Gokaldas Exports' stock rises on the back of strong June quarter results

25 Jul 2022 , 02:31 PM

Gokaldas Exports reported solid performance in the June quarter (Q1FY23), despite a tough macro-economic business environment, which led to a rise in the company’s shares of 7% to Rs384.40 on the BSE on Monday. Shares had increased by 8% over the last two trading days. The management expects solid growth in FY23 and a rise from FY24 despite short-term obstacles.

From its most recent low of Rs315.90 on July 13, 2022, the stock of a maker of clothing and apparel has increased by 20%. The stock increased 5.5% during the past month, compared to the S&P BSE Sensex’s 5.6% increase. The stock saw a 38% correction from the record high level of Rs520 reached on May 18, 2022.

Revenue at Gokdaldas Exports increased by 4% from quarter to quarter (QoQ) and by 153% year over year (YoY) to Rs610.6 crore in Q1FY23. Earnings before interest, taxes, depreciation and amortization (EBITDA) margins decreased by 130 basis points on a quarterly basis to 11.8%. (up 439 bps YoY).

Increased minimum salaries that took effect this quarter resulted in an Rs4.3 Cr. rise in labor costs. Although this had a 0.7% negative impact on the margin, the company maintained that it was more than compensated by increased productivity and business volume. In comparison to a loss of Rs2.6 crore in Q3FY22, it declared a profit after tax (PAT) of Rs39.4 crore in Q1FY23. In the March quarter, it reported a PAT of Rs60.9 crore (Q4FY22).

Excellent execution and effective capacity utilization were the main drivers of the steady revenue and profit development. Seasonally, H1 is somewhat poor for the Indian garment sector since businesses seek to obtain synthetic clothing for Autumn/Winter during this time, but India is more deeply anchored in the cotton fiber ecosystem, which primarily meets Spring/Summer demand, according to the management.