Buy Gokaldas Exports, target price Rs 570: ICICI Direct

ICICI Direct has buy call on Gokaldas Exports with a target price of Rs 570. The current market price of Gokaldas Exports is Rs 462.2. Time period given by analyst is a year when Gokaldas Exports price can reach defined target.

Gokaldas Exports, incorporated in the year 2004, is a Small Cap company (having a market cap of Rs 2728.87 Crore) operating in Apparels sector.

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


Financials
For the quarter ended 31-03-2022, the company has reported a Consolidated Total Income of Rs 587.95 crore, up 12.19% from last quarter; Total Income of Rs 524.06 Crore and up 57.77% from last year same quarter. The company has reported net profit after tax of Rs 60.91 crore in latest quarter.

Investment Rationale
GEL witnessed significant re-rating on the back of consistent outperformance despite various headwinds. For FY22, GEL exports grew 58% YoY vs. 36% India exports. We like GEL as a structural long term story to play the apparel export space and maintain BUY recommendation on the stock, the brokerage said.

Key triggers for future price performance:

• Production currently operating at peak utilisation levels with robust order book for the next six months

• Charted out capex of Rs 350+ crore over the next four years (by FY25E) which will have potential to generate incremental revenues worth Rs 1300 crore

• With the recent fundraise (QIP: Rs 300 crore), the company has strengthened its balance sheet with repayment of Rs 300 crore debt, post which GEL has become net debt free (net cash surplus: Rs 105 crore)

• Enhanced government focus on apparel exports and China +1 strategy of global brands provide long term growth opportunity for players like GEL

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.