (up by around 30 per cent) while containing costs has helped deliver this growth.

The key operating parameters like production efficiency, wastage reduction, ontime production and delivery have consistently improved. The company has initiated several measures to augment its capacity to meet the business demand from customers, the company said.

With a strong order book, the company ensured a rapid expansion of its production capacity. The company managed the production value chain well by increasing people availability, improving productivity and on-time shipments. The management continued to focus strengthening the order book position for the coming quarters as well.

US, the largest market of the company, monthly apparel retail sales for CYTD 2021 is 6 per cent higher than pre-covid 2019 level. European Union apparel import data also indicates that 2021 is catching up with 2019 level steadily.

China continues to be hobbled by trade restrictions, Covid resurgence and high cost of labour. Vietnam is also experiencing a flare up of Covid. All of these impose additional constraints on global supply chain and presents an opportunity for India, the company said.

With the Government of India coming up with a strong support for Indian textile industry by announcing a stable policy regime, a new PLI scheme and initiating discussions with several countries for FTA, the company said it can expect a good future for the industry in India.