Gokaldas Exports inches towards record high; surges 36% in one month

Brokerage ICICI Securities has maintained a BUY rating on Gokaldas Exports with a revised target price of Rs 425.

Shares of Gokaldas Exports were locked at the 10 per cent upper circuit at Rs 362.75, after hitting an over 15-year high and inching towards a new record high on strong outlook.

The stock of the textiles company was trading at its highest level since May, 2006. It had hit an all-time high of Rs 405 in March 16, 2006. At 01:58 pm; a combined 765,000 equity shares had changed hands and there were pending buy orders for around 21,000 shares on the NSE and BSE.

In the past one month, the market price of Gokaldas Exports has appreciated by 36 per cent, as against a 3.5 per cent rise in the S&P BSE Sensex. In the last three months, it has zoomed nearly 75 per cent, as compared to a 0.05 per cent gain in the benchmark index.

In October, Gokaldas Exports had raised Rs 300 crore by issuing shares at a price of Rs 194.50 per share. A portion of the funds have been utilized towards reducing debt levels, with the surplus to be used to meet incremental working capital and capacity expansion requirements.

Rating agency ICRA expected strong performance of Gokaldas Exports in the coming quarters on the back of its established market position and strong relationship enjoyed with large international customers, as illustrated by its order book position and the healthy improvement in capital structure and liquidity position witnessed post the equity infusion in October 2021.

Gokaldas Exports’ credit metrics and liquidity position witnessed a healthy improvement, primarily on the back of the Rs 300-crore equity infusion made in October 2021 (through the Qualified Institutional Placement route), ICRA said in a rating rationale on December 27.

Meanwhile, for the first half (April-September) of the current financial year 2021-22 (H1FY22), the company had reported a robust set of numbers, with consolidated net profit up 6-fold at Rs 26.06 crore, as against Rs 4.41 crore in the year ago period (H1FY21). The company’s consolidated revenue from operations during the period grew 19 per cent to Rs 685 crore from Rs 576 crore a year ago.

Gokaldas focuses on manufacturing complex garmenting products (mainly woven garments) with capacity of 30 million pieces (220 manufacturing lines). It has embarked on a capex of Rs 340 crore over the next four years (FY25E), which will have the potential to generate revenues worth Rs 1,300 crore. Its production is currently operating at peak utilisation with capacity fully booked for Q3FY22E, Q4FY22E, said ICICI Securities. 

During the July-September quarter (Q3FY22), Gokaldas Exports set up two units in Karnataka (potential revenue worth Rs 160 crore) and initiated work on a new greenfield unit that is expected to be commissioned in early FY23E.

We build in revenue CAGR of 21% in FY21-24E, ICICI Securities said, maintaining a BUY rating on Gokaldas Exports with a revised target price of Rs 425.