Hold Gokaldas Exports; target of Rs 468: Arihant Capital

Arihant Capital recommended hold rating on Gokaldas Exports with a target price of Rs 468 in its research report dated May 05, 2022.

Broker Research

May 05, 2022 / 08:33 PM IST

live

bselive
nselive

Volume

Todays L/H

Arihant Capital's research report on Gokaldas Exports

The overall performance of the company was stellar, and beat our expectations on all fronts in leaps and bounds despite the cost pressures faced by the industry. The top line growth was healthy, and the company has also reduced its employee costs and work charges QoQ which helped offset the other input cost pressures, and drove margin expansion. GEL’s Q4FY22 Net Revenue grew by 58.13% YoY to INR 585 Cr (12.36% QoQ). This beat our quarterly revenue estimate of INR 398 Cr by 46.97%. Q4FY22 Gross Margin grew by 234bps YoY 47% (-448bps QoQ). This is due to input cost pressures faced by the company as prices of cotton and polyester continue to soar. Q4FY22 EBITDA grew by 154.93% YoY to INR 71 Cr (28.01% QoQ). EBITDA Margin expanded by 461bps YoY to 12.15% (149bps QoQ). This beat our quarterly EBITDA estimate of INR 20 Cr by 255%, and beat our EBITDA Margin estimate of 5.08%. Q4FY22 Consolidated PAT grew 287.04% YoY to INR 53 Cr (20.58% QoQ). PAT Margin expanded by 537bps YoY to 9.08% (62bps QoQ). This beat our quarterly PAT estimate of INR 61 Cr by 238%. However, a large reason for this is a DTA of ~ INR 12 Cr recognized this quarter which significantly reduced the tax burden.

Outlook

We assign a TP of INR 468, valued at a P/E multiple of 23x on the FY24E EPS of INR 20.33. We believe that the company will be able to hold its ground in the face of macroeconomic adversity due to its robust management systems. However, the heavy capacity expansions along with the volatility in input prices could hamper operations in the next year. At current levels, we recommend that investors Hold the stock.

For all recommendations report, click here