Gokaldas Exports Share Price Target at Rs 1,140: Sharekhan Research
Mirae Asset Sharekhan has reiterated a Buy recommendation for Gokaldas Exports (GKEL), setting a price target of Rs. 1,140, signaling confidence in the company's long-term strategic vision despite near-term volatility driven by tariff uncertainties and operational cost pressures. The stock has corrected roughly 26% from its peak, offering an attractive re-entry point for long-term investors.
Strong Q4FY25 Performance Demonstrates Operational Resilience
GKEL’s Q4FY25 consolidated revenue rose 25% year-over-year to Rs. 1,015 crore, exceeding expectations. The EBITDA margin improved by 47 basis points (bps) to 11.8%, supported by robust capacity utilization and enhanced execution planning.
Adjusted PAT grew 3.7% YoY to Rs. 52.9 crore despite a higher tax burden on a lower base. On a standalone like-for-like (LFL) basis, revenue increased 17% YoY while EBITDA margins expanded by 76 bps to 14.4%.
FY25 Results Validate Strategic Growth Amid Margin Contraction
Full-year consolidated revenue grew 62.4% YoY to Rs. 3,864 crore. However, EBITDA margin declined by 205 bps to 9.3% due to elevated operating costs and short-term disruptions. The adjusted net profit for FY25 stood at Rs. 159 crore, a 10.1% increase.
Outlook for FY26: Growth Continues, But Margin Headwinds Persist
Management has secured Q1FY26 volumes and expects around 15% revenue growth in FY26. However, a near-term margin contraction of 200 bps is anticipated due to tariff-related uncertainties and global macro risks.
A rebound in margins is expected from Q3FY26, subject to more clarity post the 90-day pause on newly introduced US tariffs.
Strategic Capex and Market Expansion Enhance Competitive Edge
GKEL has outlined a capital expenditure of Rs. 150 crore for FY26, earmarked for modernization and expansion in Madhya Pradesh, Karnataka, and Jharkhand. These facilities will be instrumental in meeting demand from anticipated India-UK and EU free trade agreements (FTA).
The company invested Rs. 175 crore in BTPL for vertical integration and ended FY25 with a net debt of Rs. 158 crore, backed by a QIP of Rs. 600 crore.
Recent Acquisitions Fuel Volume Growth
Atraco and Matrix contributed significantly, taking consolidated production to 68.34 million pieces in FY25 with an average selling price (ASP) of Rs. 524. GKEL now operates over 30 manufacturing units and employs more than 51,000 people across global geographies.
Valuation Metrics and Forward Projections
Below is a detailed look at valuation metrics from FY23 through projected FY27:
| Particulars | FY23 | FY24 | FY25 | FY26E | FY27E |
|---|---|---|---|---|---|
| Revenues (Rs. cr) | 2,222 | 2,379 | 3,864 | 4,472 | 5,377 |
| Adjusted PAT (Rs. cr) | 168 | 144 | 159 | 239 | 361 |
| EPS (Rs.) | 27.8 | 22.7 | 22.2 | 33.5 | 50.5 |
| P/E (x) | 33.5 | 41.0 | 42.0 | 27.8 | 18.4 |
Industry Dynamics: Challenges and Opportunities
GKEL faces short-term challenges from tariff policy changes, particularly with US trade. A 10% tariff is in place, and a revised 30% on Chinese goods could redirect sourcing decisions.
India stands to gain in the long run from its geopolitical stability, trade agreements like the India-UK FTA, and a growing preference for sourcing outside China and Bangladesh. These trends bolster India’s position as a preferred apparel exporter.
Shareholding Pattern Reflects Institutional Confidence
| Shareholder | Holding (%) |
|---|---|
| SBI Funds Management | 8.3 |
| Nippon Life India AM | 7.58 |
| Goldman Sachs India Pvt. | 5.7 |
| Goldman Sachs Group Inc. | 5.47 |
| Matrix Clothing Pvt. Ltd. | 3.84 |
| L&T Mutual Fund Trustee Ltd. | 3.45 |
This reflects strong institutional faith in the company's long-term fundamentals.
Risks to the Investment Thesis
Investors should remain cautious of:
Client concentration risk: A few major clients contribute a significant portion of revenues.
Rising input costs: Volatility in cotton, yarn, and wages can compress margins.
Export dependency: Geopolitical or economic downturns in the US and EU could disrupt orders.
Bottomline: Buy Call Reaffirmed With Rs. 1,140 Target
Despite short-term concerns over tariffs and margin compression, Mirae Asset Sharekhan retains its 'Buy' call on Gokaldas Exports, anchored on a robust expansion strategy, improving global market share, and sound execution.
Trading at 28x FY26E and 18x FY27E earnings, GKEL offers a favorable risk-reward balance for long-term investors focused on India’s manufacturing and export renaissance. The company is well-positioned to capitalize on geopolitical shifts, FTAs, and India’s rising prominence in global textile sourcing.
