India truly has challenges in exporting textiles. For some time now, the Indian textile industry has been in decline due to fierce competition from businesses in Bangladesh and Vietnam.

In September 2023, India’s garment exports decreased 11.23 percent from the same month the previous year. India is the fifth-ranked nation in the world for textile and clothing exports. Europe and the US receive more than half of these shipments.

$10 billion was invested in US clothes per month. The value of the inventory has dropped to $7 billion in recent weeks. The US desires to see this amount reduced to $5 billion. In the future, US corporations are probably going to keep $7 billion in inventory. 

Surprisingly, though, this apparel manufacturer with headquarters in Bengaluru has managed to weather the downturn in exports. India’s textile exporters are having difficulty, but Gokaldas Exports has been able to reach duty-free consumers in the US and Europe thanks to a timely acquisition.

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Nearly all of Gokaldas’ expansion will come from the $55 million acquisition of the Dubai-based clothing manufacturer Atraco Group. Gokaldas’ attempt will equal last year’s revenue if the contribution from Atarco is removed.

The stock performance of Gokaldas Exports has also been great giving multi-bagger returns. The stock surged almost 100 percent over last year and when looking at the period of three years, the stock gave a return of a whopping 858 percent. So let’s delve deep into the article to understand what the future holds.

Industry Overview of Gokaldas Exports

Rising labor costs and geopolitical unrest are driving a possible shift in textile and apparel exports away from China. China’s market share has gradually decreased over the last ten years as a result of rising factor costs, rising exchange rates, and trade restrictions.

This change presents new chances for developing Asian nations, particularly India, to capture a bigger share of the market. India’s sourcing industry is growing, and this is becoming more and more evident. 

Furthermore, competing countries have the opportunity to profit from changing trade dynamics due to geopolitical issues between the US and China as well as the US ban on cotton products from China’s Xinjiang province.

This tendency is further supported by domestic Chinese factors such as rising labour costs, a decrease in the working-age population, increased social security benefits, and a shift in emphasis away from low-value garment exports.

Company And Product Overview Of Gokaldas Exports

Gokaldas Exports is a significant presence in the Indian fashion sector, specializing in the production and exportation of a wide array of ready-to-wear garments of high quality. With a solid presence in global markets, the company serves the needs of well-known international fashion brands and retailers across more than 50 countries.

The success of the company can be attributed to its thorough understanding of garment specifications, a strong awareness of customer preferences, and its consistent dedication to delivering products that meet strict quality and compliance standards.

As of FY2023, the company has 36 million annual apparel manufacturing capacity. It also has more than 20 state-of-the-art manufacturing facilities along with 15,000+ advanced machines and five value added service units.

Gokaldas Exports has cultivated enduring relationships with key clients, which have played a pivotal role in its growth and maintenance of its market position. The company’s customer base extends across regions such as North America, South America, Europe, Africa, Oceania, and various parts of Asia.

As a reliable and favoured partner in the international fashion scene, Gokaldas Exports is still known for its commitment to quality and customer-first philosophy. Most of the revenue generated by the company comes outside India with 84 percent coming from the rest of the world.

Product MixFY 22-23FY 21-22
Jackets35%42%
Pants16%14%
Tops/Shirts48%42%
Others1%2%
Product CategoryFY 22-23FY 21-22
Women51%46%
Men42%47%
Kids6%6%
Others1%1%


Financials Of Gokaldas Exports

FY2023FY2022FY2021FY2020
Revenue (in ₹crore)2,222.201,790.321,210.731,370.95
Net Profit (in ₹crore)172.97117.0826.4930.39
ROE19.58%21.68%7.48%2.53%
ROCE21.20%17.83%7.46%5.90%

In the fiscal year 2023, Gokaldas Exports saw a substantial increase in revenue, surging by 24.12% to reach ₹2,222.2 crore as opposed to ₹1,790.32 crore in FY2022. Gokaldas Exports’s success in achieving this revenue growth was largely due to its ability to balance capacity with orders on hand and execution excellence. Analyzing four years, encompassing FY2020 to FY2023, the company displayed a  robust Compound Annual Growth Rate (CAGR) of 17.47% in revenue.

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 47.7% increase from ₹117.08 crore in FY2022 to ₹172.97 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased a 78.54% CAGR.

In FY23, Gokaldas Exports maintained favourable financial metrics with a Return on Equity (ROE) of 19.58% and a Return on Capital Employed (ROCE) of 21.20%.

Future Outlook

Expanding Capacities

In order to maximize capacity utilization, improve machinery for efficiency, and unlock capacity in its current facilities, GKEL intends to invest Rs. 370 crore. Gokaldas Exports invested Rs. 160 crore in FY2023 to backward integrate fabric processing for knitted garments and establish a new greenfield factory in Madhya Pradesh.

Pilot production of the MP capacity began in Q4FY2023; commercial production commenced in Q1FY2024. In FY2024E, it will generate an additional Rs. 50 crores in revenue.

In FY2025E, the addition of a knitwear plant in Tamil Nadu (capex of Rs. 75-100 core) is expected to contribute to additional revenue generation of Rs. 300 crore.

Established Market Position And Long Track Record

GEL gains from its well-established connections with reputable international clothing shops in North America and Europe, as well as from recurrent orders and a consistent rise in wallet share with important clients.

Gokaldas Exports’s robust business profile is exemplified by its presence throughout the manufacturing value chain and its ₹ 2,222 crore operating revenue in the fiscal year 2023. The primary cause of this was a rise in volume, which went from 23 million pieces in the fiscal year 2022 to 27.9 million pieces in the fiscal year 2023.

For the first nine months of fiscal 2024, GEL reported revenue of ₹ 1,566 crore, despite the turbulent economic conditions in the US and Europe. In the medium run, operating performance should improve following the acquisition of MCPL and the Atraco Group, with synergies anticipated in the upcoming quarters.

Conclusion

In conclusion, Gokaldas Exports has demonstrated remarkable resilience and growth in the face of global challenges in the textile industry. With its strategic expansion plans, well-established market presence, and robust financial performance, Gokaldas Exports appears poised for continued success. 

However, the future is never certain, and it remains to be seen how Gokaldas will navigate the ever-changing landscape of international trade and consumer preferences. What are your thoughts on the future prospects of Gokaldas Exports? Do you think their strategies will enable them to maintain their momentum and capture a larger share of the global textile market?

Written by Nalin Suriya S

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