- 24 Jan 2022
- ICICIdirect Research
GEL delivers back to back robust quarterly performanceGOKEX - 457 Change: 3.35 (0.74 %)
News: Gokaldas reported one its best quarterly performances driven by healthy demand in the US apparel market. On a significantly high base of Q2FY22 revenue grew 17% QoQ (up 97% YoY) to Rs.520.7 crore (highest quarterly revenue). On a QoQ basis company has maintained its gross margin levels at 49.7% (down 560 bps YoY). Despite material increase in employee (up 11% QoQ) and other expenses (up 36% QoQ), company delivered strong EBITDA margin to the tune of Rs.11.4% (Q2FY22: 11.7%, Q3FY21: 7.9%). Absolute EBITDA grew 15% QoQ to Rs.59.4 crore (up 2.8x YoY). Robust operational performance resulted in company reporting a 36% QoQ jump in PBT at Rs.38.6 crore (Q3FY21: Rs.6 crore). Owing to ~ 22% effective tax rate (vs. Nil in Q2FY22/Q3FY21), company reported PAT of Rs.30.2 crore. On account of recent capital infusion through QIP (Rs.300 crore) company has become net debt free vs. net debt of Rs.166.2 crore in FY21.
Views: Production is currently running at peak utilisation levels with robust order book. During the quarter, the company has set up two units in Karnataka (Tumkur and Bommanahalli), which is expected to be ramped up in the next six months (potential revenue: Rs.160 crore) Furthermore, it has also 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 (by FY25E) which will have potential to generate incremental revenues worth ~Rs.1350 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