Gokaldas Exports growth outlook supported by India and Africa order momentum despite margin pressure

Investment View and Valuation

In its August 13, 2026 result update, ICICI Direct Research retained its BUY recommendation on Gokaldas Exports Ltd. and revised its target price to Rs 910, valuing the company at 18 times FY28E EPS of Rs 50.5. The current market price cited in the report is Rs 761.

The broker’s core thesis is that revenue growth remains firm, supported by strong order visibility, improving sourcing interest in India and the ramp-up of African operations. However, near-term margin recovery may be slower because of higher wages, freight and input costs.

Business Profile and Q1FY27 Performance

Gokaldas Exports is a large apparel manufacturer and exporter with more than 34 production units and annual capacity of around 90 million garments following the Atraco and Matrix acquisitions.

In Q1FY27, reported revenue grew 20.7 per cent year-on-year to Rs 1,153.5 crore, driven by 46 per cent growth in Africa and 16 per cent growth in India. Consolidated volumes rose 14 per cent and realisations increased 5.1 per cent. Gross margin declined 132 basis points year-on-year to 52.4 per cent, while EBITDA margin fell 82 basis points to 9.3 per cent. EBITDA rose 11 per cent to Rs 107.2 crore and adjusted PAT increased 7 per cent to Rs 44.3 crore.

India and Africa Operating Performance

Growth Outlook and Order Visibility

Management retained its approximately 15 per cent consolidated revenue-growth target for FY27. Q2FY27 revenue is expected to be similar to Q1FY27 despite seasonal weakness, with orders booked for Q2 and Q3-Q4 placements progressing.

Gokaldas Exports is seeing increased enquiries from US and European customers, aided by India’s tariff position relative to competing sourcing locations. Management expects India growth to benefit from higher customer placements, better product mix and realisations, productivity improvements and new capacity.

Africa has FY27 revenue visibility of US$112 million to US$115 million against a US$120 million target. Utilisation is around 80-85 per cent, and second-shift operations could support a US$30 million quarterly revenue run rate.

Margin Outlook and Cost Pressures

Management expects consolidated EBITDA margin to exceed 10 per cent as H2FY27 brings improved mix, operating leverage and utilisation. ICICI Direct, however, remains cautious on the pace of recovery.

• Q1FY27 profitability was affected by Rs 5 crore to Rs 6 crore of higher utility, fuel and chemical costs.
• The India business absorbed around Rs 20 crore of incremental wage cost following wage revisions.
• Shipment delays of around two weeks are increasing costs and working-capital requirements.
• Africa EBITDA margin is expected to return to double-digit levels by Q4FY27 or early Q1FY28.

BTPL recorded around Rs 170 crore turnover but an operating EBITDA loss of around 7.5 per cent to 8 per cent. Management expects BTPL to become EBITDA-positive in Q3FY27 and PBT-positive in Q4FY27.

Capacity Expansion and Estimates

Gokaldas Exports plans to add 2,000-3,000 machines by FY27-end, mainly in lower-cost Indian regions. The new Jharkhand and Karnataka facilities require around Rs 100 crore investment and could add around Rs 350 crore of revenue potential. Operations are expected to begin in H2FY28, with full potential expected in FY29.

ICICI Direct reduced its FY27E EBITDA estimate by 5.4 per cent to Rs 473.1 crore and EPS estimate by 1.7 per cent to Rs 30.7 to reflect lower margin assumptions, while broadly maintaining its FY28E estimates.

Key Risks

• A slowdown in export markets.
• Higher input prices and supply-cost escalation.
• Shipment delays and the resulting increase in costs and working-capital requirements.
• Uncertainty related to West Asia and its potential impact on supply costs.