According to the IBEF, the Garments and Apparel industry in India is a vital sector, contributing approximately 2.3% to the GDP. In FY24, the sector’s exports reached $28.72 billion, with readymade garments alone accounting for $14.23 billion. The market is projected to grow at a 10% CAGR, aiming for $350 billion by 2030.
With a market capitalization of Rs 6,517.78 crore, the shares of Gokaldas Exports Ltd were trading at Rs 912.75 per share, increasing around 1.26 percent as compared to the previous closing price of Rs 901.35 apiece.
Matter explanation:-
As of September 2024, Vanguard Fund group, a Foreign institution investor bought 17,02,019 fresh equity shares which is equivalent to 2.38 percent of the company.
Financial performance:-
Examine the company’s financial condition, revenue zoomed by 81 percent from Rs 515 crore in Q1FY24 to Rs 932 crore in Q1FY25, and during the same time frame, net profit plummeted drastically by 18 percent from Rs 33 crore to Rs 27 crore.
Market condition:-
The U.S. retail market showed resilience in H1 FY’24, with 3% YoY sales growth driven by pricing, while volume growth remained flat. Retailers optimized inventory amid market volatility, facing challenges like production disruptions, shipment delays, and higher airfreight costs from the Atraco acquisition.
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Operational Challenges:-
Gokaldas Exports faced operational challenges in April and May 2024 due to manpower shortages, resulting in production rescheduling, overtime costs, and order cancellations, with an EBITDA impact of ₹12.6 crores. Additionally, Atraco incurred non-recurring air freight costs of ₹8.6 crores from Q4 FY’24.
Capacity expansion:-
Gokaldas Exports’ new manufacturing unit in Madhya Pradesh is expected to reach full capacity by Q3 FY’25, while its fabric processing unit in Tamil Nadu will begin commercial production in Q2 FY’25 following successful trials. Integration of newly acquired entities continues to enhance operational efficiency.
Market opportunities & Strategic initiative:-
Gokaldas Exports has bolstered its management team to support future growth and is focusing on diversifying its customer base, with a strategic push into Europe to mitigate market risks. These initiatives are aimed at strengthening the company’s position in an evolving global market.
The company foresees long-term opportunities from a shift in sourcing towards India due to challenges in Bangladesh. However, current capacity constraints limit immediate order acceptance. To address this, Gokaldas Exports plans to expand capacity in low-cost regions like Madhya Pradesh and Jharkhand to enhance competitiveness.
Management guidance:-
Gokaldas Exports’ management is optimistic about achieving double-digit margin growth in the second half of FY’25, supported by operational improvements. Revenue growth in FY’26 is expected from debottlenecking existing facilities and expanding capacity in low-cost regions like Madhya Pradesh and Jharkhand.
Company snapshot:-
Gokaldas Exports Limited deals in a range of apparel products, which include outerwear, activewear, and fashion wear. It exports to fashion brands and retailers across all continents and within a delivery network of approximately 50+ countries.
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Written by:- Abhishek Singh
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