Up around 250% in 2 years! ICICI Securities sees further upside in this multibagger stock
The multibagger stock has recovered over 60 per cent from its 52-week low of Rs 301.10, hit on August 14, 2022
- Jun 19, 2023,
- Updated Jun 19, 2023 1:16 PM IST
Shares of Gokaldas Exports have delivered around 250 per cent return in the last two years. The multibagger stock has zoomed over 1,300 per cent to its long-term investors in the last ten years. It has recovered over 60 per cent from its 52-week low of Rs 301.10, hit on August 14, 2022.
ICICI Securities, in its recent report, said Gokaldas Exports had delivered stellar returns in the past one month as it believes the street seems to have factored in the exuberance (China+1, margin expansion, etc.) a bit too early.
"A sharp fall in key input costs might have excited the street; however, the benefit of the same shall only be visible in upcoming months as clients place larger orders. There is no change in the long-term story for GEXP; however, a few blips may result in minor stock price correction and hence, provide a fresh entry opportunity," the brokerage said.
Pointing out a few concerns, ICICI Securities said that India’s Apr-May’23 RMG exports are down 12% YoY. Given the uncertain global demand situation, it expects monthly exports to remain subdued till the first half of FY24. Owing to the revision in minimum wages, the company may witness 9-10% higher staff costs in FY24. It pointed out a delay in the passage of the FTA with the UK. Also, the operating leverage benefits from the MP unit are still a few quarters away till it operates on optimum utilisation.
The brokerage also highlighted that staff costs (32% of total costs in FY23) are expected to rise by 9-10% in FY24 owing to a revision in minimum wages in Karnataka. Its impact is likely to be visible in the upcoming quarterly results.
However, it said that the spot cotton yarn prices have corrected sharply by 36 per cent from its peak in Jun 2022. Similarly, current spot rates of crude oil and the Baltic Dry Index are down 34% and 72%, respectively, from their peak. So, the lower input costs will likely benefit the company as they lower the overall cost in the value chain and may result in larger purchase orders.
ICICI Securities has maintained a 'Buy' call on the smallcap stock with a target price of Rs 560, suggesting a 16 per cent upside potential of more than from Friday's closing price of Rs 482.80.
Incorporated in 1995, Gokaldas Exports is the largest exporter of garments in India. The Bengaluru headquartered company manufactures blazers and pants, shorts, shirts, blouses, denim wear, swimwear, active and sportswear.
Gokaldas Exports is also expected to be one of the beneficiaries of the government push on the textile sector and the PLI scheme announced for the same. The government approved 61 companies for the textile production linked incentive (PLI) scheme with investments worth Rs 19,000 crore and an expected turnover of Rs 1.84 lakh crore in five years.
Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today
Shares of Gokaldas Exports have delivered around 250 per cent return in the last two years. The multibagger stock has zoomed over 1,300 per cent to its long-term investors in the last ten years. It has recovered over 60 per cent from its 52-week low of Rs 301.10, hit on August 14, 2022.
ICICI Securities, in its recent report, said Gokaldas Exports had delivered stellar returns in the past one month as it believes the street seems to have factored in the exuberance (China+1, margin expansion, etc.) a bit too early.
"A sharp fall in key input costs might have excited the street; however, the benefit of the same shall only be visible in upcoming months as clients place larger orders. There is no change in the long-term story for GEXP; however, a few blips may result in minor stock price correction and hence, provide a fresh entry opportunity," the brokerage said.
Pointing out a few concerns, ICICI Securities said that India’s Apr-May’23 RMG exports are down 12% YoY. Given the uncertain global demand situation, it expects monthly exports to remain subdued till the first half of FY24. Owing to the revision in minimum wages, the company may witness 9-10% higher staff costs in FY24. It pointed out a delay in the passage of the FTA with the UK. Also, the operating leverage benefits from the MP unit are still a few quarters away till it operates on optimum utilisation.
The brokerage also highlighted that staff costs (32% of total costs in FY23) are expected to rise by 9-10% in FY24 owing to a revision in minimum wages in Karnataka. Its impact is likely to be visible in the upcoming quarterly results.
However, it said that the spot cotton yarn prices have corrected sharply by 36 per cent from its peak in Jun 2022. Similarly, current spot rates of crude oil and the Baltic Dry Index are down 34% and 72%, respectively, from their peak. So, the lower input costs will likely benefit the company as they lower the overall cost in the value chain and may result in larger purchase orders.
ICICI Securities has maintained a 'Buy' call on the smallcap stock with a target price of Rs 560, suggesting a 16 per cent upside potential of more than from Friday's closing price of Rs 482.80.
Incorporated in 1995, Gokaldas Exports is the largest exporter of garments in India. The Bengaluru headquartered company manufactures blazers and pants, shorts, shirts, blouses, denim wear, swimwear, active and sportswear.
Gokaldas Exports is also expected to be one of the beneficiaries of the government push on the textile sector and the PLI scheme announced for the same. The government approved 61 companies for the textile production linked incentive (PLI) scheme with investments worth Rs 19,000 crore and an expected turnover of Rs 1.84 lakh crore in five years.
Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today