Gokaldas Exports - Q4FY22 First Cut - ICICI Direct

(CMP: Rs. 400 MCap: Rs. 2401 crore)

Gokaldas Exports (GEL) continued to impress with another robust performance in Q4FY22, despite challenging times. Company recorded its highest quarterly revenue and EBITDA in Q4FY22.

Q4FY22 Earnings Summary

· On a significantly high base of Q3FY22 revenue grew 12% QoQ (up 58% YoY) to Rs. 585 crore. The growth is expected to be driven by a mix of price hikes and contribution from its recently commissioned plants in Karnataka. FY22 was a landmark year for the company as it recorded robust revenue growth of ~48% YoY to Rs. 1790 crore (2 year CAGR: 15%). From an average quarterly run-rate of ~Rs. 350- 400 crore, company in the last two quarters has been clocking in Rs. 520+ crore revenue. It has been operating at peak utilisation levels and price hikes coupled with improvement in product mix has led to realisation growth.

- Recent increase in fabric prices resulted in gross margins to decline by 380 bps QoQ (up 214 bps YoY) to 46.0%. Company tries to protect its gross margins as it endeavours to pass on almost entire price hike to the customers and tends to factor in current prices while booking the order. This is the third consecutive quarter, wherein the company has clocked in double digit EBITDA margins. On account of positive operating leverage, company reported 13.1% EBITDA margins (up 170 bps QoQ and 356 bps YoY). Absolute EBITDA grew by 29% QoQ (up 2x YoY) to Rs. 76.6 crore.

- Robust operational performance resulted in company reporting a 36% QoQ jump in PBT at Rs. 52.4 crore (Q4FY21: Rs. 16.2 crore).

- On the balance sheet front, inventory days increased from 78 to 88 days in FY22, while better collections resulted in receivable days declining sharply from 54 to 19 days. Operating cashflows remained constant YoY at Rs. 117.2 crore. Company enhanced garmenting capacity in FY22 and incurred capex of Rs. 80 crore vs. Rs. 36 crore in FY21. On the back of FCF and capital infusion worth Rs. 300 crore, company became net cash surplus worth Rs. 104 crore in FY22 vs. net debt of Rs. 165 crore in FY21.

GEL has initiated work on a new greenfield unit in Madhya Pradesh that is expected to be commissioned in early FY23E (potential revenue: Rs. 150 crore). It has charted out capex of Rs. 340 crore over the next four years which will have potential to generate incremental revenues worth ~Rs. 1300 crore (4.0x A/To). Further, the management indicated it is looking at entering new business segments like technical textiles, knitwear and setting up manufacturing units in cost efficient countries like Bangladesh. We like Gokaldas Exports as a structural long term story to play the apparel export space.

We will be coming out with a detailed update after the conference call with the management.

Shares of Gokaldas Exports Limited was last trading in BSE at Rs. 399.60 as compared to the previous close of Rs. 352.65. The total number of shares traded during the day was 332749 in over 12043 trades.

The stock hit an intraday high of Rs. 414.00 and intraday low of 351.05. The net turnover during the day was Rs. 131280158.00.

Source : Equity Bulls

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GokaldasExports INE887G01027 GOKEX Q4FY22 FirstCut ICICIDirect