From ₹39 apiece three years ago, shares of Gokaldas Exports have skyrocketed to the current level of ₹478.95, rewarding their shareholders with a whopping return of 1,128%.
During the same period, an investment of ₹1 lakh in the stock would have turned into a staggering ₹12.28 lakh. Such exponential growth has positioned Gokaldas Exports as one of the standout performers in the equity markets.
The stock has consistently delivered remarkable gains over the last four years. In the year 2023, it has already provided a stellar return of 40%. Similarly, in the previous year, it delivered a decent return of 12.66%, and in the year before that, it recorded a substantial rally of 262%. In CY20, it rewarded shareholders with 24% gains.
What's even more impressive is that the stock experienced a staggering surge of 26.5% within a span of just 12 trading sessions. This incredible rally commenced on May 26 and culminated on June 12, propelling the stock to achieve a record high of ₹497.4.
The remarkable momentum displayed by Gokaldas Exports over the past four years raises the question of whether this trend will continue.
According to domestic brokerage firm Sharekhan, there is ample room for further growth in the stock. The brokerage attributes this optimistic outlook to the company's multiple long-term drivers, which include capacity expansion, a better product mix, sustained client additions, and market share gains in the key US market.
The company is one of India’s largest integrated apparel manufacturers, with a manufacturing capacity of 36 million pieces per annum. It exports to some of the world's most prestigious fashion brands and retailers in more than 50 countries.
After a management change in FY2018, the company has transformed itself into one of the strongest partners for global retailers by improving on-time delivery to customers, augmenting the supply chain of key inputs, expanding capacities, and increasing the focus on product quality, which helped lower rejections by 1.5%, said the brokerage.
The company’s efforts yielded strong results, with revenues and PAT clocking a CAGR of 17% and 54% over FY19–23 (EBITDA margins rose to 11.9% in FY23 from 5.3% in FY19). With strong operating performance, improved working capital management, and a QIP issue of Rs. 300 crore, the company reduced debt on books, it highlighted.
Further, the company has made itself future-ready by planning to invest ₹370 crore in capacity expansion (over FY22–24E) and improving the product mix (outer wear share is expanding). Revenues and PBT are expected to post a CAGR of 17% and 20% over FY2023–25E (tax rate to normalize in FY24).
The company registered a strong earnings CAGR of more than 50% in the last five years. It is now focusing on the next league of growth by expanding capacities to grab opportunities from industry tailwinds such as the China + 1 strategy and the likely signing of an FTA with the UK, the broekrage added.
Thus, Sharekhan expects the double-digit earnings growth trajectory to sustain, which will help in improving cash flows and the return profile over the next three to four years.
The brokerage has initiated coverage on the stock with a 'buy' recommendation, assigning a price target of Rs. 635 apiece, which reflects an upside potential of 32.6% from the stock's previous closing price.
Sharekhan said the stock is trading at an attractive valuation of 17.8x and 13.5x its FY2024E and FY2025E EPS, respectively.
7 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
