Gokaldas Exports Q2 Results Review - Temporary Blip; Bigger Picture Intact: ICICI Securities

ICICI Securities Report

Gokaldas Exports Ltd.’s Q2 FY24 consolidated Ebitda, at Rs 470 million (down ~28% YoY), was below our expectations. Revenue at ~Rs 5 billion was down ~12%/3% YoY/QoQ owing to continued demand softness and inventory liquidation in Gokaldas Exports end-market (U.S.).

Management maintains its guidance of demand revival in the U.S. and expects flat YoY revenue growth in FY24.

Ebitda margin declined 205/229 basis points YoY/ QoQ to 9.4% owing to:

1. higher employee costs;

2. one-time costs pertaining to Atraco Group acquisition and

3. start-up costs at Bhopal, Madhya Pradesh unit.

We cut our FY24E/25E Ebitda by ~6%/18% on account of higher costs. We introduce FY26E numbers and value Gokaldas Exports/ATRACO at 18 times/20 times (both unchanged) FY26E earning per share and arrive at a higher target price of Rs 973 (earlier Rs 855). Maintain 'Buy'.

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