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Buy This Multibagger Textile Stock For A Target Price of Rs 570: ICICI Securities


Gokaldas Exports Ltd., a small-cap company with a market capitalization of Rs 2,728.87 crore, is India's largest apparel manufacturer and exporter. The company's shares have risen from Rs 89 as of May 4, 2021 to Rs 460.90 on May 2, 2022, 3:30 p.m. IST, representing a multibagger return of 417.87 per cent in a year. Year-to-date (YTD), the stock has increased by 40.43 per cent, and in the previous six months, it has climbed by 84.80 per cent. The stock has gained by 18.90 per cent in the past month and by 23.12 per cent in the previous five trading days. ICICI Securities has issued a buy call on the stock with a target price of Rs 570 and a 12-month target period, implying potential upside for the stock.


Q4FY22 results of Gokaldas Exports (GEL) according to ICICI Securities

Q4FY22 results of Gokaldas Exports (GEL) according to ICICI Securities

  • GEL reported its best quarterly performance driven by growing order book and ability to weather supply chain disruptions.
  • On a high base of Q4FY22, sales grew 12% QoQ (up 97% YoY) to Rs 585 crore (highest quarterly revenue). The growth is supported by new capacity expansion in Karnataka and Tamil Nadu (~Rs 40 crore).
  • Recent increase in fabric price and change in product mix resulted in gross margins declining by 380 bps QoQ to 46.0%. However, better operating efficiency and lower employee provisioning led to EBITDA margins improving 170 bps QoQ to 13.1% (not sustainable in the near term).
  • PBT grew 36% QoQ to Rs 52.4 crore (Q4FY21: Rs 16.2 crore).
Key investment rationale as per the brokerage

Key investment rationale as per the brokerage

  • 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.
Buy for a target price of Rs 570

Buy for a target price of Rs 570

The brokerage has claimed that "Since our initiation report, the stock price has appreciated ~7.5x (from Rs 60 in September 2020 to Rs 450 in April 2022). 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. We maintain BUY recommendation on the stock. We value GEL at Rs 570 i.e. 19x FY24E EPS."

Pandemic led restrictions can lower sales and high RM cost to subdue margin remains the key risk for the stock according to ICICI Securities.



The stock has been picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Read more about: stocks to buy
Story first published: Tuesday, May 3, 2022, 19:11 [IST]
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