Gokaldas Exports extends gains on commencement of operation at new unit

The company said it has a strong order book and is in the process of augmenting its capacity over the near term, to meet demand and clear Q1FY22 production backlog

Shares of Gokaldas Exports were up 5 per cent at Rs 208.60 on the BSE in intra-day trade on Monday after the company announced that it has commenced commercial production at its new manufacturing unit in Tumkur, Karnataka. On achievement of full ramp up and productivity, the unit will contribute about 4.5 per cent to its current capacity.

The stock today was trading higher for the third straight day, up 14 per cent during the period. It had hit a record high of Rs 236 on August 9, 2021. At 12:18 pm, Gokaldas Exports was trading 3 per cent higher as compared to 0.27 per cent rise in the S&P BSE Sensex.

The company is currently operating at peak utilisation levels with robust order book for the next six months. To cater to the strong demand, it has planned a capex of Rs 120 crore over the next two years that will have potential to generate incremental revenue worth Rs 450 crore (asset turn: ~4.0x), ICICI Securities said in a note.

Indian textile export is at the threshold of a strong growth on the back of a vibrant retail stores and e-commerce demand in key markets like the U.S. and Europe.

With China’s export share on a decline, the opportunity for India is ripe. India’s share so far has been small in the global apparel trade. With large brands realigning their supply chain to de-risk from the effect of COVID-19, and looking at a more balanced approach for sourcing, this could prove to be an excellent opportunity for Indian exporters.

Moreover, the Indian government has announced continuation of the Rebate of State and Central Taxes and Levies (RoSCTL) up to FY2023-24, which provides clarity to exporters and pushes for growth in the sector over a longer-term period. Additionally, the Production-Linked incentive (PLI) scheme could boost growth in the industry as well.

The company has a strong order book and is in the process of augmenting its capacity over the near term, to meet demand and clear backlog of production from the first quarter of FY2021-22. As per the annual report, the company anticipates a substantial revenue growth in FY2021-22 in line with these trends.