This Small Cap Apparel Stock Grew 388.23% In 3 Yrs, Brokerage Assigns Buy For 47% Upside

ICICI Securities has assigned a "buy" on Gokaldas Exports Limited with a target price of Rs 560 per share. According to the brokerage, if the stock is purchased at the current market price, it could give a return of up to 47% on the investments. Gokaldas Exports is a small-cap Apparels sector company having a market cap of Rs 2,314.38 crore. The company is engaged in the business of design, manufacture, and sale of a wide range of garments for women, men, and children and caters to the needs of several leading international fashion brands and retailers.

CMP, 52-Week Low & High, and Returns

The current share price of Gokaldas Exports is Rs Rs 381.10 per share on NSE. Its 52-week high is Rs 519.90 per share and its 52-week low is Rs 301.10 per share, respectively. The stock has given 4.99% in the last 1 week. It grew 3.44% in 1 month and 5.28% in the last 3 months, respectively. It has given 8.47% in the last 1 year. The stock has given 388.23% multibagger returns in the last 3 years and 190.04% multibagger returns in the last 5 years, respectively.

Weaving each piece (scale, margins, FCF) together; initiate with BUY

Gokaldas Exports (GEXP), under its new management (since FY18), has witnessed significant changes including marquee client additions, richer product mix, higher margins, etc., leading to robust shareholder returns. "We believe, India - with its stable economy, abundant cotton availability, cheaper labour vs China and control over covid - is well placed to wrest a chunk of apparel market share from China and other competitive economies. Hence, India's textile and apparel industry stands to benefit in the medium term. Further, the government of India's (GoI) signing of FTAs with various countries (UK FTA likely in H1CY23) and incentive schemes is likely to boost the domestic textile ecosystem and catalyse further growth. GEXP, in the next leg of its growth, is executing a capex of ~Rs3.7bn over FY22-FY25, which includes new greenfield projects and upgrading its existing machineries. This will help: a) diversify its revenue sources (foray into knitwear), and b) potentially boost the topline by ~Rs8bn-9bn over FY23-25E," the brokerage has said.

It added, "We estimate EBITDA margin to expand by 100bps on the back of operating leverage benefits and adjusted PAT to register ~18% CAGR over FY22-FY25E. Initiate with a BUY rating and P/E-based (17.5x FY25E) target price of Rs560/sh."

According to ICICI Securities, the Key risks are input cost inflation, logistic bottlenecks, and geopolitical tensions.

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.