26 Jan , 2022 By : Kanchan Joshi
Gokaldas Exports (GEL) is one of India’s leading apparel exporters with an annual capacity of 30 million pieces. Gokaldas focuses on manufacturing complex garmenting products that insulate it from other price based competition. Gokaldas Exports shares have appreciated around 6x, from Rs60 in September 2020 to Rs370 in January 2022.
Brokerage house ICICI Securities likes GEL as a structural long term story to play the apparel export space. It has maintain Buy recommendation on the multibagger stock, that has surged over 343% in a year's period. It has a target price of Rs480 per share with a target period of twelve months.
The company's production is currently running at peak utilisation levels with robust order book for the next six months. Charted out capex of Rs340 crore over the next four years, which will have potential to generate incremental revenues worth around Rs1,300 crore.
“GEL is planning to backward integrate and start a fabric processing unit for knitted segment with a capex of Rs100 crore. The management believes the knits market is growing faster than the woven’s market (97% of sales). It provides an immense opportunity to diversify its product offering," the note highlighted.
With the recent fundraise, the company has strengthened its balance sheet with repayment of around Rs240 crore debt, post which GEL has become net debt free. Enhanced government focus on apparel exports and China 1 strategy of global brands provide long term growth opportunity for players like GEL, which could act as key triggers for future price performance, as per ICICI Securities.
Apart from Gokaldas Exports, in its textile coverage, the brokerage also like KPR Mill as the company is among select vertically integrated textile players having one of India’ largest knitted garment manufacturing capacity of 157 mn pieces. Its Buy tag comes with target price of Rs820.