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- 26 May 2023
- ICICIdirect Research
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GOKALDAS EXPORTS REPORTS DECENT PERFORMANCE IN DEMANDING BUSINESS ENVIRONMENT
GOKEX - 923 Change: 22.95 (2.55 %)News: On account of a slowdown in the order book for spring-summer production (owing to previous years high inventory levels with the global retailers), revenue declined by 11% YoY to Rs 523.0 crore (grew marginally by 1% QoQ). Despite lower sales, company has continued to maintain healthy profitability levels. EBITDA margins (excluding loss on foreign exchange) improved 150 bps YoY to 13.7% driven by reduction in employee (down 11% YoY) and other expenses (down 16% YoY). Subsequently, absolute EBITDA stood flattish YoY at Rs 71.5 crore (up 13% QoQ). Company reported PAT of Rs 47.1 crore vs. Rs 60.9 crore in Q4FY22 (base quarter had deferred tax credit).
View: The performance of Gokaldas Exports in Q4FY23 is resilient considering the tough business environment in the context of reducing/slowing new order tempo for apparel vendors. Improvement in EBITDA margins also augurs well and demonstrates company's ability to manage its costs well. Further, over the longer term the government’s emphasis on boosting exports through investment schemes and trade agreements will aid in driving revenue growth for players like Gokaldas Exports. The company continues to be optimistic about the future outlook for the industry and is looking to optimally utilize its existing capacities and selective add new capacities to benefit from the long-term growth opportunity. Company during FY23, generated healthy operating cashflow of Rs 368 crore (vs. Rs 117 crore in FY22). Post accelerated capex (Rs 135 crore in FY23 vs. Rs 79.8 crore), company generated FCF of Rs 233 crore. Company continues to have healthy net cash reserves of Rs 332 crore which would assist in funding future growth capex.
Impact: Negative