Gokaldas Exports surges 18% in two days on robust Q4 performance

Increased volume, better product mix, and improved operational efficiency all contributed to a growing operating profit in Q4.

Shares of Gokdaldas Exports were up 4 per cent at Rs 416.50 on the BSE in Monday’s intra-day trade, surging 18 per cent in the past two trading days after the company reported a robust performance in the March quarter (Q4FY22).

Its consolidated earnings before interest, taxes, depreciation, and amortization (ebitda) margin improved 170 bps QoQ and 365 bps YoY to 13.1 per cent on account of positive operating leverage.

The stock of the garments & apparels company had hit a record high of Rs 438 on March 31, 2022. At 09:41 AM; it was up 2 per cent as compared to a 0.6 per cent decline in the S&P BSE Sensex.

The company’s revenue grew 58 per cent year on year (YoY) to Rs 588 crore as against Rs 373 crore in Q4FY21. Consolidated profit after tax jumped 280 per cent YoY to Rs 61 crore from Rs 16 crore in the corresponding quarter last year.

The primary drivers of growth were robust capacity expansion and a rapid ramp-up of production. Increased volume, better product mix, and improved operational efficiency all contributed to a growing operating profit.

The company plans to invest around Rs 130 crore on new initiatives in the next two years and will deploy around Rs 110 crore on existing and ongoing projects. The company has commissioned three new units in Karnataka and Tamil Nadu, which are ramping up well, and initiated work on a new factory in Madhya Pradesh.

“Gokaldas Exports has initiated work on a new greenfield unit in Madhya Pradesh that is expected to be commissioned in early FY23E (potential revenue: Rs 150 crore). It has charted out capex of Rs 340 crore over the next four years, which will have potential to generate incremental revenues worth Rs 1,300 crore,” ICICI Securities said in a note.

Further, the management has indicated that it is looking to enter new business segments like technical textiles, knitwear and setting up manufacturing units in cost efficient countries like Bangladesh. "We like Gokaldas Exports as a structural long term story to play the apparel export space", the brokerage said.