Gokaldas Exports rallies after Abu Dhabi Investment Authority picks up stake

Apparel manufacturer and exporter Gokaldas Exports surged over 5 percent in trade on October 3 after Abu Dhabi Investment Authority acquired 15 lakh equity shares in the company at an average price of Rs 349.75 a share.

The fund owned by the Emirate of Abu Dhabi bought these shares in a bulk deal that was executed on September 30. Clear Wealth Consultancy Services LLP sold 15 lakh shares at the same price.

At noon, the share was trading at Rs 365 on the National Stock Exchange. It has gained 10 percent in 2022 so far.

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Experts believe the company is a big beneficiary of the move towards China-plus-one strategy. The US is a key market for Gokaldas Exports and accounts for 75-80 percent of revenue, while Europe contributes 4 percent.

Speaking to CNBC-TV18, managing director Sivaramakrishnan Ganapathi said, “Opportunity for Indian textile sector is huge in the exports market. We are witnessing orders shift from China to India due to low-cost structures and US curbs. Production in China is 30-40 percent more expensive than India.”

To capitalise on this, the company has planned Rs 280 crore capex between FY23 and FY24. New factories are expected to start by the end of FY23.

At the moment, recessionary fears in the US were not a major worry for the management. “The US is a resilient market. We are not witnessing any signs of slow down in consumers’ spending,” Ganapathi said.

Terming Gokaldas Exports as a long-term play in the apparel export space, ICICI Direct has a “hold” rating on the stock with a 12-month target price of Rs 415.

“Demand headwinds in key markets in H2FY23 could subdue revenue growth. However, better productivity and higher operating efficiencies will help the company report EBITDA CAGR of 19 percent in FY22-24E,” it said.

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