ICICI Securities’ Retail Research has reaffirmed a Buy call on Gokaldas Exports, with a revised target price of Rs 890 against a current market price of Rs 715, implying an upside of about 24% over 12 months. The brokerage argues that the apparel exporter is entering a stronger phase, supported by improving demand visibility, a better tariff backdrop, rising capacity utilisation, and a meaningful rebound in the Africa business. Even though Q4FY26 was not a clean margin story, the report suggests the near-term turbulence is giving way to a more constructive FY27 setup. In plain terms: revenue growth is re-accelerating, operating leverage is expected to improve, and the company’s strategic footprint across India, Africa, and BTPL is beginning to scale in a more visible manner.

Quarterly performance

The fourth quarter delivered a mixed but resilient picture. Consolidated revenue rose 5.3% year on year to Rs 1,068.8 crore, helped largely by 17% growth in the Africa business, while India revenue grew 2%. On a sequential basis, revenue increased 9.2%, showing that demand did not lose momentum quarter to quarter.

Operating performance, however, was under pressure. EBITDA margin slipped 157 basis points year on year to 10.2%, even as standalone India margins improved to 12.5% and gross margin edged up to 51.3%. Consolidated EBITDA fell 8.7% to Rs 109.5 crore, and adjusted PAT dropped 32% to Rs 36 crore, reflecting weaker subsidiary profitability and lower other income. Volumes also declined 11.9% in the quarter, indicating that the top line was helped more by pricing and mix than by pure tonnage growth.

What changed in FY26

For the full year, consolidated revenue grew only 3.2% to Rs 3,987.6 crore, but gross margins improved by 169 basis points to 51.7%. That improvement did not fully translate below EBITDA, because margins contracted to 8.4% and EBITDA fell 10.1% to Rs 335.6 crore. Adjusted PAT was hit harder, falling 40.7% to Rs 100.1 crore.

The report highlights a sharper working-capital cycle, which expanded to 103 days from 82 days in FY25. That was driven by advance inventory procurement, stronger Africa activity after AGOA extension, and a changing customer mix. North America remained the dominant revenue geography at 77.9%, while Europe’s contribution climbed to 12.2% from 8.9% a year earlier.

Why the stock looks stronger

The central investment case rests on three pillars: Africa, India, and BTPL. ICICI Direct expects Africa revenues to rise about 50% in FY27 to roughly USD 115-120 million, up from USD 80 million in FY26, aided by the extension of AGOA and improved order flow. It also expects consolidated revenue growth to accelerate into the mid-teens in FY27, supported by better utilisation and added capacity in both geographies.

The margin recovery narrative is equally important. Management expects EBITDA margins to expand by around 200 basis points in FY27 as tariff-related discounts fade, operating leverage improves, and utilisation rises in both India and Africa. The report notes that India standalone margins could eventually climb to 13-13.5%, while Africa margins may reach 10-10.5% in a stable environment. For FY28, consolidated EBITDA margins are expected to improve further to 12-12.5%.

BTPL and capacity build-out

BTPL is emerging as a meaningful optionality lever in the story. The merger and integration are expected by Q3FY27, with management targeting a sharp turnaround through higher fabric volumes, better utilisation, and post-merger synergies. The company expects BTPL to break even in H1FY27 and deliver EBITDA margins of 6-7% in H2FY27.

Capacity expansion is already underway. Gokaldas added 7.5 million pieces of India capacity and 4.5 million pieces in Africa in FY26, lifting total capacity to 104 million pieces. The company also plans Rs 80-100 crore of capex over the next two years for two new facilities, while management believes modest additional capex could unlock more meaningful fabric capacity expansion at BTPL. That matters because the earnings upgrade in this stock will likely be driven less by one-off quarters and more by a sustained rise in throughput.

Levels for investors

Based on the brokerage’s valuation framework, ICICI Direct has pegged the target at Rs 890, valuing the stock at 18 times FY28E EPS of Rs 49.2. With CMP at Rs 715, the implied upside is 24%, which is why the rating remains Buy.

For investors watching the chart and the fundamentals together, Rs 715 is the immediate reference zone, Rs 890 is the brokerage target, and the broader earnings story depends on whether FY27 can deliver the promised margin repair and revenue acceleration. The report’s own revision cuts FY27 and FY28 earnings estimates slightly, but that does not derail the thesis; it simply lowers the near-term base before the growth cycle potentially strengthens.

Risks to watch

The obvious risk is external: a slowdown in key export markets could weaken demand for apparel sourcing. Global unrest can also disrupt working capital, supply chains, and customer ordering patterns. A sustained rise in input prices would squeeze margins, especially if tariff benefits and utilisation gains fail to offset them.

The more nuanced risk is execution. The investment case assumes ramp-up in India, continued recovery in Africa, and successful integration of BTPL without major friction. If any one of those links breaks, the earnings trajectory could remain bumpy even if the long-term story stays intact.