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ICICI Securities Report
Gokaldas Exports Ltd. has signed a definitive agreement with the shareholders of UAE-based apparel maker, Atraco, to acquire 100% of the latter's equity for a total consideration of up to $55 million funded through debt (73%) and internal accruals (27%).
Atraco exports 95% of its production to the U.S. (primary market for Gokaldas Exports) and has nearly mutually exclusive customer base with the company.
Hence, we believe this deal provides Gokaldas Exports an opportunity to leverage Atraco's existing relationships for cross-selling opportunities.
Given the duty-free access to U.S. from Kenyan operations coupled with huge cross-selling opportunities, we now value Gokaldas Exports at 18 times FY25E earnings per share (earlier: 17 times) and value the Atraco business at 20 times FY25E EPS to arrive at a revised target price of Rs 855/share (earlier: Rs 595). Maintain 'Buy'.
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