Buy Gokaldas Exports, target price Rs 530: JM Financial

JM Financial has buy call on Gokaldas Exports with a target price of Rs 530. The current market price of Gokaldas Exports is Rs 365.1. Time period given by analyst is one year when Gokaldas Exports Ltd. price can reach defined target.

Gokaldas Exports Ltd., incorporated in the year 2004, is a Small Cap company (having a market cap of Rs 2149.71 Crore) operating in Apparels sector.

Gokaldas Exports Ltd. key Products/Revenue Segments include Textile Apparels, Export Incentives, Scrap, Job Work for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 612.69 Crore, up 4.21 % from last quarter Total Income of Rs 587.95 Crore and up 152.15 % from last year same quarter Total Income of Rs 242.99 Crore. Company reported net profit after tax of Rs 39.39 Crore in latest quarter.

Investment Rationale
Gokaldas Exports reported a revenue increase of 4.4% QoQ to INR6.1bn, driven by excellence in execution and optimal utilization of capacity. EBITDA decreased 5.6% QoQ to INR723mn, with margin at 11.8% during the quarter. The company reported a PAT of INR394mn in 1Q. Net cash position further improved QoQ to INR2.2bn aided by reduced working capital days. Gokaldas Exports delivered a resilient performance despite challenging macro-economic business environment and seasonally weak 1H. The company expects near term uncertainties on account of inflation and recessionary sentiments. However, order book for 2HFY23 (still in progress) is attracting reasonable traction aided by falling raw material prices. Despite the near term headwinds, the company is well placed to sustain its growth journey aided by structural drivers like a) shift of business away from China b) increasing consolidation of supplier base across most brands c) announcement of PLI d) supply side instabilities in countries like Sri Lanka, Pakistan and Myanmar. The company’s decision to invest consistently towards modernisation and superior supply chain efficiency is likely to benefit the company in the long run. Further, FTAs with UK/EU over time is likely to increase the addressable market size and the brokerage believes Gokaldas exports is ideally positioned to capture this market backed by strong management leadership of Mr Sivaramakrishnan Ganapathi. Maintain BUY with revised target price of INR530/sh.

Promoter/FII Holdings
Promoters held 24.09 per cent stake in the company as of 31-Mar-2022, while FIIs owned 11.03 per cent, DIIs 27.2 per cent.