Gokaldas shares pop 10% on Atraco acquisition deal

The equity value of the deal being done through Gokaldas’ subsidiaries. It is worth $55 million and will be funded by a mix of debt and internal accruals.

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Shares of Gokaldas exports opened 10 percent higher at 676.55 at open on August 29, a day after it entered into a deal to acquire Dubai-based Atraco Group. As of 10:30 am, the stock grew 20 percent to 735.35, up from yesterday’s close.

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The equity value of the deal being done through Gokaldas Exports‘ subsidiaries is $55 million and will be funded by a mix of debt and internal accruals.

Atraco Group is a leading manufacturer of apparel with a strong market position with customer relationships across US and Europe. The transaction is expected to be closed by Q3 FY24.

In a release, Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director, Gokaldas Exports said that the acquisition was an important step as Atraco is “strategically relevant, possesses a good complementary customer base, operationally strong, and above all, a leader in its own sphere.”

With this acquisition, Gokaldas exports is hoping to gain access to low-cost duty-free locations for manufacturing. “Together, we can deliver a wider choice and value proposition to our global customers,” Ganapathi said.

Also read: A good yarn: Gokaldas Exports’ story of success likely to continue

For the quarter ending June 2023, Bangalore-based Gokaldas reported a revenue of Rs 522 crore, down by around 14 percent year-on-year from Q1FY23. The revenue also saw a sequential decline of 1.5 percent from Rs 530.1 in Q4FY23. The company also saw a 17.4 percent Y-o-Y and 31 percent Q-o-Q decline in consolidated net profit to Rs. 32.6 crore in Q1 FY 24. Earnings before interest, depreciation, taxes and amortisation (EBITDA) declined by 8 percent Y-o-Y and  12 percent Q-o-Q decline to Rs 67.8 crore in Q1FY24. EBIDTA margin grew by 18.5 basis points Y-o-Y and declined by 15 basis points Q-o-Q to 13 percent for the quarter ending June 2023.

In an interview with CNBC TV 18, Ganapathi said that the demand should pick up in the second half of the year. “Most of the global brands are sitting with excess inventory from the previous year and hence they are buying a lot less since then.”

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