Gokaldas Exports Ltd. share price target

GKEL’s Q4FY25 LFL performance was strong with revenue (including other income) growing by 17% y-o-y to Rs. 706 crore and EBITDA margin expanding by 76 bps y-o-y to 14.4%.

Volumes gain momentum; margin improves

Acquisitions drag performance; recovery expected in H2

Gokaldas Exports’s (GKEL’s) LFL performance was good with revenues growing strongly by 28% y-o-y to Rs. 652 crore, EBIDTA margins stood flat y-o-y at 11%.

Gokaldas Exports Limited’s (GKEL’s) Q1 performance was affected by lower margins due to higher freight costs and labour costs. Revenue grew ~13% on like-for-like (LFL) basis, while adjusted EBITDA margin stood at 10.5%

Volumes healthy, margins suffer; expect a strong H2

Gokaldas Exports Limited’s (GKEL’s) Q4 numbers were good with like-for-like (LFL) revenue growth of 14% (largely volume led), while adjusted EBIDTA margins came at 14.4%.

Demand revives; Matrix acquisition to provide further upside

Gokaldas Exports (GEXP)’s Q2FY24 consolidated EBITDA, at INR 470mn (down ~28% YoY), was below our expectations. Revenue at ~INR 5bn was down ~12%/3% YoY/QoQ owing to continued demand softness and inventory liquidation in GEXP’s end-market (US).

Earnings subdued, revival on the cards

Gokaldas Exports (GEXP) has signed a definitive agreement with the shareholders of UAE-based apparel maker, ATRACO, to acquire 100% of the latter’s equity for a total consideration of up to USD 55mn funded through debt (73%) and internal accruals (27%). ATRACO exports 95% of its production to the US (primary market for GEXP) and has nearly mutually exclusive customer base with GEXP.

Gokaldas Exports’ (GEXP) Q1FY24 consolidated EBITDA at INR 602mn, down 17% YoY, was slightly below our expectations. Revenue at ~Rs5bn was down 16% / 2% YoY / QoQ owing to continued demand softness and inventory liquidation in the company’s end-market (US). Management maintains its guidance of demand revival in the US H2FY24 onwards as, by then, retailers will place fresh orders for spring / summer of CY24.

Weaving the opportunities together

Gokaldas Exports (GEXP) has delivered stellar returns (<25%) in the past one month as we believe the street seems to have factored in the exuberance (China+1, margin expansion, etc.) a bit too early. A few concerns: 1) As per the latest exports data, India’s Apr-May’23 RMG exports are down ~12% YoY.

Gokaldas Exports’ (GEXP) Q4FY23 consolidated EBITDA at Rs701mn, although down 8.5% YoY, was above our / consensus expectations. Revenue at Rs5.2bn was flat QoQ (down 11% YoY) due to soft demand scenario in the company’s end-market (US).

Gokaldas Exports’ (GEXP) Q3FY23 consolidated EBITDA at Rs632mn (up 7% YoY) was above consensus expectations. Revenues at Rs5.2bn were flat YoY (down 9% QoQ) due to soft demand scenario in the company’s end-market (US). Flat revenue growth was in line with similar growth in Indian apparel exports in Q3FY23.