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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.
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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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