GOKALDAS EXPORTS LTD is a small-cap stock with a market capitalisation of Rs 4700 crore. The Company is one of the largest manufacturer and exporter of apparels in India with an annual turnover of USD 200 Million.
The promoters hold 11.06% of the equity while the public holds 88.94%. Mutual Funds, Alternate Investment Funds and Insurance Companies hold 32.31% of the equity capital. Foreign Portfolio Investors like GOLDMAN SACHS, HSBC GLOBAL INVESTMENT FUNDS and ABU DHABI INVESTMENT AUTHORITY hold 15.26% of the equity capital.
A number of HNIs like SIVARAMAKRISHNAN GANAPATHI, PATHIK SHYAMSUNDER GANDOTRA, SANKARANARAYANAN SANGAMESWARAN and CHETAN JAYANTILAL SHAH hold substantial equity in the company.
Gokaldas Exports Ltd has been a steady performer on the bourses and has given multibagger returns to its shareholders. The stock is up 760% in the last five years and 111% on a YoY basis.
Atraco Acquisition is a critical tool for growth
Gokaldas Exports’ investors presentation states that the Atraco Acquisition will create immense value for its shareholders besides bringing in numerous potential benefits for the business, like building scale, improving operating performance, and enabling long term profitable growth.
Deriving synergy benefits from this acquisition, Gokaldas Exports’ competitive advantage will be further strengthened. The company can
• Leverage the nearly mutually exclusive customer bast for cross-selling opportunities
• Gain excess to low-cost duty-free locations for manufacturing, offering a wider choice to its customers
• Explore cost advantages in operating costs with superior scale of operations.
• Access additional skilled resources for growth
Experts recommend buy
Nuvamo, a leading research agency, has analyzed all the nuances of the Atarco aquisition by Gokaldas Exports and stated that it views this acquisition as a positive for GEXP as it expands and diversifies its production capabilities and provides duty free access to its key market the US. GEXP has room to further increase Atraco capacities in the medium term (via a brownfield expansion). It has acquired Atraco at a reasonable valuation (7.6x 2022 earnings), which will be EPS accretive (Exhibit 2). The acquisition provides GEXP enough capacities to tap upcoming opportunities in the apparel export market. Nuvamo has recommended a ‘BUY’ with a revised TP of INR884, valuing it at 17x FY25E consolidated earnings.