Multibagger Stock: Gokaldas Exports advances 1260% in 4 years, 2358% in 11 years. Can it rally more?

Multibagger Stock: Gokaldas Exports, a leading apparel manufacturer, has emerged as a standout performer on Dalal Street, delivering remarkable returns to its shareholders. The company’s share price has surged significantly in recent years, cementing its position as one of the biggest wealth creators in the Indian equity market.

Over the past five years, the company’s shares have been on an impressive winning streak, showcasing consistent growth without any major corrections. The stock has appreciated 154% over the last two years, reaching ₹850. Over a four-year period, the stock delivered a phenomenal 1,260% return, while in 11 years, it saw a robust 2,358% gain. 

A closer look at the stock's year-wise performance reveals its steady climb. In CY19, the shares gained 25%, and in the following year, the stock turned into a multibagger, delivering an astounding return of 264.41%.

While CY22 saw a modest jump of 13%, the momentum picked up again in CY23, with the stock surging 126%. In the current year, the stock has maintained its upward trajectory, gaining 3.82% so far.

What drove the impressive surge in share prices?

Strong operational performance, rising global demand for Indian apparel exports, diversification of supply chains away from China, and strategic market expansion efforts all contributed to the sustained rally in the company's shares.

Additionally, the recent crisis in Bangladesh has raised expectations that international buyers might shift their focus to alternative markets like India. Leveraging opportunities in both domestic and international markets, the company further strengthened its global presence through significant acquisitions in FY24.

For most of FY24, the retail industry faced an inventory overstock issue, prompting brands to reduce apparel purchases by 20% in the US, 19% in the EU, and 28% in the UK.

However, the inventory destocking cycle is nearing its end, with many fashion brands now reporting lower inventory levels, improved financial performance, and a renewed appetite for purchases, which is expected to translate into stronger demand for apparel manufacturers in the coming quarters.

Meanwhile, the potential implementation of Free Trade Agreements (FTAs) with key markets like the UK and EU presents exciting prospects for increased textile trade from countries like India. Additionally, government initiatives such as the Production Linked Incentive (PLI) scheme for the Man-Made Fibre (MMF) and technical textile ecosystem are expected to boost investments in the sector.

According to the India Brand Equity Foundation (IBEF), India’s textile and apparel exports could reach $100 billion by 2030, up from $44.4 billion in FY22. This growth is expected to be driven by increased demand from traditional markets like the US and EU, as well as emerging markets in Asia and Africa.

Can the stock continue its momentum further?

In its latest report, domestic brokerage firm JM Financial reiterated its buy rating on the stock, citing the company's stellar performance in Q2 FY25. With a target price of ₹1,285, the firm sees an upside potential of 51% from the stock’s latest closing price. The stock is the brokerage's top pick in the textile space.

"The company progressed well towards integration of the newly acquired facilities and is poised to gain from operating leverage in the future. Strategic investment in BTPL, a fabric processing unit, allows the company to derive the utmost benefit through vertical integration into critical raw materials, adding an edge in terms of speed, quality, and cost," said the brokerage.

JM Financial further highlighted that the company’s strong order book ensures robust near-term prospects. The long-term outlook also remains promising, driven by a global shift in sourcing away from China, Vietnam, and Bangladesh, supplier consolidation favouring efficient and well-capitalised players, and ongoing supply chain disruptions in several regions, it added. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.